This article originally appeared on Rich Tehrani’s (News - Alert) blog at http://blog.tmcnet.com/blog/rich-tehrani/marketing/rewards-network-the-social-restaurant-hub.html.
In the last few decades it has become apparent that all companies are for the most part limited by their imaginations. Apple was thought to be a computer company but is now a leader in music, movies and phones. Amazon went from selling books to everything – even its servers are for rent via its cloud-computing solutions. Google (News - Alert) went from search to purchasing Motorola Mobility and is well known for being involved in many projects from solar to self-driving cars and the television space.
But an airline? Certainly they aren’t adapting to the new competitive landscape – after all, many of the airplanes we fly on in the U.S. were built in the 1960s when the cloud was defined as an IBM System/360 mainframe.
American Airlines has been a pioneer in loyalty marketing since the AAdvantage frequent flyer program was launched in 1981 and as a result its successful marketing concept spread to many other industries from toys to greeting cards.
The airline took a page from its own book and runs an AAdvantage Dining program which allows members to earn points good for travel and other services. This isn’t unlike agreements AA and other airlines have with credit card companies where a percentage of the money spent is converted to airline points or miles.
The company just announced a new program called the Get Ahead Bonus promotion where participants are eligible to earn two American Airlines AAdvantage bonus miles on every dollar spent after $75. The offer is good until April 30, 2012 and typically participants would get only one mile per dollar spent. The promotion is actually a bit ambiguous as it also says you can get up to seven miles per dollar between now and March 31st but let’s stipulate you will get more miles than usual to get us back to more interesting topics.
And the fine print does get interesting as the company encourages you to be social – you are to submit dining reviews between now and March 31st, 2012 to get your extra points.
So here we have an airline that has obviously embraced restaurant rewards and now has found a way to incentivize users to be more social by providing reviews.
The company behind this dining program from American Airlines is Chicago-based Rewards Network, an organization with over 3.4 million frequent diners according to their website. It was founded in 1984 as Transmedia Network by Mel Chasen and at that time had only 225 members. It has become a major force in Airline loyalty card/ restaurant programs and partners similar initiatives at America West, Continental, Delta, US Airways among others.
I spoke with Megan Flynn, the Senior VP of Marketing at Rewards Network and she told me the company has an open network philosophy – sharing data and reviews with not only their partners but with social networks. She says there will be some announcements soon regarding new content sharing partners.
She likens her company’s service to a “secret shopper” experience where you know the review is from a person who actually ate at the restaurant. You see, the way the program works is it matches credit card numbers to ensure customers get credit for eating at a particular establishment. So the company has not only credit card information but email addresses.
She contrasted this to other sites where reviews can be posted by anyone – there is really no quality control. And the review numbers are staggering – over 50,000 restaurant surveys are completed each week according to Flynn.
To me some natural partners are Google, Facebook and Microsoft (News - Alert)/Bing – Yahoo would make sense as well. Google might be a likely acquirer– remember they have Zagat and they also launched Nosh which isn’t that far from the Rewards Network concept.
It’s interesting, Facebook (News - Alert) quotes 483 million “active” users – but we know the numbers are fudged (or at least exaggerated). And even if the real number is so big, how do we know if any of them have spending power? I’ve said repeatedly that having a U.S. real unemployment rate somewhere between 18-30M is part of the reason for Facebook’s success. Are these the buyers a restaurant wants or needs?
Then we have the Groupon business model – daily deals emailed to members and as a result the company has a valuation of about $15.5B!
What is the value of millions of members of a restaurant program who actually spend money? In 2010 the members spent almost $700M in fact. We aren’t talking chump change here. Imagine the potential to grow this business as an even more social company where it starts to get the buzz of a Yelp or LinkedIn (News - Alert).
Seems to me Rewards Network is really one of the most underreported stories out there and as long as it can continue to take an industry as stodgy as the airline space and make it social and interactive, imagine the potential it has to transform other markets and industries.