Many industries are characterized by the fi ght not only to attract customers but also to retain their continuing support once captured. An example of using information to enhance customer bonding and improve competitiveness is customer loyalty schemes. These schemes have long been a feature of marketing programs, with a recent example being Air Miles.
There has been a large growth in the number and type of fi rms offering loyalty programs. These range from bookstores, such as WH Smith in Britain, which has a sophisticated database of millions of customers, through to credit card companies and telephone operators such as MCI in the USA, which pioneered the friends and family discount.
For MCI, this single measure, undertaken with relatively modest advertising expenditure (5 percent of the market leader, AT&T), resulted in its market share growing by 4 percent despite fi erce competition. The inventiveness of loyalty programs is constantly surprising, revealing the brand values of the companies and the threat they pose to competitors.
For example, Virgin Atlantic introduced an ingenious loyalty scheme for customer bonding, to reduce the time that it takes to get new customers. Virgin offers privileges to those involved in competitors’ loyalty schemes, offering a free companion ticket to 9 CUSTOMER BONDING 111175-100 GI Business.indd 21 1/5/09 10:38:11 22 • 100 GREAT BUSINESS IDEAS any British Airways frequent fl yer who has accumulated 10,000 miles. This has the added advantage of reinforcing perceptions of the Virgin brand as being dynamic and fl exible.