Unfaithfully Yours: Why Airline & Airport Loyalty Programs Fail

Well, what can you say about loyalty? Everyone values it. Life and work isn't much without it. In a business setting, we're asking customers to choose us and stick with us. But, in an ocean of other choices, how do you build, keep and grow customer loyalty? And knowing that we need some mechanism through which we can reward and speak to customers over the long term, why do most loyalty programs fail to engage?

The modern airport loyalty program: I have seen the best and worst of them over the last few years working specifically in the travel, airline and aviation category, and have worked with airports to build more effective strategies to attract and retain customers. Airline loyalty programs, on the other hand, are everywhere and have been, in some form or another, for perhaps over three decades. Some of the lessons we derive from one can and should be applied to the other.

The question is, in today's consolidating industry, do loyalty programs deliver? Namely, do they strengthen brand loyalty?

The answer seems to be a yawning, stretching no.

A Deloitte study found that travellers are not satisfied with airline loyalty programs. Loyalty programs ranked 17th in overall satisfaction. Business and leisure travellers ranked their satisfaction at 14th and 19th. High-frequency business travellers ranked loyalty programs second in importance and fourth for satisfaction.

If we look at enrolment and participation exclusivity we see lack of commitment and some promiscuity here. 78 percent of respondents are loyalty program members, while nearly 50 percent are enrolled in two or more. This behavior is most pronounced with business travelers. Of these, almost 60 percent are members of two or more programs. Among high-frequency business travelers, slightly more than half are members of four or more loyalty programs. So there's quite a bit of playing the field going on.

These findings suggest that loyalty programs don't inspire brand loyalty with a large number of travelers, especially the coveted business traveler and high-frequency groups.

The question is why?

Well, survey participants overwhelmingly felt that airline loyalty programs were not personal enough, they were too 'templated' and didn't speak to them. Many were over restrictive with many limitations. Some made it harder to get big rewards (that flight reward keeps getting further away as airlines and airports clamp down on spending). And still more programs would remove long-standing customers if their loyalty membership lapsed! All told, this speaks to our own limited commitment to engage our own customers. Obviously this is an express elevator to a failed relationship.

In the work I've done with loyalty programs in airports, segmentation and preferences are important in understanding the opportunities before us. For example, from the Deloitte research, we can carry forward these considerations (and others) as we plan for our own loyalty strategies:

- Millennials are in early career with low household income. The share of Millennials with income below $50,000 is three times that of other segments. But don't dismiss them. Just over 1/8th of Millennials travel more than 50,000 miles, but the vast majority travel for leisure in a pre-family stage of life;

- Seniors fly for leisure. They skew towards a low income, although they may have substantial savings;

- Gen Xers and (some) Baby Boomers are in full career mode: Both enjoy relative affluence. Gen Xers travel more than other groups for business;

- Two groups define the Boomers: those who fly mostly for business and those who fly mostly for leisure (some still working, some retired or semi-retired);

- Share of wallet loyalty appears to increase with age: About 30 percent of Millennials fly at least three quarters of their air miles on their preferred airline compared to nearly 60 percent of Seniors.

Understanding your customer is obviously important. So is following through with originality and surprise. Because data plays so much a part of these programs, it's easy to lose sight of the fact that these are real individuals we're talking to. To ensure you're doing all you can to engage your customers and establish greater loyalty, consider the following:

1. Redefine what loyalty means. Throw old concepts out. Don't just copy bad ideas. Look to what's important to your segments in your market; As the British band The Kinks said, 'Give The People What They Want' - that'll mean something different everywhere;

2. Reinvent programs so that they are personal and make the customer feel special; this way you have a better chance of staying memorable;

3. Offer unexpected quality in ways that support and build upon your brand values - like, for example, KLM's delicious, on-board fresh-squeezed apple juice I hear raves about;

4. Reshape the customer experience and expectations. Give them immediate rewards. Surprise them with exclusivity. Spoil them. Keep them expecting the unexpected (this is key);

5. Always ask your customers what they want. You might be surprised by what they say - and very well rewarded.

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