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Loyalty Programs To Be More Loyal

Article first published as Loyalty Programs To Be More Loyal on Technorati.

After moving to Dallas, TX, I realized if I wanted to leave the state and fly direct, it was going to be on American Airlines. So I signed up for their “loyalty” program and like other loyalty programs, was bombarded with email offers, vacation packages, and the like. I will admit, I did look at them, but I was disappointed; not based on the prices, they were good; and the packages were decent, but I wanted something more personal. So when I started receiving emails saying, “Your personalized AA offers”, I was stoked. I mean, based on how far we’ve come in tracking, data segmentation, data purchasing and monetization, cookies on sites, etc. I was pretty certain I should be receiving an email that offered packages for activities I liked or services I frequently used. Nope. The emails were the same and they were offering one personalized thing; flights out of Dallas. Well, there’s a no-brainer – so they booked me coming out of Dallas. Why not take the time to make more personal?

With the advent of all listed above – the segmentation possibilities, the data research, etc. why would AA not make it a priority to send something more personal? I had used their site and their credit card to book hotels, golf packages, spa packages, car rentals, and many other specific items; and I had done so more than once. Why not send me specific emails? Or even better – why not hand written letters?

I contest that loyalty programs will have to become far more personal and individualized over the next year to compete. Certainly, the psychological benefits of the programs work – they make people feel special, entitled even. But to continue to compete with other loyalty programs in the market place, they are going to have to be a bit more strategic.

Let’s take Marriot Rewards as an example; I’ve booked golf getaways through Marriot and every month I receive “golf getaway special offers”. I may also receive an upsell or cross sell from time to time. Because of the implied endorsement, that the up sell is coming from Marriot, I frequently click through these specials – even if I don’t need something. I’m “loyal” to Marriot and their partners and in return, they show me that they are loyal to me by taking the time to track specific activities.

To become and remain a “player” in the loyalty space, investments must be made in strategic partnerships, business development, and more than anything, analytics and data segmentation. I’ve flown 190,000 miles on American this year and guess how many targeted emails I’ve gotten that target different things other than flying from Dallas? None. So, I added Expedia to my credit cards and programs; why be loyal to a company that does not invest in the time / research / resources to be loyal to me, individually?

A letter in the mail would be nice; these days, that insinuates some effort. Even more so, what about a package when you get to the airport when you hit a milestone number of miles? Maybe a travel bag that says “AA” on it? Or a blanket / pillow set? We know the cost involved with these, because we can purchase them – about $10. Am I not worth that $10 investment after spending nearly half a million dollars on your flights? You would even get free branding out of it.

Sure, I like the perks and the free flights, but whichever loyalty company finds the way to differentiate their offers utilizing data segmentation and tracking will be the loyalty program of choice over the next couple years. Come on American, I don’t want to have to choose another program.

  1. February 10, 2011 at 11:52 am

    A few weeks ago, I interviewed the head of loyalty programs at AmEx for an article, and they’re doing tons of research on exactly that topic. I was stunned when he told me that frequent-flyer programs have been the single most important source of income (and, in many instances, of capital) for the airlines in the past five years. With so much at stake, you’d have to think AA would be on top of it, or more on top of it.

    I’ve been a FF member of six or eight programs over the years, and the only one that’s really been worthwhile is Southwest. It’s ridiculously simple to earn free tickets, plus we get points from our Visa card. And enough free drink tickets to make the flights more pleasant.

  2. February 10, 2011 at 8:05 pm

    Ha – everyone days Southwest is the best FF program. In the state of TX, there is some weird law that all Southwest flights have to ‘touch ground’ in a connecting state to TX, so there are no direct flights (I try not to fly them because of that). But I have flown them and every time I fly with someone, they are always hording drink tickets over to me. They are actually the most profitable business model in the airline industry. Have you ever noticed how much more efficient they are than the other companies? They cut costs in ridiculous places – they don’t even have a call center. Brilliant business plan – you should try and look it up – interesting read.

    Oddly enough – I just had to read an article TODAY for one of my marketing classes that was about hotel points; unlike AmEx, not as profitable a business! AmEx, I think, is a bit of a different animal in that 1) People or businesses typically have money before being ‘invited’ to AmEx – so they have a different customer base 2) They have yearly fees associated with memberships 3) They CLEARLY have the best reward program.

    I also found out today that AA was the first launched airline reward program. I don’t mean to put them down, they’re “on top of it” and I always get treated like gold, but if you think about it – with everyone else going “engagement” or “personal”, they’re going to have to step it up as well. Where is the interview with the Amex head? I’m interested in reading.

    • February 11, 2011 at 3:07 pm

      Yeah, I know that TX has that goofy rule. Jim Wright, a Fort Worth congressman, put that in place in 1979 to protect AA against — you guessed it — Southwest. Sorry! http://en.wikipedia.org/wiki/Wright_Amendment

      The profile was for Lift magazine, which is the alumni pub for Embry-Riddle. I’ll send you a link when it comes out.

      He was saying ALL airline frequent flier programs are that lucrative, which is what surprised me. Hotels, probably not so much.

  3. February 10, 2011 at 9:42 pm

    Too bad they don’t know about the value of predictive analytics for the maximim ability to target marketing for direct response email, right Jamie??. That is what American Express uses.

  1. February 10, 2011 at 7:10 am

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