How American Airlines Makes Money Offering Status Challenges

America Airlines offered status challenges and used them to collect additional data on customers and make incremental sales. The company American Airlines engaged to manage the project interviewed American’s Senior Manager of Marketing Communications Planning.

The airline didn’t just offer the status challenge, what they’re highlighting as unique is that they actually had a communications plan with members who registered to get more information from the customers in exchange for 500 miles (what kind of trips they want to take) and then followed up marketing destination recommendations to those members right away and then a month later. Some of the takeaways,

The first step in personalizing anything involves collecting information, and the best way to do that is by asking customers questions and offering them value in exchange for answers.

So, AA started by temporarily upgrading the frequent flyer status of customers before they reached the necessary mileage threshold. If those customers maintained a level of travel frequency during that time, that status then became locked in for the year. This rewarded customers earlier for the same activity, thus providing value and earning loyalty.

Once customers registered for the status upgrade, AA asked for additional information in return for an additional bucket of free miles. Questions included anything from where and when they planned to travel, to what kind of items they typically pack, through a fun, almost gamified, experience.

That information was then used to provide destination recommendations, one immediately and another 30 days later. The idea was to give travelers new ideas and motivate them to act on them.

And the results were amazing. Of those who began the survey, 84% finished. The emails sent afterward had over 54% open rates. All this resulted in a lift in revenue as well—to the tune of an average increase of $20 per user.

It’s no surprise that customers are engaged after a status match, and the airline becomes focal. Ignoring those customers, failing to educate them about the program, and failing to capitalize on a customer’s identified interest quickly is a huge failure but also the base case for most airlines (and hotel chains). What’s perhaps new here is the destination recommendation engine, though it’s unclear how many incremental trips are actually being booked versus trips the matching airline would get anyway after the match (American presumably has some sense of this because they withheld some matched members from the extra engagement as a control group.)

In some sense this entire project is symptomatic of the great forgetting. American Airlines used to have a marketing strategy to continue to communicate with status matched members. For instance a decade ago when United Airlines was falling apart, having made a disaster of moving over to legacy Continental Airlines platforms, AAdvantage offered status matches to United 1Ks and sent followup communications. They didn’t just offer matches, the gave those members Admirals Club passes. And they sent free inflight internet passes, to showcases what was at the time a real differentiator between American and United.

American, after they merged the US Airways frequent flyer program into AAdvantage, produced customer journey communications to educate members about the combined program with 1000 miles as the reward.

(HT: @drdoot)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. From what I could find online, status challenges aren’t active right now? Is that correct?

  2. Pre-COVID, I did a status match (as a UA 1K) with them, even though I knew I couldn’t earn the equivalent, but because it got me free seats on a number of BA TATL flights that would cost me a thousand or so otherwise.

  3. They hooked me. In early 2020 I was offered Platinum status. Could not complete it because of the pandemic but they offered it again later in the year. Again in late 2020, they offered again, but then we had the deadly Thanksgiving-Christmas surge and I did not even attempt to complete. In he Summer of 2021, I called and beg them to try again. They offered Gold status which was easy to complete and then I got Platinum outright status fairly quickly also because of the quirk they have this year. I used my status to do a United silver status which I completed and when I got Gold outright, I was able to do a Delta silver challenge. With the changes they made, it should be easy to keep my American status.

    And somehow this year I also got Air France silver status. I value American and United the most because they are generous with upgrades and Delta and Air France the least.

  4. The only thing status on American gets you is on the plane faster so that they can be rude to you for a longer period of time.

  5. @2808 Fatty

    That is a mean and unfair comment.

    I am only rude to some of my customers. Occasionally I give good service.

  6. Oh contraire, as a Platinum I continuously see American FAs bend over backwards to accommodate rude, inattentive, and just plain difficult passengers.

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