Is airline loyalty living in the dark ages?

Is airline loyalty living in the dark ages?

After writing my blog last month about customer relationship management moving on, I have to ask the question: “Are airline loyalty schemes still living in the dark ages?” Loyalty schemes can be an important aspect of customer relationship management. They provide the opportunity to increase the number of touchpoints a company has with its customers and collect valuable data. If customers have good interactions with a company when experiencing these touchpoints then this has to be positive. This is as true for airlines like any other company.

I belong to two schemes.  I am a member of the British Airways Executive Club and Virgin Atlantic Flying Club. I collect Avios (for BA) and Miles (for VA). I am not a frequent flyer, so I sit in the lower tiers of loyal customers, as I am sure the majority of loyalty scheme members do. Nevertheless, I appreciate the opportunity to earn Avios and Miles with my credit card spending and look forward to being able to avail myself of reward flights.  I am sure the airlines appreciate the marketing opportunity of having my contact details and some lifestyle & travel information.

Right now, I am writing this sitting on a BA flight to Spain.  I like to use my Avios, but the availability of Reward Flights is somewhat sparse, so last August I booked flights for myself and my wife for a week’s vacation. As it turns outs, my wife has business commitments, so she cannot travel with me. The ticket restrictions are such that I could not pass the flight onto a friend nor could I cancel her ticket and have my Avios refunded. For our return in a week’s time, we now have to be back in the UK earlier than anticipated.  I am unable to change our tickets to earlier flights nor can I cancel them for a refund of my Avios. This is not creating warm feelings between me and BA.

I fly to Florida quite a bit so have been looking forward to using my Virgin Atlantic Miles for flights to Miami. For several years now I have not been able to find any flight availability to use my Miles. This is not creating warm feelings between me and VA.

I don’t mean to single out these two particular airlines, but they are within my own experience. I am quite sure that plenty of others would be managing their loyalty schemes in a similar way. The problem is that they are offering promises that appear simple and straightforward – build up a bank of points/miles and use them to purchase flights.  However, they are delivering something that is far more complex and frustrating than it ought to be. Frustrations such as these completely defeat the purpose of loyalty schemes and, at their worst, customer dissatisfaction could lead to these becoming disloyalty schemes.

Contrast old style airline schemes with successful retailer schemes such as Tesco’s. Supermarket loyalty is so straightforward. You spend, you earn points, you are sent money-off vouchers, you shop, earn more points and carry on round and round the virtuous circle. Supermarkets gain loyal customers and gather marketing intelligence to entice you to buy even more. So simple, so transparent, so unlike my airline loyalty experience.

The travel industry is moving on, leaving the airlines trailing in the wake of innovation. Take two new entrants. Trippki is a new business that is combining a hotel booking site with a loyalty scheme.  Booking through Trippki earns you TRIP Tokens. These are, in effect, a crypto-currency and so, like any crypto-currency, will be a transferable, tradable store of value that can be used for discounts on bookings with the many hotels that will be available on Trippki’s website.  Another crypto-currency loyalty scheme is Voy. Their tokens will be redeemable across the many travel companies that they hope will sign up to the scheme. The more companies that accept Voy tokens, the more utility the tokens will have.

Loyalty schemes are moving into the 21st Century. Are airline schemes still living in the dark ages?

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Paul Richer is Senior Partner of Genesys, a management consultancy specialising in providing advice on technology for the travel, tourism and hospitality industries. Genesys has built a worldwide reputation for its knowledge and experience of new system procurement, online technology and strategies including website audits and online booking systems, reviewing and formulating companies’ IT strategies and more. Clients include many of the best known names in travel. Paul has co-authored several reports examining the impact of technology on the distribution of travel, including “Distribution Technology in the Travel Industry” originally published by Financial Times Retail and “Marketing Destinations Online – Strategies for the Information Age” published by the World Tourism Organisation. He has presented at and chaired many online travel conferences, is regularly quoted in the press and has also been invited to make several appearances on television to debate the subject. Prior to founding Genesys in 1994, Paul was Business Development Director of Finite Group plc and Head of the Group’s IT strategy consultancy. He holds an MBA from Cranfield School of Management, is a Fellow of the Institute of Travel & Tourism and Member of the Chartered Institute of Marketing. More information at http://www.genesys.net/

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