How to Keep a Customer Loyal Forever. Yes, Forever. Seriously.

My friend and colleague Joe Pine recently phoned me with the news that he had shared the stage at CES with Arnold Donald, CEO of Carnival Corporation, the big cruise line holding company that operates Carnival, Princess, Holland America, Seabourne, and several other brands.

At CES, Donald announced that Carnival would be launching an innovative way to ensure that every cruise passenger’s experience was increasingly personalized, by using technology to learn each passenger’s preferences and desires as the customer expressed them, and then to reflect these preferences immediately in all of a passenger’s upcoming interactions and activities. In essence, Joe told me, Carnival’s new “Ocean Medallion” program, scheduled to be rolled out in November on one of their Princess ships, was exactly the kind of thing we predicted 20 years ago when Joe, Martha Rogers and I jointly authored a Harvard Business Review article, “Do You Want to Keep Your Customers Forever?”

In the article we suggested that as interactive technology became ever more sophisticated, companies would eventually be able to keep customers loyal by creating what we called “learning relationships” – customer relationships that learned customer preferences and adapted to them in real time. Moreover, we said, with a learning relationship the customer’s loyalty would likely increase even if a company’s direct competitors offered the same exact personalization services:

“The more customers teach the company, the better it becomes at providing exactly what they want—exactly how they want it—and the more difficult it will be for a competitor to entice them away. Even if a competitor were to build the exact same capabilities, a customer already involved in a learning relationship with the company would have to spend an inordinate amount of time and energy teaching the competitor what the company already knows.”

Joe called because Carnival Corporation’s Ocean Medallion program is designed to build learning relationships with individual cruise consumers. Each cruiser will be issued a one-inch diameter water-proof Ocean Medallion that they can carry in their pocket, strap on as a wrist band, or wear as a piece of jewelry.

The Medallion will serve as a room key, a payment mechanism for all cruise purchases, a sign-in verification various computer screens around the ship, and a ticket for all cruise events, games, or activities. It will also track the holder’s location in the ship, so with a smartphone app families or groups can rendezvous with other members of their party, parents can see where their kids are, and networkers can keep track of friends they connect with during the cruise. With the Medallion you’ll be able to order a drink or a snack from anywhere, and the waiter will be able to find you even if you’ve wandered off to another deck, or to the other end of the ship.

Moreover, if you’ve ever done a cruise yourself then you know that one of the biggest headaches is the initial embarkation process – gathering in a large hall with your passport and other papers, then waiting in line to get everything inspected and stamped. But with the Ocean Medallion you’ll be able to pre-load all your documentation (while at home, via the app) and simply walk on board! (Talk about frictionless!)

The point is, this program will make it much more convenient to be a cruise consumer, as every cruiser’s experience becomes increasingly personalized, in real time. To quote John Padgett, Chief Experience and Innovation Officer for Carnival Corporation, “With the Ocean Medallion, the more you engage in your vacation journey, the better it is. From the moment of your first engagement, and even more over time, you'll have richer and richer experiences, crafted and created just for you.” (For a 4-minute video outlining all the features of the Ocean Medallion program click here.)

But the benefits for the cruise line itself are immense, also. Start with the fact that the vast majority of cruising consumers are repeat customers. Cruising is a rapidly growing category, but 90% of first-time cruisers say they intend to cruise again in the future. And while every individual cruise must come to an end at some point, an Ocean Medallion customer’s data will persist. So a repeat cruiser will no longer have to re-specify their preferences or “teach” the cruise line anything – except to the extent that their preferences have changed since the last time around.

This means every second-time (or fifth-time) cruiser will soon be able to enjoy a highly personalized experience from the very beginning. They won’t have to re-load all the embarkation information they provided the first time around, either – assuming, of course, that they remain loyal to the cruise line they started with.

For a large, multi-brand cruise company like Carnival, the data can be ported from cruise line to cruise line within the group. So even when other lines begin to imitate Carnival’s Ocean Medallion, a Carnival cruiser will still have an incentive to stay within the Carnival family, rather than having to “start over” with some other, non-Carnival line that hasn’t yet learned how to personalize this cruiser’s experience.

According to Padgett, “in the future, the Guest relationship and the associated experiential intelligence can be extended between ships within a particular cruise line brand and ultimately across all 10 brands across the corporation to power experience delivery. So long term, whether you sail on Princess Cruises, on a Holland America ship, or a Carnival vessel, Ocean Medallion will be able to maximize your experience.”

Bottom line, here’s the takeaway lesson for your business:

Give your customers the opportunity to teach you their individual preferences. Remember these preferences and tailor each customer’s offering accordingly. Keep doing this, and the more the customer teaches you, the more loyal that customer will be, no matter what your competitors do!