Status does a great job motivating customers who buy coach, or at least fly coach a substantial portion of the time – for instance the road warrior whose company will spring for business class internationally once or twice a year but has a rule of 6 hours or more for premium cabin so domestic trips are mostly out up front.
Status does almost nothing to motivate someone who buys all premium cabin tickets.
- They don’t need the upgrade, they’re already up front
- Free checked bags already comes with their fare
- They don’t really need the bonus miles, most miles aren’t earned from flying anyway.
- They don’t need economy plus seating
The ability to gift status to a loved one could be nice. As the threshold for earning status approaches a level where it’s obtained mostly by people who do not need it it isn’t going to be a significant motivator.
The basics of any loyalty program are reward and recognition. There’s points (for instance, earn something when traveling on your employer’s dime and direct your employer’s money to the travel provider so you can pad your own mileage account) and there’s status (better treatment).
That better treatment is only a motivator for customers who aren’t buying that treatment on the travel day anyway.
Programs were designed to get customers to take a less convenient flight – perhaps travel a couple of hours later or take a connection – in order to stick with their preferred carrier. But will someone buying all premium tickets do that anyway? It’s the person striving for something, trying to make their travels a bit better, that road warrior traveling in back most of the time where programs can move the needle on their spend and earn incremental business.
With increasing levels of spend, elite programs are on a collision course with themselves, headed towards irrelevance where they precisely target the customers whom they cannot influence. At $24,000 spend alone for 1K status it will be interesting to see if United reaches the point where they draw a circle around members who earn status without trying, and don’t give the airline incremental business as a result.
To be sure there will be program members spending $24,000 in a year on all coach tickets, and spending $18,000 while flying enough segments. That’s not the question. But when the program loses relevance to a large portion of its membership it’s no longer driving business — it’s incurring cost without benefit. The program may well be less useful to United as it drives to focus more heavily on its top spenders.