Sky high loyalty: New ways airlines and travel companies can soar
NB: This is a guest article by Bram Hechtkopf, vice president of business development and marketing, Kobie Marketing
Given enough time mentors and mentees invariably swap roles. Students become the teachers. Industries operate under similar cycles. No truer is that the case then when it comes to loyalty programs and the airline industry.
Frequent flyer programs (FFPs) were once the pioneering vanguard of driving the passenger experience. Today, many legacy and low-cost carriers (LCCs) are striving to enhance the services they provide, by refocusing on travel as an experience worth being loyal to, and doing so in a way that adds value while remaining profitable.
In the past few years, the loyalty landscape has expanded far beyond the airport and cabin to become a vital component to a host of industries, like retail and hospitality. Their loyalty programs work because they keep the customer, their wants, needs and desires front and center.
And, some programs within those industries are beginning to embrace the omni-channel loyalty approach. Brands are streamlining and better integrating the channels through which they communicate with their customers by tailoring their messaging and loyalty membership needs accordingly.
Just as hospitality and retail have found new ways to drive loyalty beyond accumulated points, tiered services, or room upgrades, FFPs should be considered as just the beginning of a multifaceted airline loyalty experience, with newer initiatives needed to take flight.
Loyal to what works: Thinking Beyond FFP
Ultimately these approaches must mix, match, and combine with social media and the latest smartphone technology, branch out to other types of non-mile related rewards and broaden their scope beyond current frequent flyer stereotypes while capitalizing on status. The facts speak for themselves: globally some 9.7 trillion frequent flyer miles go unredeemed, according to a 2011 report by InsideFlyer and at 1.5 cents per mile, that’s valued at $145.5bn. What’s more, in 2007, some 39 billion points expired because of rule changes alone. Money left on the table in billions and a hefty percentage of unredeemed points are proxies that customers are looking for something beyond traditional FFPs.
Southwest Airlines uses real-time text messages to alert passengers if their checked baggage hasn’t made it onboard their flight. While not necessarily part of a loyalty program, it’s a type of service that engenders loyalty.
The reality is that today’s tech-savvy travelers demand more – much more. Armed with smartphones and tablets in record numbers – Apple sold five million iPhone 5s in its first weekend and overall US adoption rates exceed 50% – travelers of all demographics are familiar with social media and many expect that their preferred brands interact with them via this channel offering rewards. As has occurred in other industry verticals like retail, travelers increasingly seek an omni-channel experience and the freedom and flexibility to earn and burn their rewards as they choose.
In light of the frustration many travelers feel toward onerous airline rules against mileage redemption, loyalty programs might want to consider allowing preferred members to convert their points into real currency and have all of their user data metrics accessible via mobile and social media accounts.
Consider this: by the fourth quarter of 2011 alone, frequent flyers had mastered the wireless skies:
- 38% were on Twitter
- 88% on Facebook
- 72% used YouTube
- 63% had LinkedIn accounts
- 36% checked TripAdvisor
- 24% read blogs
- 18% accessed Flickr, the photo sharing site.
And while still in its infancy, some 24% of Twitter followers follow 1-5 airlines and 53% of Facebook users “like” 1-5 airlines as well. If this is where passengers already are, you can be sure it’s where airlines want to be too.
Booked, Bought and Sold: Where Passengers Have Already Been
But, it’s important to remember that before travelers were loyalty-eager passengers, they were customers and hotel guests. And passengers are heading in this new tech-centric loyalty-enabled direction because they’ve experienced these services in both the hospitality and retail sectors.
Nordstrom is a great example of loyalty’s new retail approach. Its Fashion Rewards program includes benefits like complimentary alterations, concierge party planning services, gift purchases and tickets to shows or weekend getaways. The system’s 1-4 tiered engagement is very similar to the type of passenger status airlines are looking to further promote.
Customers can further engage with the brand—through a free iPhone app—and via Twitter or Facebook, which boasts 1.5 million “likes” and features a playful (and clever) “excuse generator” citing reasons why someone should shop at their anniversary sale. The result is that their customers are actively engaged and intensely brand loyal.
Why? Because the brand has become synonymous with the experience it’s offering.
Just imagine how easily these loyalty perks could be adapted to the airline sector.
What if future airline loyalty programs included a type of concierge service that helped loyal customers plan and manage their trip, offering ideal destinations, times of travel or even a personal travel planner? Actually, airlines like JetBlue are already moving in this direction – thanks to smartphone technology.
There’s no reason why similar “out-of-the-cabin” thinking can’t apply to the airline loyalty space. Beyond JetBlue, the reality is that nearly 8 out of 10 (78%) of airlines are already or plan to “personalize” the communications and services they currently offer customers via mobile and social media. The good news is that it’s starting to happen.
NB: This is a guest article by Bram Hechtkopf, vice president of business development and marketing, Kobie Marketing.
NB2: In the next article, Hechtkopf will look at social media touchdowns in airline loyalty.
NB3: People group image via Shutterstock
Special Nodes is the byline under which Tnooz publishes articles by guest authors from around the industry.