Loyalty programs need to stay relevant. When people aren’t traveling, they aren’t engaging with the brand. Expect co-brand credit card applications to fall. There will be fewer new customers, and perhaps even more people than usual will cancel cards when annual fees come do. Both the number of active members of a program will drop and the size of the credit card portfolio will decline as well. The volume of card spend is likely to fall in recession.
Yet loyalty programs are key to a travel brand’s resurgence. Airlines have largely neglected the basic block and tackle strategies they used to employ to fill empty seats by incentivizing program members to travel, since there haven’t been many empty seats. Times have been good they’ve used the opportunity to devalue the programs, to reduce marketing spend. Now they’re going to need to ramp that up. But to do that successfully they need to have engaged members. That’s tough to do when customers aren’t interacting with the brand, or keeping the brand top of wallet.
There are several things that loyalty programs should be doing now to keep members engaged and keep them thinking about the future of travel and earning in the program.
- Make it easy to stay engaged and earn small amounts of miles free on the ground. Miles aren’t free to a program and with large numbers of members even small mileage awards can be costly. However there’s a long history of giving out miles for engagement, and right now there’s a real risk of losing member engagement, what if it doesn’t come back? It makes sense to spend money to keep members on the treadmill. (I wrote this post before S7 Airlines came up with the idea independently.)
Since members can’t travel, why not reward them for that? Give out miles for social distancing, based on the personal level (GPS data, staying away from congested areas) and city-level data, rewarding people for being part of a community that reduces total travel. Speaking of staying on the treadmill, give points for exercise. Give points in exchange for member stories during this crisis, and for stories about where people want to travel when they’re able to again – keep them dreaming about and talking about and planning travel.
- Bonuses, bonuses, bonuses with earning partners. Less flying and lower credit card spend mean fewer miles earned. That also means less revenue for the program. Keep members engaged and bring in program revenue by running bonus promotions with non-travel partners, with the program funding the bonus. That’s good for partners, generates partner revenue, and gives members a reason to engage. Even better, gamify the promotions – something along the lines of the old US Airways Grand Slam would be ideal, with bonuses based on the number of partner transactions – to send members on a quest for greater levels of program interaction.
- Sell miles cheaply. Sacrifice margin for immediate cash, and give members the ability to travel easily once travel resumes. There’ll be plenty of seats to use miles for when travel resumes. Even under new U.S. accounting rules miles for flying (ASC 606) are booked only at a penny apiece, assuming that covers the true cost of future travel redemptions, any amount over that is still profit – and the miles won’t be redeemed immediately. Usually the biggest risk of cheap mileage sales is immediate redemption for the most expensive awards, but that’s mostly not an option for consumers now. Generate cash flow and dreams.
- Give members something to look forward to. Planes are going to be pretty empty as travel ramps back up. Work it out with revenue management to get more saver award space. Commit to lower award pricing for a period of time, or to specific aspirational awards at a discount. With parked planes, too many employees, and cheap oil charter an airline’s planes to run redemption-only flights and make them celebratory party flights.
- Reassure elites and encourage future travel. Programs haven’t wanted to say what they’re doing about status, because just extending status won’t give customers a reason to spend money later in the year (and might even make it easier to travel with the competition). Double status promotions on the other hand help goose stays and flights. So who other than Hilton wants to just extend status across the board if they don’t have to? But messages that ‘we know we need to address this’ don’t go far enough.
It’s possible though to do both, give everyone comfort they keep their status and incentivize members with the best, easiest change ever to earn high levels of status (double qualifying miles and dollars or even waiving qualifying dollars requirements) along with bonus miles or earning redemption discounts.
- Airlines should announce middle seat blocking as a new elite benefit to give their best customers comfort when they return.
Loyalty programs shouldn’t be complacent. Just because people can’t travel doesn’t mean members can’t be engaged. The marketing engine of a travel program should be marketing future travel, it should continue generating revenue for their brand, and most importantly it should be maintaining the health of its member file so that it remains an effective platform to help grow the business as soon as people are getting back on the road.
If none of that appeals to a given loyalty team think about it this way: you need to ‘do something’ now, look busy, and convince your bosses you have a role to play in the down times in order to avoid furloughs or payroll reduction. This is one time where employee, company, and member incentives are al aligned.
Not sure about the logic of middle seat blocking. Is it about being elite or is it a effort to distance passengers for spreading of germs. If it’s a health issue, then keep it as that. Don’t determine that elites deserve more protection.
Once the coronavirus crisis is behind the world, and it will be. United and American need to reverse every elite and miles unfriendly move they have made in the last 15 years. Otherwise the bounceback will be disappointing.
BTW: The New York Subway system took a page out of Parkers book. Because of lack of customers, the MTA reduced the number of trains running. Of course, that makes social distancing impossible on the subways.
Another source of possible disengagement will be the loss of priority status from the lack of accrual of points or miles. Airlines should offer extensions as a way of holding on to some of their best customers.
It’s too late for me to care. The Big3 killed loyalty, the programs are now irrelevant to me, and I’ve been a very satisfied free agent over the last few years….and this is after 20 years of being either ExecPlat or 1K. Looking forward to the deals when this is all over, though. Going to ride these programs like a borrowed mule….while maintaining the glory of informed choice, and my flexible points card. 🙂
You forget the people who are still staying with them during the crisis. It’s another topic but it’s the far west right now, the chains (especially Marriott) do not follow any T&C.
Get us involved and busy while doing the social distancing thing.
Start activities’ game like the US Airways Grand Slam of years past … until things go back to normal. Activities could be shop affiliated businesses from home (biscoff comes to mind) or portal, shop using affiliated credit cards, apply for affiliated credit card, buying miles (on sale of course), conversion of points to miles, donation to coronavirus-related charity or any worthy cause, etc.
The only issue is it takes months to prepare for such game and no one was anticipating this sudden and complete halt of business.
Kalboz says: The only issue is it takes months to prepare for such game and no one was anticipating this sudden and complete halt of business.
The government wasn’t prepared for a pandemic. With the millions of federal employees, you would have thought their was one intelligent person among them. As for airline executives, just watching UA implode is downright scary. American is not far behind. What does it take to have a small part-time team of management to think up scenarios, and write plans for them. Bet they have full-times to think up ways to screw their best customers.
Frankly I don’t care what they do during this time. It’s an unprecedented period, no one is traveling, we travelers are concerned with other things, who cares.
What IS going to matter to me is what I experience when I first board that plane or step through those hotel doors once things open up again. Are elites welcomed back and greeted with real benefits (upgrades, amenities, perks)? Are companies grateful to have us, and showing it? Or do they go immediately back to treating us like disposable, replaceable revenue generators as they did for the past years? That’s the only test that I care about.
I remember you saying years ago (and possibly more recently) that airlines tend to devalue right before a recession, and in this case, we were overdue. At least the devaluations will end for a while, and “flexible awards” might actually let airlines do a low-key temporary RE-valuation.
This might have been what you meant by Point #4, but I see it being the dominant narrative after this is over with. Stock up on miles now, if you can.
@Alan, I agree about the government having to have a strategic planning division (or, at least a desk at the CIA or other agency) and I am sure they have a “What if” plans drawn up but with the current political atmosphere (moron-in-chief) and the public apathy (until the sky is falling) probably such planning was shelved!
I also agree that billion $$$ corporations should have such strategic planning (what if contingency plans) but as we all know they are more interested about their quarterly numbers, stock buy-back, and executive compensation!
I could see them come June or so extending same status regardless for the following year. I could also see them changing back to distance based for a year or so after that.
This is likely why Marriott threw the carrot yesterday. Anything to stay relevant.
I wish that Southwest Airlines would extend their companion fare passes for a few extra months. is there any hope for that? I have had to cancel two trips and possibly another due to the Corona virus. Hopefully, we will be able to get some use of the Companion Pass before the end of the year. Although, I do realize that all the airlines are struggling at the moment.
In addition to middle seat blocking American should scrap Oasis. Continuing with densification in an environment of a current pandemic with likely future phases is a terrible and clueless decision.
Longtime EP that has been increasingly considering leaving AA for Delta – that is an absolute deal breaker for me, especially now.
AA wants to sell miles to me for 1.7c each now. Really?
When a mile is worthless and I can’t even travel?
UA elite lines do not exist for a phone call
I think loyalty programs are a thing of the past – better find a new thing to write about Gary
@Alan.
Many of the millions of Federal Employees DID see this coming.
And thus we set up commissions and plans to deal with it
And then a certain party said government is always the problem, and defunded those programs
Undeterred, many scientists warned about this anyway
And they were silenced by our President
Government has MANY flaws. But those flaws are amplified when you put people in charge who believe that “starving the beast” is the most important endeavor, not to mention when you put untrained sycophants in charge of a health crisis
Even now, the right is going after Dr. Fauci because he dared contradict the fallacy that all will be well by Easter, or that this is just some Chinese virus Democrat hoax which will bring American jobs back from China.
I am rarely political on blogs. But as a doctor whose team must face a potentially deadly virus without masks or protection, in large part due to our government’s unwillingness to listen to science, cheered on by a the most ignorant of people filled with hate, I refuse to hear the trope that there wasn’t one smart Federal employee.
Let us pray that we have flattened the curve, and that the US doesn’t become NYC.
Of course, if our efforts are successful, then all those sycophants will scream and holler about how we destroyed the economy for nothing
And we will cut funding to science orograms so that we can give billionaires another tax break so that it can “trickle down” to their offshore accounts
I disagree that extending status drives away loyal customers. As a Hyatt Globalist, my status is really important because the benefits are great. The problem is, now I’m not remotely sure that I’ll make Globalist again for next year. If I lose my status, it becomes more of an uphill climb to regain it in the future, and consequently makes the status chase less worthwhile. Adding a year of additional validity as a Globalist would not only cement my loyalty on an emotional level but ensure more stays with Hyatt next year as well. That’s exactly why loyalty programs should be emulating Hilton right now.
@JRMW said:”Many of the millions of Federal Employees DID see this coming. And thus we set up commissions and plans to deal with it.” “MILLIONS” of bureaucrat writing reports and carefully worded actions plans that carefully correspond with United Nations Protocols, will rid the world of diseases. Give me a break. The pandemics would not have happened if crooked Hillary was in charge. Give me a break. Senile and bought and paid for Biden would fix it. Give me a break.
BTW: I do not believe you are a doctor. I also do not believe you never rant on blogs.
It is people like you, that got Trump elected. MAGA.
I rant often?
Easy to check
Just google this blog and “JRMW”
You can read my posts
Not a doc?
Again, easy
Send me a throwaway email and I’ll be happy to send you my name which is close to JRMW by the way
Or Gary can check it since he has my email and location
I stand by my claim which is easily confirmed
Republicans spent all their time dumping stock and saying that COVID was just the flu and will bring jobs back to America (Wilbur Ross)
Trump minimized COVID until last week
He told governors to pound sand and get their own ventilators
Public health has been defunded by Republicans. They continue to attack Medicare.
And his supporters hate Fauci
That’s not a rant. It’s facts.
My rant is that it’s disgusting that people like you say “nobody could have known” or “why didn’t one Federal employee do anything” when they were actively blocked from doing so
(Like how they currently are not allowed to mention climate change)
Hillary has nothing to do with this. I have never been a Hillary supporter. But nice try.
@JRMW. “Republicans spent all their time dumping stock” Answer: Swamp creatures, like Pelosi (who is known for insider trading), Reed, Hillary, Diane Feinstein, Bernie Frank, Biden, Warren, Sanders sell their offices and get rich. Your implication that only Republicans are swamp creatures, is at best a naive prevarication, but to be honest, it is most likely a bold face lie. Further, neither Trump nor Wilbur Ross sold stock in front of the coronavirus pandemic.
“saying that COVID was just the flu” Answer: Idiot, the Spanish flu was just a flu and was a horrible pandemic in 1918-19. Millions die from the flu. Maybe being a doctor you never heard about that.
“will bring jobs back to America (Wilbur Ross).” Answer: It turns out that the USA no longer manufactures masks, gowns, ventilators, antibiotics, and etc. They have all been outsourced. Unless the USA goes back to the outsourcing policies of the bought and paid for swamp, some of this production will return to the USA. JRMW equals Dumb as a Rock.
“Trump minimized COVID until last week.” Answer: Outright lie. He banned flights from China on February 1st, 2020 against raging criticism. Further, he has been doing what your precious ‘millions’ of bureaucrats told him to do. BTW. There are videos that Pelosi was in SFO Chinatown saying the coronavirus was not a big problem in February 24, 2020. In fact, Cuomo, De Blasio, and the head of the WHO were saying that the coronavirus was not a threat to New York or the USA in February 2020. Maybe your faulty memory does not go back a month. New Yorkers call people like you a moron.
“He told governors to pound sand and get their own ventilators.” Answer: Total lie. Trump has been working with corporations to obtain a supply of ventilators, masks, and gowns. Further, medical preparedness in the USA is the preview of States. So the natural question is: why did Cuomo and De Blasio reduce beds, not invest in masks, gowns, and ventilators, before the current crisis? Well, the Trump administration is helping them, but they are (like you JRMW) complaining ingrates. Disgusting.
“Public health has been defunded by Republicans.” Answer: Full out lie. In fact, left wing creepos have been arguing for years that the one payer system will decrease medical spending which has been a drag on the economy. Maybe you missed all the propaganda.
“They [Republicans] continue to attack Medicare.” Answer: Oldest scam in the book, Medi-scare. In the meantime, the Democrats continue to want to pile additional expenses onto Medicare without increasing funding, hurting the program for current seniors. Moreover, Obama actually did a $1 Trillion raid on Medicare to fund Obamacare. You cannot make this up.
“And his supporters hate Fauci.” Answer: So you did a survey of Trump supporters and found out they ‘hate Fauci’. Lie and a very stupid one at that. You are a scientist, HA. Not sure you even have a brain with ludicrous comments like that.
“That’s not a rant. It’s facts.” Answer: No JRMW, it is a rant and all lies, you crazy nut you.
“(Like how they currently are not allowed to mention climate change)”. Answer: Yea, your precious ‘millions of bureaucrats’ were probably working on reducing climate change rather than curbing infectious diseases like the coronavirus. When you are busy putting halos on your head saving the planet, there is no room for little things like curing actual diseases. Pathetic.
“Hillary has nothing to do with this. I have never been a Hillary supporter. But nice try.” Yea, sure you voted for Trump, you crazy leftist loon. Tell me another good one. And you are going to vote for Trump over Biden in the next election? You are going to kill me laughing. Given your rant above, I am willing to bet you never voted Republican in your life and never will.
Final comment. Do you rant at patients about politics while treating them? It is downright scary to think you might actually be a medical “professional”.