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.