Physicists have determined that a bubble-burst is not a finite event, but instead the initiation of a cascade effect that creates a series of smaller, less-stable bubbles. And the chain seems to continue to unfold and multiply repeatedly.

This all sounds hauntingly familiar, resonating with the popping we hear in the global economic universe. The savings-and-loan bubble is followed by the internet bubble is followed by the housing bubble and so it goes.

Is this phenomenon really so different within the microcosm that is the loyalty industry? For instance, it wasn't so long ago that we were captivated by programs like Beenz and Flooz that rewarded customers for simply reading online ads or taking online surveys until that bubble burst in the cascade resulting from the internet bubble's collapse. Now, we have a new generation of "engagement strategies" that reward customers for myriad word-of-mouth activities, healthy behaviors, ecologically-responsible activities and much more.

In discussing the newest loyalty ventures into cultivating non-transactional behaviors, it's easy to get dazzled by the scope and diversity of the new options and platforms available to engage best customers. When digging into the conversation a bit further, however, there are familiar themes that will determine the sustainability of this new movement. Here are a few of those themes:

  • And, we will monetize this how? Without showing the CFO the money, the initiative probably isn’t going to last. Some leaders in this space are working quite hard to show that activities such as program engagement or healthy-living behaviors connect directly with an economic pay-off for corporate stakeholders. However, too many vendors and start-ups have lost sight of the loyalty lesson learned soundly in the late 1990s during loyalty's "internet start-up bubble,” which is that without a correlated economic benefit to rewarding non-purchase behavior, the business model falls apart.
  • WIIFM (What's In It For Me) is the key to success. All marketers dream of the day when, without spending money, they can entice customers to "act now," a dream which is complete fantasy. Some current initiatives recognize the lessons learned from systematically cultivating purchase behaviors. Those who blend economic and emotional benefits to drive non-transactional behaviors are to be applauded. Yet, a surprising number of initiatives seem to assume that messaging alone can cut through the clutter and drive new behaviors. Good luck with that.

  • Participators are worth more than non-participators. A loyalty truism is that the bottom-line impact (customer retention and increased spending) correlates with the percentage of customers who engage in such non-transactional behaviors. Cultivating participation and repeated engagements in which customers delight in rewards and recognition pays off. The COLLOQUY Relationship Chain documented the evidence of this years ago. Instead of recreating the wheel, one must trust in its continued relevance while cultivating other types of word-of-mouth, healthy living and environmentally responsible activities.

  • Success requires continual communication and promotional zest. The avid early adopters are easy to reach and sway for now. For the rest, however, a solid, multi-channel communications plan to entice customers to act and repeat desired non-transactional behaviors is mandatory. Now is the time to institute an engagement strategy with a strong communications component.

Is this new generation of rewards and incentives for non-purchase behavior here to stay; or, are we witnessing the rapid inflation of the next loyalty "bubble" that will burst when practitioners fail to make a direct-enough link to the underlying economic motivation for encouraging such socially responsible behaviors?

To influence non-transactional behavior, sincerity is imperative. Mix that with rewards, recognition elements and relevant communications and – yes – it is possible to influence customer behaviors outside of the checkout line. One would expect that more than a few loyalty leaders have studied past failures and will take to heart their lessons learned; and, that these prescient loyalty physicists will find themselves not on the bubble, but on the solid ground of entirely new loyalty worlds.

Kelly Hlavinka is Managing Partner at COLLOQUY, a LoyaltyOne Research Group.
Kelly.Hlavinka@COLLOQUY.com