The changing face of loyalty
THIS year an increasing
number of airlines have
switched from a milestravelled
reward programme
to an amount-spent reward
programme.
Although the trend is mainly
in the US, with Delta, United,
American Airlines and US
Airways pioneering it, the
rest of the world is expected
to follow suit. With the new
model, travellers earn more
miles when they spend more
money, not necessarily when
they travel more. The rewards
are also higher for elite status
members.
For airlines, the amount
spent is obviously a much
better indicator of who their
most profitable customers
are than the amount of miles
flown. A customer flying once
a year on a full-fare premiumclass
ticket is likely to be a
more valuable customer than
someone who flies 10 times
as much, but on cheap tickets.
For TMCs, the new loyalty
structure can become quite
a headache, as it tempts
corporate travellers to book
outside their travel policy. The
cost of loyalty programmes to
a company and the ensuing
non-compliance can be
considerable. For example, if
points are awarded based on
the ticket price paid, travellers
may consider booking their
ticket seven days in advance
of travel (when prices tend to
be higher) rather than 14 or
more days in advance.
An analysis conducted by
the US CWT Solutions Group,
Carlson Wagonlit’s consulting
division, confirms this trend.
It shows that as a traveller’s
status increases within a
loyalty programme, so does
the average ticket price (ATP).
The ATP for tickets booked by
travellers with airline status
measured 15-20% higher than
the ATP booked by travellers
without status on the same
routes.
Ben Langner, md of Carlson
Wagonlit Travel, says loyalty
programmes often come at a
cost to the company. “If the
corporate travel programme
is not closely managed,
certain traveller behaviour,
driven by participation in
loyalty schemes, may result in
conflict with the organisation’s
support objectives for
suppliers with whom they
have agreements. This may
result in the corporate missing
support performance targets
and, therefore, losing out on
rewards that may be in the
form of discounts, rebates or
added benefits.”
Most leisure travellers don’t
welcome the changes to
loyalty programmes either. A
survey by Colloquy, a loyalty
marketing firm, shows that
more than half of frequent
flyers, 58%, are confused
about how to earn or redeem
miles because of recent
programme changes. Almost
one-third of travellers say they
have switched airlines based
on changes to their frequent
flyer programmes.
Henry Harteveldt, aviation
analyst and founder of the
Atmosphere Research Group,
warns that if airlines want to
create loyalty, they’ll need to
introduce more perks. “Loyalty
is an emotion, loyalty is about
fidelity. What the airlines need
to strive for is to be the best
friend with the best benefits
so the customer will think of
the airline first and fly it even
if it is less convenient, more
expensive, or both.”
Adam Weissenberg, vice
chairman for US travel,
hospitality, and leisure at
Deloitte & Touche, says
airline loyalty programmes
are currently failing to engage
travellers. He is quoted in a
recent study conducted by
Deloitte, Rising above the
Clouds. Adam says 44% of
business travellers and 72%
of high-frequency business
travellers currently participate
in two or more airline loyalty
programmes. He adds that
two-thirds of travellers have
also reported that they are at
least open to switching to a
competing loyalty programme,
even after achieving highest
status levels.
According to Adam, there
is no overriding formula
when it comes to loyalty. “An
undifferentiated, one-sizefits-all
approach to loyalty
improvement will seldom be
fully successful because no
two travel cohorts, and no
two individual travellers, are
identical in what matters
to them in the air travel
experience, airline loyalty
programmes, and the manner
in which they prefer to engage
and be engaged. Airlines need
to embrace this fundamental
premise.”
He says if airlines want to
strengthen loyalty, they will
have to follow four steps.
They’ll first need to redefine
loyalty, and then they’ll need
to refocus on individual
customer preferences. Once
they’ve done that, they’ll
need to reinvent programmes
and experiences by making
rewards more meaningful
and provide more accessible
rewards. Lastly, they’ll need
to reinvest in foundational
capabilities and infrastructure.
Travellers want more choice
AS MOST airlines begin
changing their loyalty
programmes to truly reward
only their most profitable
clients, it’s not surprising
that travellers are becoming
increasingly dissatisfied with
the programmes.
According to a customer
engagement survey released
by loyalty marketing firms,
Colloquy and FanXchange,
more than half of American
members of loyalty
and frequent traveller
programmes (54%) are
unhappy with the options
offered by their loyalty
programmes and 48% of
travellers are frustrated with
the redemption process.
Pet peeves with loyalty
programmes included:
expired points (43%); not
having enough points to
redeem (39%); and reward
items not being available
(37%). The study also found
that consumers would
rather receive tickets for live
events, such as concerts or
sporting events, than for air
travel.
Other surveys and studies
point to the same trend. In
a recent WebFlyer survey,
81% of respondents agreed
that loyalty programmes had
‘got worse in rewarding loyal
customers over the past
25 years’. Ninety-three per
cent of respondents agreed
that loyalty programmes
were not serving loyal
customers but were
primarily a marketing tool.
Sharing rewards in the new trend
Several airlines have
started adapting their rewards
model to allow corporate and
frequent travellers to share
their miles with loved ones.
Air Mauritius recently
adapted its loyalty programme
to allow travellers to share
miles with a nominee (spouse
and children or father and
mother). Travellers can share
up to 50% of their travel miles.
KLM too now allows its
customers to transfer miles
into someone else’s account.
The new miles transfer service
makes it possible for travellers
to share their awards with
anyone they please, as long
as they are Flying Blue
members. The process is
simple and straightforward.
Clients can just tell the airline
how many miles they want
to transfer as well as the
Flying Blue number and last
name of the person they are
transferring to. Each block of
250 award miles transferred
will incur a €3 (R43) fee.
Did you konw?
Delta’s new loyalty programme will launch in 2015. Margaret
Copeland, commercial director Southern Africa and Angola, says
feedback from Delta’s elite members so far has been very positive.
Did you know?
Air Mauritius’s miles can be redeemed for upgrades,
free tickets, excess baggage, discounts on SIXT car rental, discounts on on-board duty
free, and more. The biggest advantage for corporate travellers still lies in upgrades,
says Carla da Silva, regional manager for Air Mauritius. She says corporate policy often
dictates that corporates need to fly in economy when the flights are less than eight hours
long. If the traveller has enough miles he can then upgrade his economy ticket, which
has been purchased by the company, to business class with his miles. She says: “Then
corporate compliance is adhered to and the traveller is happy sitting in business class.
Who should benefit the company or travellers?
LOYALTY is an issue that
has been debated for years
in the corporate travel
world. According to Monique
Swart, founder of African
Business Travel Association,
loyalty programmes have
always been a challenge for
travel buyers, with the core
issue being, who owns the
miles – the traveller or the
company that sends them on
business?
She says travellers argue
that they are entitled to the
rewards as they suffer the
discomfort of long travels.
Companies argue that travel
is part of the job description
and, as the company pays
for the travel arrangements,
the rewards belong to the
company.
For the airlines the matter is
clear. Loyalty miles belong to
the traveller. Carla da Silva,
regional manager Southern
Africa for Air Mauritius, says:
“Our loyalty programme,
like all others – whether
other airlines, a retail store
or a financial institution
– is designed to benefit
the individual and not the
company where the individual
is employed.”
Delta Air Lines' Margaret
Copeland agrees.
“Our passengers are the
members and we wouldn't
be part of any arrangement
between the passenger and
his/her company.”
Margaret adds that Delta
does have a web-based
programme for small
companies that do not have
enough spend for a corporate
agreement. “This programme
is called Skybonus. The
company manages the
programme online and there
are rewards for both the
company and passenger,”
she says.
Win with SAA Voyager!
IN CELEBRATION of its
20th anniversary, SAA
Voyager has launched a
promotion, giving members
the chance to win 200 000
miles. Members who fly
on any domestic SAA flight
in business class during
the months of October and
November stand a chance to
win by registering online.
Voyager is also
running promotions and
competitions from various
partners. These include
earning double miles from
Airlink; 10 000 miles from
InterContinental Hotel
Group; one million miles
from Seeff Properties; and
the chance to win up to two
free nights at Oceana Beach
& Wildlife Reserve – just to
mention a few.
Tangeble benefits drive loyalty
LOYALTY programmes still
drive allegiance, despite
what critics say, according to
Sharon De Leur, group loyalty
and direct marketing manager
for Peermont Hotels. “We
believe that tangible benefits
that provide real, added
value, coupled with excellent
customer service, drive loyalty
and therefore better business.”
Sharon says loyalty
programmes have evolved over
the past few years to provide
more relevant value by offering
increased personalised
and customised service. “It
has become mandatory to
offer access to a variety of
convenient, lifestyle brand
options, alliance partnerships
and tangible services that
appeal to customers’ specific
needs,” she says.
To achieve the necessary
level of customisation, clients
are asked to share their
details, likes and dislikes.
Sharon says: “Once customers
experience the value of
sharing this information, they
become more willing to part
with additional information,
further enhancing our ability to
tailor-make experiences and
customise services unique to
their individual requirements.
Of course, everyone is looking
for freebies or better value.
Aha-ThreeCities merger won't affect loyalty
THE acquisition of the Three
Cities Hotel Group by African
Hotels and Adventure (AHA)
will not affect the existing
loyalty programme.
Ruzandri Stoltz, marketing
manager for AHA, told
TNW: “Three Cities has an
established loyalty programme
that we will implement
across all AHA properties.
We will furthermore review
and enhance the current
programme, making it more
appealing to the customer.”
The Three Cities programme
has Silver, Gold and Black
tiers. Silver is free, Gold
costs R1 200 and Black
is by VIP invitation only.
Members can earn cash
back on accommodation and
receive exclusive travel and
accommodation offers and
discounts. They also receive:
further 5% discount on
advertised specials
free birthday accommodation
valued at about of R1 500
one night’s stay e-voucher,
also with an approximate
value of R1 500
A pay one, stay two nights
accommodation-only
e-voucher, valid for two
people sharing a double
room (value ±R1 500)
A pay two, stay three
nights accommodation-only
e-voucher, valid for two
people sharing a double
room (value ±R1 500).
