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What’s Up with Airline Loyalty?

For the most part, the airline industry gets a bad rap. Reporters and travelers alike lament the days of attentive and personalized service and the loss of perks that were previously included in the fare.

Increasingly, airlines are coming under fire for the significant changes being made to their loyalty programs. Though some changes such as earning miles on partner airlines, converting hotel stays into airline miles and access to more lounges are good, others, like higher award ticket fees, minimum annual spending requirements and disappearing bonuses have caused members genuine distress. Other changes are a little of both: last summer Virgin America added “gold” and “silver” tiers to its Elevate frequent flier program.

Of course new tiers mean new status, but as my colleague David Andreadakis has pointed out, such changes can make existing members feel less important. And changes like these, as evidenced in the dissatisfaction with reward redemptions by frequent fliers have led to an even more fractured airline loyalty landscape.
According to a recent Frequent Business Traveler and FlyerTalk survey, Delta’s SkyMiles and Air Canada’s Aeroplan ranked at the bottom of the satisfaction list. Both loyalty programs face dissatisfaction rates as high as 67% and 68%, respectively. Meanwhile the latest Deloitte study finds airline brand loyalty “dangerously low” with fewer than half of all travelers, 44%, flying at least three quarters of their earned air miles on a preferred airline.

Delta’s challenges, as I see it, aren’t surprising. Ever since its 2008 merger with Northwest Airlines, the airline has struggled with loyalty program currency devaluation – which is bound to drive customer satisfaction levels down. There are simply too many miles chasing too few seats, a challenge affecting many airlines and their loyalty program members. Contrast Delta with American Airlines, though, and a different picture emerges. Loyalty program rewards and traveler perks (like seat upgrades) aren’t as easy to obtain and their perceived value therefore increases.

An Airline Fix: Omnichannel Loyalty

Encouragingly, a ‘loyalty fix’ is within reach, coming down to airlines’ better using and understanding omnichannel loyalty, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience. For airlines, mobile is an increasingly important communications medium due to its ability to link easily with other channels and do so anywhere.

In other words, communication channels are converging and mobile is that conduit.

While airlines still need to do a better job integrating mobile as part of their passengers’ loyalty experience, encouraging changes are beginning to unfold: airlines are moving beyond mobile flight booking and status update capabilities and adding more “mobile 2.0” features.

This is especially true inside the cabin. More airlines are equipping flight attendants with tablets – tablets that can access passenger profiles. These actions are helping flight attendants create more accurate pictures of what passengers might want to purchase even before they board the plane. They’re also enabling loyalty program managers to understand the types of incentives or program perks that best speak to their passengers’ personalized needs. Something as simple as an airline communicating seat upgrade lists to passengers via a native app or by SMS is a major improvement.

It also helps if airlines and their affiliated loyalty programs get downright creative. Back in April, American Airlines tweaked its Elite Rewards program, giving members incentives and special rewards as they progressed between tiers – a move that inspired loyalty as it became easier to utilize points. Even more creative incentives have stemmed from BalticMiles.  BalticMiles, a multi-partner loyalty program in Northern and Eastern Europe and Russia, owned by Latvia-based Air Baltic Corporation, and in partnership with Endomondo, recently launched a new program called “Keep fit with BalticMiles,” which rewards program members points based on their physical activity. During the month of August 2013, members received virtual lottery tickets for every 1,000 calories they burned where, at the conclusion of the competition, 10 winners would be awarded 10,000 BalticMiles points, good enough for several free flights with airBaltic.

Fuelling For Takeoff

Convergence, however, isn’t just channel focused or about coalition, multi-partner loyalty programs. It’s a larger phenomenon unfolding across all walks of life. That’s why, in addition to omnichannel loyalty and improved mobile capabilities, coalition or multi-partner programs like Delta and Starwood’s Crossover Rewards program (where a member’s hotel and airline points are shared) is where the future of loyalty lies for many travel, airline and hotel programs alike.

My advice to airlines and their loyalty programs is simple: remember that consumers are smart and when they see a smart message they’ll likely want to engage it. So whether we’re talking about coalition programs, seat upgrades or the emerging trend of personalized pricing – a topic I will address in a future blog – relevant offerings combined with a seamless customer rewards programs will remain a vital component to keeping passengers happy and brand engaged.

Are you member of a frequent flyer program, or in charge of running one? How do you envision airlines better embracing omnichannel loyalty’s potential for both yours and your customers’ needs? Let us know in the comments below or email us at info@kobie.com.

Author: Bram Hechtkopf

Bram leads the "marketing of Kobie Marketing". He consults with current and prospective clients on new business opportunities, helping to develop customer retention and loyalty marketing solutions that drive increased retention and spend. Following in the footsteps of his father, Kobie's founder, Bram is eager to continue Kobie's vision of technology and data analytics as enablers of leading-edge marketing executions for world-class customer loyalty initiatives.

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