Loyalty Programs testing Social Networking Waters

Stanley Milgram originally coined the term ‘six degrees of separation’ in 1967 to underscore the fact that everyone in the modern world was capable of connecting to another like soul based on common interests. But in today’s world of social networking, links between strangers are much closer than in Milgram’s day, and Kevin Bacon’s circle of influence may have shrunk dramatically.

A new study from the European Mobile carrier O2 asserts that the old ‘six degrees of separation’ may have been reduced as much as fifty percent. By his calculations, due to the new world of Web 2.0 and the social networking capabilities of the internet, today we may be talking about only three degrees!

According to this study, the average person is now connected by just three degrees within a shared “interest” or social group. In fact, it determined that people are usually a part of three main networks: family, friendship, and work.

It should be noted that the research is not the epitome of a real scientific study since O2 did pay for the research. And anyone who has a LinkedIn account knows that their potential contacts could be more than three degrees away, and they may need to be introduced by others, who they barely have an acquaintance. But the study does underscore something we all know now more then ever before, everyone is connected (even if only tangentially).

On the other hand, another study from Synovate via eMarketer claims that only 42% of consumers know what social networking truly entails.

In any event the Social Networking space in the airline and hotel industry is beginning to gain traction. While Hyatt has rolled out Yatt’it for its Gold Passport Members, Starwood has debuted with TheLobby.com, designed to update and involve Starwood Preferred Guests.

It's their "foray in the 'social networking' world," stated a Starwood spokeswoman. "The most important thing for travelers is word of mouth ... other people's experiences," not just the accumulation of frequent guest stay points.

According to a recent report from comScore Media Metrix saying that while the growth rate of many top Internet sites is cooling, it's soaring for sites focused on social networking, blogging and forums pertaining to hotel visits, destination experiences and personal accounts.

Up till now, there has been unfortunately only negative situations when traveling by air that warranted travelers banding together in a community. Regrettably, it occurs when they are distressed by flight delays, lost luggage and/or airline personnel indifference. Apart from the "community" of frequent flyers, the airline industry has typically not risen to the occasion of de-commoditizing their service nor fostering social interaction between passengers.

In turn, aggregators have spawned to fill this void. One such community is FlyerTalk.com. This and other sites like it are dedicated to travelers sharing tips with one another on how to manipulate the system, travel smarter for cheaper, achieve preferred status in frequent flyer programs faster, or simply talk about the airline industry from a traveler's point of view. Again, the community is talking around airlines and not with them.

KLM has a different vision, launched through several social networks - including ones targeted at entrepreneurs and business travelers in China and Africa, as well as a robust social network all about golfing where travelers can enter their destinations and scores, use miles to purchase golf related merchandise, and even book golf get togethers with other travelers that happen to be in the same location.

The way that KLM has done these (and presumably will do others as well) offers some interesting lessons to other struggling airlines on how to better connect with customers by using social networks:

1. Offer what business customers are interested in. If you are going to see mom and dad for a week, you probably won't be interested in social networking with other golfers or business folks. The beauty of focusing on business interests here is that it is not only more useful, but obviously more profitable for KLM as business travel is where the higher margin tickets are sold. For that reason, every airline is trying to stand out for business travelers. But when everyone offers 180 degree flat beds and the same video capabilities - you need to go further. You need to offer something that no one else has, but that business travelers would be interested in.

2. Capitalize on existing trends (and the underlying meaning). The "trend" of social networks points to the underlying need for people to connect with other like minded individuals. Every successful social network has some element that allows it's users to do that. Being part of the club is a part of your identity - and the incentive is not a reward (as with frequent flyer points). The incentive is building your own personal network, finding a new golf buddy and perhaps even doing a new deal or two.

3. Understand what brings travelers together. Passion for a subject, whether it's work or golf is the primary reason, but there is another interesting insight KLM is using to its advantage here. For many business travelers (particularly those traveling internationally), there is a familiar moment of recognition and bonding when you find someone else in a strange place who is from where you are from. It explains the rise of strong expat communities in cities around the world, and the immediate bond with a "seatmate" who comes from the same city, and leaves on the same flight as you to the same destination. Focusing a social network on helping people to forge that bond is a what distinguishes social networking from other personalized offerings.

The traditional way to interact is face-to-face public forums. Social Networking is the next best thing to being there. Interactive technology makes it possible for people to network with their peers from anywhere globally, 24/7 in an online environment. And now that there only three degrees of separation, all the more reason to bond with your fellow man!

iOptimize Marketing is an Internet marketing firm that specializes in search engine optimization, search engine marketing and social networking. Because of the heightened interest in social networks, the firm has focused on a multitude of vertical markets that can benefit from the development of customized communities. A hotel brand of boutique hotels, a major domestic or international airline, an insurance firm, a university or a trade association are all viable candidates. Whether a membership body entails frequent flyers, brokers, agents, alumni or organizational members, a Social Network is the type of platform that can bring these firms affinity audiences together.

Ron Callari is the Chief Marketing Officer for iOptimize Marketing, Inc. and a veteran of the hotel industry for the last 25 years.

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