Hooray, So You’ve Got A Loyalty Program…Now What?

Frequent flyer programs (FFPs) are expensive. With a total value of outstanding miles in the hundreds of billions of dollars, not to mention the operational costs of implementing, managing and promoting the program, the fact that every major carrier has a loyalty program obviously means there isn’t much debate at the executive level that the return, measured in customer retention and repeat patronage, is worth the investment. And without question, the potential value of  a massive pool of active traveler data, combined with access to those travelers, both of which the FFP provides, is certainly worth the operational costs and the liability of billions of outstanding miles that carriers know will never be redeemed.

In theory.

In practice, however, the value depends on what a carrier does with that information and access, and this is where I sometimes question the value of loyalty programs. While they’ve all invested in a database, and have some kind of flat file of member data along with an agency managing a monthly e-mail blast, this brand of going-through-the-motions outreach is not differentiable, because every other airline does it. With most frequent travelers at least registered in multiple FFP programs, even if there is one that he or she uses primarily, chances are any generic message sent via a distribution list probably achieves zero retention, instead getting lost in the competing noise within the user’s inbox. In a nutshell, although the FFP application already asks for quite a bit of information, and offers all kinds of opportunities for creatively inducing the customer to reveal even more in terms of preferences, the only data that most carriers seem to use is the e-mail address, and maybe, for the more thorough ones, a snapshot of the number of miles the member has accrued with that airline at any given time.

No brand can stand out by doing exactly what every other brand does and communicating exactly how every other brand communicates. The loyalty programs that will prove to be most successful moving forward are going to be those that find a way to dig beyond the generic, one-size-fits-all marketing approach to its members. Sure, there are already different status levels prevalent in most FFP programs today. But offering lounge access to Customer A (who’s flown 25,000 miles on you in the past year) and a free checked bag to Customer B (who’s flown 15,000 miles on you in the same time span) is only scratching the surface of the potential for this segmented approach. Think Customer C is unimportant because he only flew one sector on you last year? Well, wouldn’t it be useful to know that he has Elite status on your primary competitor? Or that his entire extended family is based in your hub city? And what is Customer B telling his friends (and the world) about your brand? Or his awful experience at check-in? Or maybe the incredible meal he got on board? With the explosive growth of social media recently, it’s incredible what kind and quality of information is available with a few strategic clicks of a mouse (Facebook, anyone?). Or, in the case of Twitter, without even having to click a mouse. And, of course, the old fashioned method of simply digging deeper with the customer in the FFP sign-up process or while having he or she onboard as a captive audience in-flight. I can think of plenty of creative incentives to encourage active participation in this information gathering quest without hardly having to spend a buck.

So the fact that airlines recognize the value of loyalty and have created mechanisms for collecting and distributing high-level information is only the beginning of the challenge. Now, carriers need to start to assess if they are deriving as much value as they could from the access and information they have, and inch ever closer to using that data and access to communicate to their most important customers, of today and tomorrow, at a one-to-one level.


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Customer Engagement Strategy for the Airline Industry