CEO Blog

The price of not keeping your promises

Written by Ravindra Bhagwanani on . Posted in CEO Blog


21 July 2015

Loyalty programs are full of promises – and hardly any keeps all of them. The price of that can be very steep and actually lead to the exact opposite of the purpose of those programs, creating dissuasive behaviour and making customers turn away.

When French all Business airline La Compagnie recently launched its loyalty program My Compagnie, I would not really have paid attention to it. The program is not really attractive and I will hardly ever have the chance of flying them, not living at one of their gateways. Nevertheless, I’ve decided to join their program as they promised for all new registrations by 30 June a number of points, equivalent to 50% of the points required for a free one-way Transatlantic flight. Not bad and the kind of the deal that could indeed influence customer behaviour in a positive manner. After having completed the registration form, I was told that I was sent a confirmation link via e-mail, which I am still to receive more than one month later (not in my spams, my e-mail address was correct and a second attempt resulted in the same).

From a potential customer ready to go a bit out of my way, I became not the indifferent person towards La Compagnie I was before, but one with even an averse feeling towards it. I didn’t make any bad in-flight experience etc. with them, they simply didn’t keep their promise – and certainly not based on any bad intention, but because basics like the technical platform didn’t work properly.

But you don’t have to look at innocent newcomers to look for such issues. For many established programs, there are simply too many technical issues with the enrolment process – what is a potential customer expected to do if he/she can’t enrol in a program? -, the credit of points, the promise of “free” flights (which come afterwards with a couple of hundred of dollars in taxes) or the promise of hotel miles for each stay (but don’t dare to book through an online travel agency! Which FFP is transparent about that??). And there are obviously more serious cases such as Gulf Air, publishing award prices for Virgin Atlantic flights on its website, which are lower than what they actually apply when you really make a booking.

All these might seem minor issues to loyalty professionals because everything is, of course, clear to them. But from a customer perspective, the interpretation can be pretty different and actually often is. Many members of loyalty programs feel nothing less than betrayed these days and most of these cases are due to companies creating wrong – or at least doubtful – promises they can’t keep. As we all expect that our close contacts keep their promises, customers expect companies to keep theirs if they are engaged with them. To start with, there should be no ambiguity what the promise is all about.

And even if the mistake is on the customer side, the interpretation of the customer might be different. The other day, I met a new frequent flyer, flying regularly in Business Class on transatlantic flights. According to him, he was always indicating his FFP number, but never got any miles. It is obviously unlikely that this can happen repeatedly on a major airline and I would also suspect that he did something wrong – but the result is nevertheless that this guy feels betrayed. Although loyalty programs are now well established, the industry shouldn’t forget about such high potential greenhorn newcomers either – there are more of them than of freaks having studied the whole system during a couple of years before ever accumulating their first miles.

Simplicity is obviously the solution to this dilemma as it is easier to keep your promises if you don’t promise anything (or at least not too much) in the beginning. But hardly any program these days feels like going back to Southwest’s earlier winning formula of 16 one-way flights = 1 roundtrip award flight, forgiving revenue potentials from credit cards etc. But looking back, there were reasons that this was a successful program. It was easy, transparent and didn’t create any promises it couldn’t keep.

Programs should self-critically consider whether their communication and engagement efforts increase sufficiently as the complexity of their programs increases. This is one of these areas where there is no directly measurable ROI, but there is little doubt that hardly any program makes sufficient efforts here and has hence room for improvement. Even if you can’t measure the ROI of such efforts as such, there should be no doubt that avoiding the creation of frustrated and disloyal customers through a sub-optimal delivery of your loyalty program promise should be the first priority for each loyalty marketer.