This week I joined my friend Rob Burgess, who runs the blog Head For Points as part of Loyalty Summit, helmed by David Feldman. The topic of the webinar was “loyalty promotions: making sure they’re relevant”, and the discussion raised some really interesting points about travel in general right now, and whether loyalty can or cannot actually make an impact on getting people back to it.
Not only that, a few thoughts on how promotions could actually dissuade customers in the future. I wanted to touch on a few highlights for those without the time to watch the one hour discussion, but also share the video, since it might help to frame the mind for readers as far as how businesses must balance risk and other thoughts when launching new promos.
Promotions Cost Money
The first thing to understand with loyalty promotions is that they cost something, in one way or another. Points have value, which means giving a travelers 4X points instead of 1X has the brand footing a larger bill at some point. Giving away free nights or upgrades is the same.
It may seem like something that’s just a bit of mystical math, but someone in some department must account for it, and points in circulation that are unused are a liability for any travel brand. At the same time, loyalty programs have been proven to be more valuable than airlines or many hotel chains themselves. How much more?
Like three times more. American Airlines is valued at just over $7 billion, whereas the airlines loyalty program, AAdvantage, is closer to $20bn. Similar figures exist for United and others. Basically, the loyalty program is more valuable than the planes, facilities and everything else.
Promotions Mean Nothing If Brands Don’t Deliver
One excellent early point made in the discussion was that promotions mean nothing if they bring people to a bad experience. Airlines and hotels are spending considerable time and effort advertising new cleaning and social distancing practices, and providing extra points, free nights or any promotion is an added cost to get heads in beds or butts in seats.
If someone arrives at their flight to see masks not enforced, or a hotel to see cleaning practices far from what’s advertised, not only is the promotion then ineffective, but it may cost longer term business. Loyalty only matters when the basics are done right, and right now that seems to be a struggle in some areas.
Taking away the health element, what if guests experience a diminished product? Like no real food service in the cabin they expect to find it, or closed pools etc? Could that leave a sour taste in someone’s mind?
As borders open and many regions seem to have the worst of covid-19 behind them, the marketing and loyalty machine is revving up again, and we’re starting to see some good offers. There are a few key ones discussed in the video, like Etihad’s 50% bonus, Fairmont’s Buy One Get One, etc.
The thing is, the brands that they’ll be most effective for are the brands that did the right thing in a tough time. For an airline or or hotel which failed to properly refund or address customer issues during the pandemic, who may still be holding onto customer cash, the idea of making a future booking is preposterous.
That customer feels wronged, and only the juiciest of promotions would ever make a customer even consider booking with them again. This again speaks to the importance of all elements of a travel business firing properly, so as not to tarnish the work of another.
The Basics Ain’t Good Enough Anymore
Undoubtedly, if you follow the offers, you’ve seen some which sound a lot like ones you’ve seen before. That just ain’t good enough right now. The brands that are winning and actually converting these loyalty program offers into money in the bank are the ones that are tearing out the rule book, or creating unique and inventive promos.
Qatar Airways and Air Canada have been thought leaders here. Qatar turned their booking drive into a game, telling customers they can book any ticket, and then swap it for one to any destination up to 5,000 miles away. The possibilities for savings and amusement were endless and millions of revenue in bookings were made.
Air Canada decided to create ways for people to earn extra points from home, including things like UberEats. Not only that, they were clever enough to say any flying you give us this year will help someone else get status – yours is already extended, so this will help share the love.
Basically – people like new, fresh thinking – not just basic bonus points.
Absolutely enough to get me back and I’ve already booked a cheap Southwest ticket for a trip this fall I otherwise wouldn’t take. I’m not the typical consumer of travel services though. First of all, while I take reasonable precautions, I am not paranoid about the virus to the extent I stay home. I have traveled 4 times since March on pleasure and have a 10 day trip to a Florida beach next week (not a crowded beach and we have, along with another family, rented a house with a pool so will be pretty independent and removed from others).
As for expectations, again, it is all about knowing what to expect. That is the same as flying American first class one week and then Frontier the next (as I’ve done on numerous occasions). You have to understand the product and not be surprised. Right now I know about masks, very limited food/drink, etc. I’ve got a business call ticket booked to Germany in November and understand even by then the in flight experience (assuming I can travel to Germany by then) will likely be very diminished from pre-COVID days (for economic reasons if nothing else). I accept that since 84,000 American miles is a steal for r/t business class to Europe and I am fine basically just paying to get me there.