Two summers ago I shared a mental model for understanding the way that loyalty programs communicate their devaluations, and suggested that it seemed to apply best to Delta. The past two years appear to have borne it out.
Mind you this isn’t a piece about the value of miles — it’s about how programs communicate changes to the value of their miles.
And it bears repeating.
The median customer doesn’t keep up with changes to frequent flyer programs. They only really pay attention when it’s time to redeem their miles. They either have a good experience or a bad experience.
Having a good experience does matter — customers who successfully redeem their miles become more engaged in the program than they were prior to the redemption.
That was a bit of a surprise to the programs — when they first started it was common to give customers a mileage bonus when they cashed out their account. The last thing an airline wanted was a customer, previously locked into the airline because of their mileage balance, to get down to zero and become a free agent.
But the 5000 mile bonus for getting down below that much became a thing of the past because airlines realized that customers who redeemed stayed customers and even increased their loyalty.
Still, customers don’t necessarily know what a good redemption means other than “I got the seat I was looking for and it was easy.”
Sure, it may have cost 60,000 Delta miles to go to Florida but isn’t that just what it costs? And availability is whatever the airline’s website says it is, of course. These are things that people who aren’t reading this are likely to believe.
Or so airline executives hope. It’s also an opening for the competition, though, Capital One built its credit card business on dissatisfaction with airline redemptions.
But even David Spade just said award seats aren’t available (“NO”), not “the award will cost you 360,000 Skypesos.”
The bet, then, remains that customers don’t have a sufficient frame of reference – that they don’t invest in learning the details of the program – such that plausible statements from airline executives about changes to their programs will ring true.
The current crop of frequent flyer program executives grew up on Star Wars. They remember Alec Guinness utilizing the Jedi Mind trick.
When Ben Kenobi approached Mos Eisley with Luke Skywalker and the droids, he had to confront Imperial Storm Troopers that were searching for them.
Stormtrooper: Let me see your identification.
Obi-Wan: [with a small wave of his hand] You don’t need to see his identification.
Stormtrooper: We don’t need to see his identification.
Obi-Wan: These aren’t the droids you’re looking for.
Stormtrooper: These aren’t the droids we’re looking for.
Obi-Wan: He can go about his business.
Stormtrooper: You can go about your business.
Obi-Wan: Move along.
Stormtrooper: Move along… move along.
You see, the mostly men running these programs went to see Star Wars as kids and they could just feel the force inside of them as they walked out of the theatre. And the lesson they learned was that the Force can have a strong influence on the weak-minded.
And deep down they all wanted to be jedi masters. They grew up, they may not have gotten to fly the Millenium Falcon but they did go into aviation.
And some of them even went to business school. Corporate speak meets The Force.
So “cuts” and “devaluations” become “enhancements.” Instead of doing things to “make more money” the reason for any change is “to better meet the needs of our customers in a changing marketplace.” Usually the changes are the result of “listening to our customers” and will make it possible to “provide greater flexibility.”
Whereas an older generation might have known George Orwell, this one knows Obi Wan Kenobi. If they just use the force, customers – like storm troopers — will believe them.
The force, it seems, is strongest over at Delta where the pile of force they’re shoveling actually includes the claim that they can’t legally notify their members in advance when they’re going to start charging more miles for award tickets (even though they have at times done so in the past, and haven’t notified the SEC of these alleged violations of law).
Deep down they’re hoping their jedi mind trick skills are as good as old Ben’s. If they tell us it is an enhancement, enough of us will believe it.
But in the end we mustn’t forget the lessons of Return of the Jedi. In its happy ending, the Jedi do not control the galaxy and Luke never even formally becomes one. And yet the people and ewoks both rejoice.
Remember that, Delta (and others) before pulling the trigger on those revenue-based programs and telling us they’re enhancements based on customer feedback meant to give us the flexibity we’ve been asking for.
There is also a significant group of medallions at DL who know they are being ripped off and lied to but who do not care or are resigned to their fate.
Love it Gary, keep the heat on these cynics. Don’t know why anyone would give Delta any more business with the contempt they show for their customers these days…
Great read. Love the commentary!
*This is the price of an award ticket*
Ohhhh, this is the price of an award ticket!
But for me, I’m more like Jabba the hut, “Your Jedi Mind tricks don’t work on me boy!”
Since the loyalty program execs are using their powers for evil, I’d say that makes them Sith Lords instead of Jedi!
Gary – you got it all wrong. These executives grew up on Spaceballs. They never underestimate the power of The Schwartz. Didn’t you recognize Dark Helmet or Lack Skymiles? May the (Delta) farce be with you!
Well, Darth Vader (aka DeltaPoints douchbag) is already attempting to distract his foolish following with a Saturday morning Delta Amex pimp piece. I thought he proclaimed multiple times this week about his “abandoning the Mothership.” His readers are like the citizens of North Korea, accepting their “Dear Leader’s” comments and great wisdom because they have no other choice. What happened to his 27 part Delta trip report to the North Pole, did he decide that nobody actually cared about his Jedi mind tricks employed to book the award, or the fact that nobody actually cares about reading about that part of his delusional galaxy? Maybe it’ll be included in the ever-so-useful “beginners guide to be used until I’ve deceived you into applying for Delta cards before you realize you’ve been taken for a fool” weekly series he graces upon the sheep.
@Ryan I disagree, the Jedi aren’t as good as you think. They turn evil, eg Count Dooku. Darth Vader was trained as a Jedi. They’re a heavily armed unaccountable self-perpetuating body. Power corrupts.
@ john — There are a significant number of Medallions who know they are being ripped off and are heading for the DL emergency exit. But, when you have lots of status and miles, it takes time reach that door. Delta may think such people ( like myself) are “resigned to their fate”, but in 12- 18 months Delta will learn otherwise.
@ Robert — Love the name DPDB…
I agree that just because you train in the Jedi ways doesn’t make you a Jedi Knight as the Dark Side might get a hold of your soul.
I would equate Delta loyalist as those living in occupied Europe during WWII (Hub Captive). There really is little choice on how to deal with the influence of Delta occupying ATL, MSP, etc. That force is efficient and not to be laughed at but if you go along things are sorta fine and once in awhile you get an extra ration (free lounge food) or a trip (Domestic ATL-MIA) out of the deal (or keep your gold (SkyRubles) that you are hoarding) The alternative is you go underground and start flying other airlines with limited routes or worse service (Alliegant, Spirit) or you connect on all your flights through another hub and take your chances with the Grey Star or Oneworld orders. Besides the changes are shocking at first and then move gradually toward the shower house.
Right now the Ruble is 0.017 per $1 so things can get worse. On the other hand aren’t Skymiles worth about 0.01 to 0.02 per $1. Maybe I’m wrong.
Gary,
It is important for you and your fellow bloggers to keep the pressure on Delta. As you do, keep pointing out the fallacy and misdirection/miscommunication Delta continues to spew forth. It is only with constant pressure that any significant change can occur. As you and your brethren disseminate the “truth,” maybe Delta will listen as people vote with their clicks over to another airline. Keep up the great work!
Unfortunately for those of us who do figure out the nuances of the programs, the people running these programs are actually right. The vast majority of people who fly have no idea about devaluations and different levels of redemption, they just want to book something when they look for it. And those who do know how to get outsized value for our redemptions and cheap ways to get points are really not wanted by the airlines. I am pretty sure that Cathay Pacific, American Airlines, and Citibank are not interested in the market that gets a business class and a first class ticket from the US to Hong Kong for a net $200 annual fee on an Executive AA card. I hate to say it, but the people who read this blog are not the target market for anybody, we are the ugly side effect that they can’t figure out how to get rid of.
I hate what Delta is doing to their mileage program (as distinct from their loyalty program), but, unfortunately, I don’t think they are wrong about the profitability of what they are doing. I do think that their disregard for their actual frequent flyers is going to bite them in the ass, but their changes to their mileage program is going to serve them well. Just look at all of the disciples of both Capital One and Southwest that think that there is no possible better program, even when Southwest devalues their “miles” annually.
I am so sick of corporate (and political) America getting away with this double-speak. I thought the worst was the change to paperless statements “for my benefit.” But the best lately was my county commissioners who have now switched from 2x per week to 1x per week trash pick up. It is being sold as a benefit to us “so that you no longer have to be confused about which day is trash pick up day.” Yeah, remembering those two days was killing us.
It would be so refreshing to see one damn business say, “in order to make more money, we’re going to remove this benefit to our customers. But, hey, we did choose the one we found the fewest of you were using, at least.” Is the average American now so stupid he actually BELIEVES any of this is for our convenience? Please.
Gary, you’re terrific! I read you daily and agree you are the “Thought Leader!” Analogizing to the Jedi and The Force is SO apt–keep up the good work for all of us in the Hobby.
What “award” ticket?
You have to wonder why someone who doesn’t live in ATL, DTW or MSP would choose DL over other options given the contempt DL has shown towards their customers. Based in NYC, I simply don’t consider them an option.
We’re all just whistling in the dark. When our fearless government “leaders” allowed the major airlines to merge from 6 carriers to 3 that ended any real competition. Now the airlines can, and do, whatever they want. So now if an important official wants United to set up a route EWR to Stockertown, PA next to his vacation home, done deal! In the meantime, these mergers also allowed Southwest to charge higher fares on their system, again for diminished competition. They all just hope that frequent flyer and “loyalty” programs will just go away. They don’t need or value them anymore.
Fun ewok fact: despite the rejoicing, most of them are dead. That’s what happens when you destroy a 1,000km diameter space station orbit directly above a habitable world 🙂