Miles to Megawatts
Mark Lacek and Peter Brennan have built their expertise in the travel business, but telecommunications companies, banks, oil companies, and retailers also have used loyalty programs to build their customer bases. Brennan says that loyalty programs are particularly attractive to companies in industries that have recently deregulated, as airlines did in the early 1980s. Loyalty programs, either as standalone operations or in partnership with airlines (by offering miles), are an effective way to grab attention and market share.
In recent years, as Lacek notes, actually being able to redeem one’s miles for a flight has become more and more difficult: as cost-strapped airlines cut back on the number of flights, demand has led to an increase in the number of miles required for the most requested awards. The idea behind Lacek’s MilePoint business model was to trade in your miles for merchandise.
That said, frequent-flyer programs are still flying high (as the recent film Up in the Air makes clear), and loyalty programs in other businesses are flourishing. One of Denali’s most promising markets is energy, another deregulating industry. Many states are allowing customers to purchase power from a marketplace of companies, instead of solely from a local utility.
For Great River Energy, a Maple Grove–based wholesale electricity distributor, Denali set up an instant rebate on the purchase of any eligible energy-efficient refrigerator or clothes washer, including free recycling of customers’ old appliances. Denali designed online and print ads and statement stuffers to promote the program. It also performs the analysis to help Great River determine the cost per kilowatt-hour and the number of kilowatt hours saved.
How does this fit the loyalty program idea? “Think of it as loyalty to the environment,” Denali President Margaret Murphy says. “We want to drive and reinforce continuity with people to recycle wherever possible. Our focus is to help them see that loyalty to the environment is as important as loyalty to their favorite brand.”
And if that eco-loyalty extends to the brand, that works, too.