Why Airlines Need to Reconsider What “Loyalty” Is Today…

Repeat customers may indeed be more valuable to an airline than new customers over time, as they represent a steady stream of revenue at a reduced acquisition cost. But how much revenue does a carrier need to give away for “loyalty” before the economic benefit of repeat versus new customers is flipped around? The goal of a frequent flyer program is not to give things away to thank repeat customers. Used strategically, the overriding goal should be to generate more revenue from customers who are already brand advocates, while generating some revenue from those who are indifferent.

The Flaw of “Loyalty” Programs Today

Airlines seem to use the term “loyalty” interchangeably with “frequent flyer,” but these terms are not necessarily synonymous. Because of the vast discrepancies between carriers in terms of route structure, scheduling and pricing, and even a company’s corporate travel policy, a passenger’s airline selection often has far more to do with these variables than any sense of loyalty or personal preference. Tools now exist to enable an airline access to determine who each of their frequent travelers are—whether they are traveling for business or for pleasure, whether they work for a corporation or are a small business owner, whether they are located in a geographic region susceptible to a key competitor, or what elements of an airline’s value proposition have the most influence over them. Yet, airlines continue the lazy practice of basing any and every award, promotion or status based strictly on miles flown. Just as the strongest branding messages come from advocates themselves, as opposed to push marketing messages, the strongest loyalty is bred from positive experiences, not concessions.

How Social Media Can Help

Social media is facilitating that paradigm shift, and we are today witnessing the evolution from loyalty based on the premise of rewards or giveaways to loyalty based on experiences. Besides allowing airlines to create memorable experiences more consistently, by knowing their customers better, social media also facilitates the repeated communication of those experiences. On Twitter, for example, an airline can redistribute a positive comment it received to each and every one of its followers with one simple click. By using social media to dig deeper into the qualitative elements of traveler profiles—emphasizing who they are and why they are flying as opposed to simply how much—airlines have a golden opportunity to influence more desired customer behavior while giving less away. The strongest “loyalty” programs of tomorrow will not actually reward anything, instead offering strategic, targeted benefits to induce specific, revenue-generating actions.

A Real-World Example Today

A great example of this is currently in play with Estonian Air’s innovative AirScore rewards program, powered by Manumatix’s Bamboo platform, which enables users to earn real-world rewards by influencing their peer networks. I helped launch the program with SimpliFlying in October (read about it here), and while I do still have some questions about the long-term viability of this type of rewards program, it is definitely a step in the right direction in terms of how airlines should view true “loyalty.”

NOTE: The majority of the above article is an excerpt from the whitepaper, Getting Over Airrogance: How Airlines Can Live Up to the New Realities of Customer Engagement, in the Age of Social Media, which I published in conjunction with SimpliFlying a few months back.



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Customer Engagement Strategy for the Airline Industry