Too often frequent flyer programs think they can Jedi mind trick their customers. But that’s so ten years ago.
What matters more than anything now is authenticity.
Or, as I wrote in 2009 customers will work with whatever game is offered as long as the programs shoot straight and play fair.
Honesty, Transparency, Integrity.
Those sound old fashioned, but I’m serious. Bear with me.
Don’t talk about ‘enhancements’ that are really devaluations. Your customers resent being lied to.
Offer a clear value proposition and STICK TO IT.
I disagree with @Chris who says no devaluations. Just be clear about what you are doing and give PLENTY of notice. So that there’s a clear connection between an offer, customer behavior, and a reward. W
..Tell the truth. Declare it openly, warts and all. And then deliver on your declarations. And your customers will love you for it.
I’m reminded of this by Matthew Klint sharing his conversations with Karen Zachary, Managing Director of the SkyMiles program, a week ago in Atlanta.
Matthew writes about Karen, “What I loved about talking to Zachary was her candor and her oft brutal honesty.”
I agree. Though Matthew “came away with a much greater respect for what Delta is doing” and there we part company.
I did find her candid and straightforward. But I found that to be a stark contrast with Delta’s communications with its customers. Delta continues to push the line that they can’t tell customers about award price changes in advance because it would be illegal to do so. They killed their award chart just a couple of months after putting it into effect, and claim it’s because their website pricing has gotten so good (even if this were true – it isn’t – the two are hardly mutually exclusive). They change their terms and conditions and don’t even bother to tell customers. In other words, Delta is anything but candid with its customers even if Zachary herself is in person.
Matthew concludes from the conversation:
Delta will continue to be an industry innovator and Delta will do whatever it feels is best to bolster its bottom line. With the best product in the sky (at least among U.S. carriers), it has the luxury of not holding on to an unnecessarily generous loyalty scheme and it will dynamically engage in cost-benefit analyses that will drive any changes to loyalty.
Here’s where I think two different ideas are being conflated. I think Matthew is right in a descriptive sense, offering what he perceives that Delta believes.
But while Delta may have a reasonable belief that they do not need to be generous with customers in the current environment in order to fill marginal seats on planes (since there aren’t very many marginal empty seats to fill), making changes at will and failing to communicate honestly and candidly with customers isn’t actually good business.
Loyalty is an iterative game and if you don’t fulfill your end as a program you don’t win long term. It isn’t just the honest thing to do to fulfill your commitments and deal honorably with your customers — it is the self interested thing too.
When you offer benefits in the future for business today and then you renege that is called fraud. And devaluations are personal failures on the part of loyalty executives that should lead to resignations.
A successful program needs to take a portfolio approach to benefits. If you spend too much time worried that someone somewhere may be benefiting too much you turn off not just customers you want to fire but the profitable ones too.
It’s why the best employers don’t all have a ‘kill the bottom 20% of employees each year’ program. While companies have tried this, the practice hasn’t spread across industries — because your 20% of best employees don’t like living in that world. It’s also part of why it takes a major recession for companies to eliminate zero marginal product workers, and why wages are sticky downward. Companies who want to retain their best employees need to create a culture that top performers want to be a part of and can be loyal to. It’s also a reason why many companies offer severances beyond anything required in or defensive as a result of law, because those employees are friends with the better employees too.
Delta is a profitable airline but it’s a fallacy to believe that every Delta practice therefore contributes to that profitability. Indeed, they were a profitable program before launching SkyMiles 2015. And in the past Delta executives would candidly admit that while they were excellent in many areas, SkyMiles wasn’t one of them. The airline was successful in spite of SkyMiles, not because of SkyMiles. And I contend it’s their lack of candor with customers more than anything that prevents them from reaching even greater levels of success.
I have much respect for Ms. Zachary as Matthew does, I sat on a conference panel earlier with her that day as well, but her candor hasn’t translated at all into authentic communication from the SkyMiles program.
Gary,
I was a delta elite and matched to Alaska this year. I do the math on mileage earning and have been finding Delta’s revenue system to be more rewarding for most of my work flights, even comparing delta non-elite earning to Alaska elite earning. It’s only the transcons where Alaska wins. I’m really a free agent now, but find myself picking delta more often than not because the revenue based earning works out better.
Also, delta seems to be releasing more premium cabin award space than they used to which is nice. I just checked AA and they don’t have a single business or first class seat between NYC and London on AA metal for the next three months. That is not a reasonable award program.
There’s an awful lot not to like about Skymiles these days. Collectively, these changes say that Delta thinks their frequent fliers are idiots. When the next economic downturn occurs, it’ll be interesting to see if they still sing the same tune.
i wish he had asked about the cap on transfers to membership rewards.
> When you offer benefits in the future for business today and then you renege that is called fraud.
True enough, but I think that’s irrelevant. AFAIK, there are NO programs that actually offer benefits in the future -ALL programs reserve the right to modify their Ts&Cs at any time. So any offers are current (except benefits like award tickets that have been reserved but not yet flown). Sure, negative changes may be bad for business, but they’re certainly not fraud.
> they were a profitable program before launching SkyMiles 2015 …The airline was
> successful in spite of SkyMiles, not because of SkyMiles.
Genuinely curious: if the SkyMiles program was profitable, why does that imply Delta’s success was “in spite” of SkyMiles? Did it fail to make program targets? Perhaps Skymiles is not the major driver of Delta’s profitability, but IMO you don’t make a case that ‘improving’ Skymiles (from our perspective) would have a positive effect on overall profits. And Delta just hedged Skymiles for at least a couple of years with their new Amex deal at a higher rate than previously.
Personally, I’m very sympathetic to the arguments above for better disclosure and better benefits, but I just don’t see objective evidence that any of the recent changes have actually hurt Delta, or that it makes business sense for Delta to change course. Of course, the specter of the next downturn may prove that they should have, but the industry and company are, seemingly, much different entities than they were during the last downturn, so the “mileage community” may not have the same significance.
I’ll agree: I don’t trust Delta. The way they treat their frequent flyers reminds me of a shady used car salesperson.
A bit over a year ago, my travel patterns changed because of a job change, and I needed to reevaluate my frequent flyer strategy. Despite flying domestic almost all the time now, except for vacation travel, Delta was not in the running for me at all. I’m focusing on Alaska and Virgin America instead. Why?
Out of SFO, Virgin America handles many of the routes I need to fly. Alaska, especially with the ability to credit American and even Delta flights for elite credit, handles the rest. For me, Alaska’s frequent flyer program beats Delta’s, no contest. And I *trust* Alaska.
As for Delta’s much touted operational advantages, I’ve just not been so entranced. In aggregate, they might have a better on-time rating, but I’ve not seen them be appreciably more reliable in my experience. On board comfort? It doesn’t strike me as much better than American, and I like Virgin’s product better. Meal service? OK, I’ll give them that advantage, but I won’t choose an airline based solely on that. Staff friendliness and efficiency? I find Alaska and Virgin better. Lounges? I’ve found most Delta Lounges I’ve tried to be overcrowded with tired decor.
If Delta meets your needs, that’s great. I wont try to talk you out of it. But I haven’t found Delta’s product to be so overwhelmingly superior to justify their lousy FF program. And as I said at the beginning, the way they’ve handled their FF program in the past few years does not make me trust them as a company.
Preach, Gary!
I give my business to companies that treat me with respect, and (I love the word you used) authenticity. Delta lost me because they have contempt for me, as evidenced by the lies they’ve told, among other things.
Have you seen that Nationwide Insurance commercial, where grown people are made to feel like children by deceptive, disrespectful companies. Delta is the poster child for that.
That’s why, as my international first and business travel has increased, I’ve chosen to spend my money on American and Oneworld, and I’m now EP. American treated me like a human being when I was at the lower tiers, so I give them my loyalty — and my cash — now.
@Stvr – You can’t transfer TO AmEx MR, so there’s no point in asking about that. They wanted to cap transfer FROM MR, but they back off on that.
The US based airlines need to get back to the basics. I left Delta because of delayed or cancelled flights that cost me money. I look forward to more European or Middle Eastern Options. I recently flew Emirates and all I can say is that Delta is second class (maybe third class) even in coach. It is time for the US based airlines to wake up or be taken over by much better quality airlines. Not approving competition is not the way to go. Platinum status has no value for me if I do not arrive on time with luggage.
Delta still publishes the award charts – just not where they are easily found.
SkyMiles is part of marketing so one would expect changes as business changes. DL serves my needs, I have made out well under the new earnings, and find TATL flights at the price In mikes that I am looking for.
I understand the upset many have but honestly the changes don’t impact my travels and the travels of many associates.
YMMV
I haven’t been elite with any airline for over 2 years. The last airline that I had been elite with was Delta. In that 3 year time period, I had so many cancellations with Delta and did not receive assistance, at all. Twice, I had to buy another ticket on American to fly home from PHL, because of snow storm cancellations. Delta was not able to get me home for over a week. Delta would make me wait on hold with a Medallion line for hours and then disconnect me. Delta’s treatment of me, as an elite member was pitiful. They have so many elite members that on many flights there are over 50 pax on the upgrade list. I felt like I was one of a million and always at the bottom of the list. The changes that Delta made to Skymiles in the last year, confirmed that leaving Delta was a wise decision. For the last year, I have been trying to deplete my Skymiles balance. Flying AF and KL from ORD used to be an easy redemption. Not anymore, the seats disappear at the 331 days from departure instantly. Delta can say whatever they want, I don’t believe any of it!