Earlier this year The Blue Swan Daily highlighted that there had been a clear seismic shift in interest in loyalty programmes over the past decade, but acknowledged that suggestions of its death were rather premature. Demise, perhaps? But even then, it still plays a vital role for retailers.
Whether it is receiving a free coffee at our favourite café, shopping at one brand of stores, even supporting our friends, colleagues, team mates and loved-ones, loyalty has an important role in our lives.
It is also a basic, but key part of any standard business strategy, as keeping a customer loyal can reap significant long-term benefits. While, it is easier to convert a loyal customer to spend, programmes are not just about encouraging us to spend more, but to ensure any spend is focused in programme.
From their humble beginnings as tactical marketing programmes, airline loyalty programmes have evolved into the “powerhouses of the global airline industry,” said On Point Loyalty, a global consulting and investment firm focused exclusively on the airline loyalty space in its 2020 report on the top 100 most valuable airline loyalty programmes.
As highlighted in another The Blue Swan Daily post it is the established programmes of the US majors that continue to dominate this space. Notably, it illustrated that more than three quarters of the analysed programmes in the report (77 out of 100) had increased in value.
In the golden days of travel we all so fondly remember prior to the Covid-19 pandemic, there were plenty of travellers to go around. Travel industry brands offered many incentives to entice repeat visits, more flights and continuous usage comfortable in the knowledge that their customers may be loyal to more than one company, but they would generally return to use up the points they had amassed.
Now with fewer travellers likely to venture out for the rest of this year certainly, and possibly into 2021 and beyond, loyalty is surely going to be all the more important. If you have a repeat customer you are going to want to keep them close as well as encourage more loyal followers.
Many airlines are fully aware that when travel starts up again they are going to need their loyal customers even more than they did before. We have seen most airlines extend elite status for their loyalty members. The early movers were Delta Air Lines and Qatar Airways but the trend has extended to most airlines, including all US carriers and Qantas and Air Canada amongst others. Once the pandemic begins to ease and people get back into the air they will be all the more likely to stick with the airline if their elite status has been extended through 2021.
A different move is being taken by airlines such as Etihad Airways, Emirates Airline and British Airways which are offering a discount off the number of tier points needed for airline status renewal. This will be important when customers get back to choosing which airline to fly if they are able to retain and enhance their status.
Another perk being offered to keep customers loyal is the increased mileage earned by cobranded credit cards. For example Delta’s American Express credit card now offers four times SkyMiles per dollar spent at grocery stores.
Some airlines are offering their loyalty club members the opportunity to buy miles with special promotions. British Airways is currently offering 50% and 75% bonuses when buying additional Avios points, which makes the idea of buying extra miles now an extremely good deal if you are planning on travelling in the coming months.
Mileage expiration has largely been suspended by most airlines so at least once flights get back up and running you can be secure in knowing your well earned points are safe and you won’t have dropped down through the tiers. As any frequent flyer knows, those mileage points are essential to earn free flights and upgrades.
Many of these techniques have also been adopted by hotel chains with most extending elite status expiration and expiry dates. Hilton Honors was one of the first chains to extend the elite status and pause expiration of their loyalty club memberships. The hotel chain also extended expiration of the Hilton weekend award night certificates that come with some cobranded credit cards. Other chains such as Hyatt, Marriott, IHG, Wyndham and Radisson followed suit.
Credit card companies are also doing their bit to offer a little extra to their card holders to both keep them loyal and entice new members. American Express card holders in the US are being offered a complimentary subscription to the app Calm, designed to help alleviate stress by offering meditation and relaxation exercises. The credit card company is also offering special discounts on fitness and home workout equipment and programmes in a bid to help people stay well while at home.
An excellent example of how to look after your loyal customers was seen by the UK’s Admiral Car Insurance. They figured that as everyone was driving much less than normal, they could help out their customers by giving them all a £25 refund. It might not be much but it goes a long way to giving their customers a warm feeling when they come to renew.
We all want to be appreciated for our loyalty so while the number of travellers who venture back out there will be a lot lower than earlier in 2019, every single one will be warmly welcomed end encouraged back into the fold with incentives and offers.
We may effectively be back in a world similar to when loyalty programmes were in their infancy and their value proposition was much higher than the diluted form that many had evolved into. The one big exception is that many of us have already accrued significant points and tier rewards. Loyalty looks set to again become an important part of the customer offer. Those companies not yet offering special deals for their frequent travellers need to get with it fast.