Rick Ferguson

For a useful metaphor describing China’s growing interest in loyalty marketing, look to the 2010 World Expo site, currently under construction in Shanghai. The Expo, which occupies over five square kilometers on both banks of the Huangpu River across from the city’s historic Bund area, will soon feature dozens of parks, pavilions and performance spaces. The Expo’s centerpiece will be the 160,000-square-meter China pavilion, designed to represent the concept of the "Oriental Crown."

The Expo’s web site features breathtaking images of planned buildings—think of them as the architectural equivalent of the opening ceremonies of the Beijing Olympics. But when you stand on Zhongshan Road and look at the site today, all you see are construction cranes, concrete barriers, tall wooden fencing and debris. The potential is there, but realizing that potential is some ways off.

So it is with loyalty marketing in China. Chinese marketers, both natives and westerners doing business...

Let’s just state right up front that what I know about running an airline could fit comfortably in a thimble. But since I have made a career of studying customer loyalty programs and their effect on the bottom line, I had to scratch my head at the quote from Doug Parker, CEO of US Airways Group Inc., in the March 25 National Post. The Post quoted Mr. Parker as saying that frequent-flyer programs hurt the industry because carriers give away too many free trips.
"There is no business that has a loyalty program even close to what the airlines have," Mr. Parker told the Post. "The amount of our product we give away is not consistent with generating returns for shareholders and providing stability for employees."
Now, again, far be it from me to tell Mr. Parker how to run his business, and if he says that the US Airways Dividend Miles program is hurting his bottom line, then who am I to disagree? So when I ask questions, I’m asking only in the hope that someone will school...

In 1995, Ethernet pioneer and 3Com founder Robert Metcalfe articulated Metcalfe’s Law, which states that the usefulness or value of a networked system equals the square of the number of users of the system. The most common example used to illustrate Metcalfe’s Law is the telephone: A single telephone doesn’t do you much good, but the value of your telephone increases as the number of telephones on the network increases. Purchasing a telephone makes other telephones more useful. The internet thus becomes the logical fruition of Metcalfe’s vision—every new node, server and user expands the possibilities for everyone else who’s already there.

This decade has seen a transformation of consumer marketing, driven by the real-world application of Metcalfe’s Law. Through the convergence of the internet, social networking tools and mobile communications platforms, the power of the network has become manifest in the explosion of conversations, referrals and commentaries by and among...

Not all of us have the time to complete four years of medical school and then four more years of neurological residency just to understand how brain architecture influences likelihood to respond to your loyalty marketing initiatives. After interviewing a number of neuroscientists and neuromarketers, as well as spending copious hours poring through Wikipedia, I now know enough to be dangerous. Here’s a brief primer on the structure of your customers’ brains.

Neurons: Neurons, cells in the body that respond to and transmit electrical currents, are the fundamental building blocks of the brain. Neurons pass information to and from other neurons through chemical synapses that form connections between these brain cells. Neurons are classified by their core function: sensory neurons receive and transmit signals from the eyes, ears and other sense organs; motor neurons send and receive signals from the body’s muscles; inter-neurons form connections between these other types. The...