Bold statement, of course. But with a string of datapoints to demonstrate, it is no wonder travel brands are urged to think of social media as more than a one-way marketing channel.
Some factoids to consider:
- There are more airlines on Twitter than carriers with frequent flyer schemes (191 versus 179).
- Nearly 90% of frequent flyers use Facebook regularly, with 65% having joined an airline’s fan page on the social network.
- 72% of frequent fliers would join a social loyalty scheme.
- Around 65% of frequent fliers want to earn social loyalty points by performing location check-ins or contributing to an airline’s Facebook page.
- Four out of five frequent fliers think they could receive loyalty points by recommending an airline to a friends or providing positive feedback.
Now while so-called “social loyalty” schemes are still in their relatively infancy, clearly there is a desire by travellers to engage via social media with either a favoured brand (leisure travellers) or accrue and manager point programmes in a different way.
And with the new version of Facebook tipped to change how its 700+ million members not only interact with each other but travel brands and icons, perhaps the classic loyalty scheme will be completely overhauled in the long term to account for social media being an constant presence in the lives of many on the web.
Here is a great infographic using data from a Simpliflying and Cranfield University study to illustrate:
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About Kevin May
!! interesting
This is a great post. Do you have similar data for hotels? It would be interesting to see it.
I wanted to know exactly the same thing Shane! So??
“Consumer loyalty in travel” and those who are frequent flyers and will do anything to get ‘loyalty’ points as it saves them – potentially – cash on their next adventure are two different things. Not so sure the high percentage factoids would span across the board.
I think the facts are invalid.
@andrew – why?
I’m guessing it’s the data on user-behaviour.
More than 50% of flight bookings are done through airline websites? No way.
The infographic looks great, but using a small survey done by a University (possibly by kids on campus) – can lead to misleading data and therefore misleading conclusions.
Bold statement indeed but a little over the top. Loyalty remains around the product and the price (i.e. the way you reduce it through miles etc.) and the brand experience. Social is a new way to communicate around some of these, a crucial and generally effective one, but no one will get on a plane just because of the Facebook page.
Social is a crucial layer in online marketing and online commerce in virtually any vertical and is destined to remain that. But it does not replace the core – product / service, pricing and branding.
@Nadav – Take your point that traditional airline loyalty has been about the product/price and experience. But if you look at new models, like Aeroplan (Air Canada) and Multiplus (TAM), you’ll realize that not only are they highly de-linked from the airline product/experience, but their aim is to make revenues from loyaty program’s base, but not necessarily for the airline.
This is where the social media model fits in well – it’s not just about marketing the core product or increasing seat redemption. But if I can share a post on Facebook about my last trip, earn 100 points for it, which can be redeemed for a vanity badge or an Amazon giftcard, why not? That’s what 72% of travelers are up for doing. What do you think?
@Shashank – It’s an interesting concept, and I’m with you that social media and loyalty programs should somehow be linked. However, I’m not seeing a lot of creative ideas out there. I think we first need to define exactly what is “social loyalty”.
In your example, that single facebook impression is not without its cost. Airlines typically value a mile at somewhere around one US cent – fully allocated and discounted for breakage. These are real costs and go on the balance sheet as debt. A 100 mile award is about $1 in cost. Now, to those on the outside of the airline business, that sounds like a trivial amount, but to airlines its actually a lot – almost as much as the internal system cost it costs for one passenger flight segment.
One concept that is at odds with loyalty programs is confidentiality. Airlines view the list of their list of loyalty members as one of their most precious assets and tend to be very protective of it. Now imagine that airline giving their best customers incentives to self-selectively volunteer their FFP identities (and travel patterns) for the whole world to see. The really smart airline would be aggregating those check-ins and postings of known frequent fliers that his competitor just paid $1 for and building profiles and target marketing against them.
Airlines are tough customers. Vanity badges are fun, but in this tough economic environment, you need to focus on what really drives customer value, and ultimately the bottom line.
Agree with @Nadav about the core remaining the most important elements. With all these being equal, however, the social factor can make the crucial difference. Social graph influence will only increase going forward.
I absolutely agree with this – the future is social. Everyone hated customer service because they weren’t getting any service and on hold/phone for ages. Make those complaints public and hey-ho, the CS team are working into overdrive. In addition, they’re tracking the public traits of their guests, giving them great quirky relevant gifts (say when they’re boarding a flight) and really generating that loyalty that a phone call with a non committal CS rep who hates his/her job would never be able to achieve. And non-CS loyalty does ensue – how many times do people not open a monthly newsletter? But create a great social promotion and everyone’s all over it like white on rice. I’m all for it, obviously
The quality and seriousness of intent of the loyalty scheme is the single most important factor, certainly for hotels. I don’t get the statement at all. If I asked a customer – would you go onto my website to earn points for your loyalty scheme, they’d probably say yes. Social is not the raison d’;etre, its merely an en engagement/communication channel.
The first thing hotels and travel companies have to do to runs successful loyalty schemes, is to be loyal to the customer, then they will get (perhaps) loyalty from the customer. its a two way street. these fundamental principles are far more important than the carrier (social in your article). And in the day of the deal, loyalty in many cases has flown right out the window. Groupon customers are loyal to Groupon perhaps, but certainly not to the hotel. Many many hoteliers have pointed this out to me.
Robert,
It seems from your comment that what you think is at odds with what we’re saying. Let me explain how it isn’t.
“The first thing hotels and travel companies have to do to runs successful loyalty schemes, is to be loyal to the customer, then they will get (perhaps) loyalty from the customer. its a two way street. these fundamental principles are far more important than the carrier (social in your article).”
PRECISELY. We’re saying that social media will offer alternatives to run BETTER loyalty programs or better ways to drive loyalty. And as we’ve seen throughout the last year or so, airlines especially have been playing the loyalty game very well through social media by engaging customers. What we’re saying is that traditional loyalty programs will be shaken up in the face of social incentives offered by innovative airlines in social media.
Take an example. Am I more likely to fly your airline if you give me a free baggage coupon for 3 checkins in 6 months or if you offer me 1500 miles per flight which will be of use to me only after I’ve earned at least 25,000 miles? See where we’re coming from? Social media is empowering airlines by GIVING them the TWO-WAY street you’re talking about – giving even ordinary customers a connection to the airline (check KLM Surprises if you don’t believe me) rather than just the guy who flies 10 times a year. Why not incentivise it for the guy who has a huge following on social media but flies only 3 times a year?It can only be beneficial for the airline.
Nobody is refuting that social media will be the channel. That is what “powered by” means. It will be a means, and perhaps the most important one at that.
I hear you for sure, but this is all hypothesis and the jury therefore is still out in my view as it is with countless theories out there on how social media, in particular Facebook, will be a game changer in hotel and travel marketing – - – - without even telling us the assumptions on which these theories are based.
I think you need to separate the strategy from the carrier, no amount of social media activity will make a hotel’s lousy loyalty programme into a good one., in fact it might make matters worse.And true, M might indeed tell the hotel how bad it is.
The recent F8 has done nothing to improve my confidence in Facebook going forward, and countless others have told me the same thing. I think it is still very dangerous to get carried away by all the prognostications.
@Robert. Interesting comment.
You’re right that about all the prognostications of course but I think we’ve all had time to calm down a bit around the hype over Facebook. Nonetheless, can I offer my 2 cents worth.
Facebook already is a Game Changer – literally one of the biggest game changers any of us have ever seen. I really mean that. And to talk about whether or not it will be a game changer in hotel and travel marketing is almost missing the point. It’s a massive game changer almost everywhere and it impacts directly at the heart of human behavior and this includes how we will all go about commerce – about how we will all go about an awful lot of our lives in the future.
What do you mean, please, by your ‘confidence in Facebook’?
When I look at my fellow commuters when traveling home and I see 70/80 % (it really looks like that!) of my fully-mobile fellow passengers on Facebook on their devices I’m inclined to see that as a more significant indicator in the future rather than the confidence level of a few people however well-informed and bright!
We need to just let go of our own interpretations and musings sometimes. It’s massive and it’s just going to get bigger and bigger and bigger.
There’s no reason to suggest that any given FF (or any other) model will work in Facebook or any other platform. But if I want to connect with anyone in whatever business I’d certainly start with the place where ‘everyone is at’ now.
And whilst these people are not necessarily the FF of today they will be the FF of tomorrow. There will come a time (sooner than many of us expect, possibly) where I imagine people going online and doing all sorts of ‘stuff’ for hours without ever leaving the (no almost OS-like) Facebook platform.
And will soon have to stop talking about Facebook as ‘Social Media’ (with all it’s old connotations). As I indicated above, it could well become some kind of parallel platform almost akin to the ‘internet’ itself. (That might need more explaining at some pointy)!!!
Cheers
Carl
I came across this, http://www.hotelmarketing.com/index.php/content/article/the_future_of_loyalty_programs_will_be_powered_by_social_media/
Powered by, perhaps, ‘is’ – not
Social Media is changing everything, it will be interesting to see how it effects consumer loyalty.
I would like to posit a different hypothesis to the conclusions presented here.
Frequent Flyers who are avid members of FF clubs have a nick name. Point Hounds (there are many less complimentary terms). One of the first question you have to ask is whether the FFs are truly social or if they are just indicating that they would sign up to get more points. I think the last bullet pint is indicative of the user community.
As a Frequent Flyer (flying more than 200,000 miles a year for the past 8 years) I can attest that many of the people I see who are frequent flyers are always chasing the optimization of their points. Call it a game that they (me included) play. In many cases true FFs are playing with other people’s money – their clients or their companies are picking up the tab. This is somewhat of an unnatural situation but a regular one none the less.
The social nature of Frequent Flyers – the true road warriors – (Defined usually by 20+ trips a year) is not measured in positive terms like loyalty, I believe they are a noisy quarrelsome lot. Just read the rants at Flyertalk.
I would challenge the statement about the number of airlines who have Frequent Flyer programs. This is a somewhat spurious point – apples to pears – as the issue should be the number of people and the number of potential currency stored in these programs. An interesting question to ask in a survey would be – “how many frequent flyer miles would you think your Facebook page is worth? If I gave you 25,000 miles would you give up your use of Facebook?
As with many statements I remain somewhat skeptical of surveys vs monitored behaviour.
However the premise of the article is whether or not Social Media is the Future of Loyalty. I believe that there will be a Social component in Airline Frequent Flyer programs. Is this the future and to what extent is not clear and I don’t think will be clear ever. There is little loyalty amongst shoppers of airline products. The number of sites visited by consumers shopping is frequently quoted at 20. That hardly implies loyalty in any shape or form.
Underneath it all there is a dark underbelly to the airline product lines. The lack of Trust in the offerings and the belief that there may be a better deal elsewhere drives consumer behaviour and Social Media will hardly change that. Rather a more fundamental approach to engendering loyalty is required. That is that there needs to be Trust in the offers. The airlines today can have a minimum of 6 different “Truly correct” prices for the identical product.
The airline’s website
The airline’s call centre
Each of the 4/5 GDS powered results
And there are many more ways that the prices can be different
One big reason the pricing is different is because the engine that powers them has different logic. The differences can be small or large. That is a limiting factor that no Social Media process will ever be useful in building loyalty.
Loyalty and Trust are built on basics. You cannot fool all of the people all of the time. If only there was a definitive single (or common) right answer, then loyalty would be built on fact. That would be a very different world
Cheers
Read http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=159508&nid=131634#comments
There is an alternative view you know.