Popular programmes – what is the secret?
LOYALTY programmes have
been a great success
story across every sector
of the travel industry, from
airlines to hotels and carrental
companies. Every year
membership increases, with
more and more travellers
signing up for multiple
programmes.
Despite the undeniable
popularity of loyalty
programmes, their
effectiveness has been
questioned by travellers and
travel agents alike. “Hardly
any loyalty programme
providers keep all of their
promises, the price of which
can be high, sometimes
leading to the exact opposite
of the intended effect,
actually creating dissuasive
behaviour and making
customers turn away,” says
Ravindra Bhagwanani, md
of frequent flyer programme
management company,
Global Flight.
To be successful, loyalty
programme providers
must possess a good
understanding of the end
user and their needs.
“Important is not to offer
a long list of benefits that
the average traveller is not
going to use,” says Wilma
Van Vuuren, head of yield
management for Wings
Travel Management. She
says the average traveller
should be able to appreciate
each benefit, examples of
which include private lounge
access, extra baggage
allowance and preferred
seating.
“Loyalty programme
providers differentiate
themselves through their
ability to go the extra mile
in ensuring that travellers’
unique preferences are met,
which means that concierge
services are invaluable,”
adds Wilma. “They also
need to cater for unforeseen
circumstances such as flight
cancellations, as a result
of which members need to
be advanced to the top of
waiting lists, or emergency
situations during which they
need to depart quickly. The
loyalty programme should
also feed into the provider’s
GDS, offering better rates
for hotels and transport to
valued members.”
Airlines’ strategies for success
AIRLINES around the globe
are trying to come up with
relevant and engaging
loyalty propositions in
an overcrowded loyalty
environment, says Suretha
Cruse, SAA executive of
customer loyalty.
To achieve this, Ravindra
maintains that transparency
is key. “Aside from the
basic requirements such
as accurate crediting of
miles, I believe the two
factors critical to success
are transparency of the
programme rules and the
ease with which miles can
be redeemed for flights and
other awards.”
Wouter Nel, head of
sales and marketing for
Southern Africa at Air
Mauritius, agrees, saying
that Air Mauritius has
made redemption as easy
as possible through a
dedicated Customer Loyalty
Centre as well as an easyto-use
online system.
“Technology plays a
significant role in loyalty
programmes,” he says.
“Customers would like
access to their miles and
redemption process online
in a seamless manner
that they can control. Air
Mauritius does not have
a select few ‘miles’ seats
like other carriers; instead
a passenger who qualifies
for a free ticket will receive
their free ticket based on
availability.”
Suretha maintains
that there is a growing
awareness of the
limitations of the legacy
mileage-based FFP models
due to an increase in
the line-up of partners
promoting greater customer
participation, which then
puts more pressure on
the limited award seat
inventory of airlines that
was initially intended to fill
empty seats.
The SAA Voyager
programme changed from
a mileage-based to a fully
fledged revenue-based FFP
in February this year. “The
move was geared towards
becoming more generous
and enabling transparency
and fairness in the
accumulation of miles
(one mile for every R1,60
spent). In other words, for
R10 000 spent on an SAAoperated
flight, members
will earn R500 (6 250
miles) to spend on a future
SAA-operated flight.”
Suretha admits that
moving from an ‘instant
gratification’ model (accrual
of miles/points based
on distance travelled) to
a ‘delayed gratification’
model (accrual of miles/
points based on uplifted
pro-rated sectors flown)
has necessitated a
significant mind-set change
for mileage junkies. She
says the most frequently
asked question is whether
customers are benefiting
from a revenue-based FFP
model. “The short answer
is ‘yes and no’,” says
Suretha, explaining that
high-yield customers will
praise you for rewarding
them equitably, whereas
low-yield customers will feel
deprived.
In South Africa, SAA’s
revenue-based programme
seems to have been widely
accepted. In a recent
survey run by TNW’s sister
publication eTNW, over
120 agents voted that SAA
had the most effective
loyalty programme, followed
by Emirates and British
Airways; 36% of agents
voted for SAA, claiming the
programme was popular
with clients as it offered
a considerable number of
partner airlines through
which points could be
redeemed. This, in turn,
makes finding seats
hassle-free when using
miles.
Emirates received 32%
of the votes, with agents
saying the programme
allowed travellers to
accumulate points
more quickly than other
programmes. The ease of
use of the online system
was also a big advantage
for agents.
Hotels should offer real returns
USABILITY is equally important
in the hotel sector. “The
programme should be kept
simple and easy to understand
from a consumer perspective.
Therefore, the customer value
propositions need to be clearly
defined and, most importantly,
there should be guaranteed
redemption of points or the
loyalty programme currency,
no restrictions,” says Nicholas
Barenblatt, group marketing
manager of Protea Hotels, part
of Marriott International.
It would seem that Protea
holds the secret to success
of hotel loyalty programmes
as 39% of travel agents
participating in the eTNW
Loyalty Programmes Survey
voted Protea as the top loyalty
programme in SA, saying it was
a good-value product, frequently
offering customers free
accommodation and meals.
Tsogo Sun came second with
17% of the votes. One agent
said the Tsogo Sun programme
was easy to use, as no
conversions were needed, with
one point equalling one rand.
Hilton came third, receiving
16% of the votes. “Hilton
always accomodates and gives
upgrades to members without
clients even having to ask,”
said another agent.
Nicholas says it is important
to remember that loyalty is
not about how members
demonstrate their loyalty to a
brand but rather about how
the brand recognises and
serves the members, based
on their loyalty and value. For
this reason it is important to
improve the programme yearon-year
to remain relevant to
the ever-changing consumer
needs, he maintains.
Car rental – promises must be kept
TRAVEL agents favour Avis
when it comes to car-rental
loyalty. In the eTNW survey,
76% of travel agents said
Avis had the best loyalty
programme, with clients
raving about it. Reasons for
this success, according to
agents, are the friendly staff,
great global rewards and
easy upgrades. Second place
belongs to Europcar with
16% of the votes, followed by
First Car Rental and Hertz,
each with 4% of the votes.
In August this year Avis
completely revamped its
loyalty programme, allowing
travellers to advance
through the programme
from Avis Preferred to Avis
Preferred Plus and Avis
President. Lance Smith,
executive director of sales,
says, whereas before the
membership of the Avis
President programme was
through invitation only, clients
can now move up the ladder
to earn more rewards.
Although Avis demonstrates
constant innovation when
it comes to its programme,
Lance rather attributes the
company’s success to the
consistency and reliability
of the global programme.
“While innovation is
important, consistency is
even more important. What
you promise, you must
deliver. Not delivering on
your promises will destroy a
loyalty programme,” he says.
First Car Rental
executive head of strategy
development and marketing,
Melissa Storey, says the
biggest mistake car-rental
companies can make is to
become paralysed by data
complexity. “Those who
succeed will be the ones
who can consolidate their
digital activity within one
technology platform and
who can then harness multichannel
data-driven insights
to develop powerful targeted
campaigns that, because
they are both personalised
and relevant, produce
smarter results.”
New loyalty programmes shift buying patterns
DURING the past year, a
number of airlines have
made radical changes to
their programmes, rewarding
spend instead of miles flown.
Ravindra Bhagwanani
says this move could push
formerly loyal travellers to
no-frills airlines. “Customers
who perform badly according
to the new systems and who
have no hope any more of
ever making it to the elite
level, for instance, now have
less incentive not to transfer
their loyalty to an LCC.
Moreover, if the LCC offers an
attractive FFP, the motivation
to shift loyalty becomes even
stronger.”
“The switch to LCCs has
become more prevalent
because of the cheaper
fares. One can now purchase
two tickets on these carriers
as opposed to one high-cost
ticket. The redemption of
points is not always possible
as seating is not always
available during peak and
holiday seasons.
“However, it is still cheaper
to utilise LCCs and then
spend the savings on
confirmed seats for these
peak travel periods,” notes
Wilma Van Vuuren.
She adds, however, that
the changes to loyalty
programmes will also see a
change of buying behaviour in
favour of the legacy airlines.
Wilma says, in the past, FFPs
were simply taken for granted
while the miles simply rolled
in. “Now, every penny has to
be turned over three times,
so clients have become more
attuned to the fine print and
rules of loyalty programmes.
Consequently, clients are
sometimes willing to pay
more for airline tickets if they
can earn more loyalty points
in the process. They are even
changing their travel routes to
comply with airline terms and
conditions for more points.”
Airlines that have made
the shift to a rewards-based
programme are optimistic
about the change. “Changing
to a revenue-based FFP
has not resulted in a shift
of business to the LCC but
rather solidified support
from high- and medium-yield
frequent flyers belonging to
the FFP ,” argues Suretha
Cruse.
Delta agrees that its
updated SkyMiles programme
has been to the benefit of
its customers. “In the first
three months of 2015, in
direct response to member
feedback, Delta made 50%
more Award Seats available,
giving members more options
when they travel,” says
Jimmy Eichelgruen, Delta’s
director of sales for Africa,
Middle East and Indian
Subcontinent. “Following
updates to our programme,
more members have been
able to redeem miles through
the availability of more
reward seats and lower
redemption levels.”
