Four to follow

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Loyalty marketing is one of the niches in the industry that sneaks up on you. It's out there, just not always at the center of the global holding company's radar. For this first special report on the subject, Ad Age editors wanted to introduce some of the players in the field, four of which are profiled here:

Kurt Stache, American Airlines' AAdvantage

as the world's first-ever frequent flyer program, American Airlines' AAdvantage has stood the test of time. Staying focused on customer retention, American executives say, has been crucial for the airline in turbulent times. "Our focus was not just on the revenue that passengers could bring in the short term," explains Kurt Stache, president of the AAdvantage Marketing Programs. "Instead, we were committed to stay focused on the long-term partners. We wanted to give our customers the incentives to stay with our airline."

One of those main incentives was AAdvantage, where 50 million members earn miles not only by flying American Airlines, but also by staying at one of 35 partner hotel chains and/or renting from one of eight car rental companies. Once on board via the loyalty program, AAdvantage members receive a number of targeted promotions. "The program is an important customer touch point for us," explains Mr. Stache, 38. He adds that the key to any program is both relevance and simplicity. In coming months, Mr. Stache says AAdvantage will expand its partnerships and products as well as launch promotions for its 25th anniversary.

Brian Bowden, Buick

As part of Buick's award-winning customer loyalty program, owners of the General Motors Corp. product receive a wide range of forms of communication. E-mail newsletters are sent out quarterly sometimes reaching upwards of 1 million members at time, with special offers and a glossy magazine titled Style Preview is delivered twice a year. Buick owners can log in to a customized owner center on the Buick Web site to get specific information on their vehicle. They can even attend special owner clinics throughout the year to find out even more about the car they drive.

Ongoing communication allows Buick to delve into the minds of its customers, and adjust its marketing plan accordingly. Recent research has shown that Buick owners especially enjoy a sophisticated lifestyle, including everything from golf to travel to dining, says Brian Bowden, Buick recently appointed marketing director. As a result, the company invited more than 500 Buick owners and dealers to LaJolla, Calif., for a VIP experience at this year's PGA Tour Buick Invitational golf tournament. "We treated our Buick owners with everything from complimentary tickets to grandstand seating on the 18th green," explains Mr. Bowden, 47. Previously GM's marketing director of cross vehicle marketing, the executive helped launch an ambitious microsite to help sell all of GM's models to small business owners and fleet managers. "We treat them in a manner that shows them just how important they are to us as a company."

Wayne Malone, Citibank

It starts simply by use of a credit card. A reward shortly follows. But Citibank is extending the carrot to simple banking acts of signing up for direct deposit or taking out a home equity loan translating to rewards. "We are essentially rewarding them for banking business that they would be doing anyway," explains Wayne Malone, senior VP-transaction innovations. "There is a certain mistrust out there with the financial industry as a whole that there has to be some sort of catch or fee. Most are surprised when they find out this is absolutely free."

Citibank's "ThankYou" customer appreciation program, which was launched in December 2004 with an ad campaign from Publicis Groupe's Fallon Worldwide, offers everything from $5 gift cards to "Your Wish Fulfilled," where customers can consult with a Wish Specialist as to how many points they would need to make virtually any of their desires come true. Mr. Malone, who's been with Citibank since he started with its merchant business in 1984, says the program thrives on consistency and continuity. And while he declines to give subscriber levels, he says that Citi customers are increasing their use of the bank's products and that attrition levels are down. "Customers are not going to switch banks simply because of a reward," he says. "We do know the program enhances the customer experience, which in turn, we think, is going to reduce attrition."

Robin Korman, Starwood Hotels & Resorts

in recent years, loyalty marketing in the hotel industry has moved away from the practice of tracking numbers of stays to enhancing a bond. "Frequent travelers want to be treated as if they were special and recognized for their allegiance," explains Robin Korman, VP-loyalty marketing for Starwood Hotels & Resorts Worldwide. "They want an emotional connection with our brands and feel like they belong when they walk through our doors. They want the hotel associates to recognize that travel is hard."

Ms. Korman oversees the "Starwood Preferred Guest" program, which since it was founded in 1999, has been cited by industry leaders for delivering customer service and flexibility. It claims to have 24 million members and to be the only major hotel program to have no blackout dates or availability restrictions and offers members point redemption at more than 850 hotels in the world.

Starwood strives to make each stay more personal with customized messaging to members booking a stay, suggesting anything from an upgrade to a better room to a reminder to book golf or a trip to the spa before their arrival. The program expands off partnership marketing efforts with airlines and rental companies and a number of associations such as AARP and AAA. It also uses brand advertising in its hotels, call centers and Web site, as well as ads placed in travel magazines. Ms. Korman says it's able to target customers' preferences based on their recent visits as well as geographic information and preferences they have given Starwood to provide offers it thinks are most appealing

"Our ultimate goal is to create a true loyalty and emotional connection to our brands and a commitment to stay with Starwood because they prefer our brands and are willing to pay a premium to experience them," says Ms. Korman. "These are the customers who won't be wooed away with the most lucrative point offer of the day."
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