{"id":5065,"date":"2020-07-13T14:41:40","date_gmt":"2020-07-13T13:41:40","guid":{"rendered":"http:\/\/www.globalflight.net\/german\/?p=5065"},"modified":"2020-07-13T14:42:06","modified_gmt":"2020-07-13T13:42:06","slug":"questioning-the-purpose-of-loyalty-programs","status":"publish","type":"post","link":"https:\/\/www.globalflight.net\/german\/questioning-the-purpose-of-loyalty-programs\/","title":{"rendered":"Questioning the purpose of loyalty programs"},"content":{"rendered":"\n
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13 July 2020<\/span><\/em><\/p>\n\n\n\n

Loyalty programs widely work on rewards and recognition. But both elements are kind of broken in the current market environment, meaning that loyalty programs would need to reconsider how to remain relevant during the crisis.<\/p>\n\n\n\n\n\n\n\n

There is no\ndoubt that loyalty programs need to assume their full responsibility to drive\nrevenues in harsh times like the current ones. While the focus over the last few\nmonths, with travel being quasi non-existent, was on engaging customers during\nthat time, the focus now needs to switch back to that more traditional role –\nbut the traditional recipe risks not working anymore for some time.<\/p>\n\n\n\n

As it is\nwidely known, loyalty programs work on the appropriate mix of rewards and\nrecognition, depending on the customer group. The rewards component predominates\nin importance for base members – although some recognition in form of\nintelligent use of data is certainly possible for that group as well – while\ntier members, representing only a small fraction of the database, tend to be\nmore focused on the recognition side, without the reward side becoming\nirrelevant though.<\/p>\n\n\n\n

The bad\nnews is that all these elements are more or less broken in the world we are\ndiscovering now as travel rebounds, whether we like it or not.<\/p>\n\n\n\n

The loyalty\ncurrency, with its direct relation to program partners, has become less\nrelevant since the award you were saving towards might not be accessible\nanymore. Be it an exotic destination, which is no longer served by your\nairline, be it the experience of a premium cabin on an Airbus 380 now in\nstorage or be it government-imposed travel restrictions: There are many reasons\nthat the miles are no longer viewed as valuable as they used to be. Or more\nfundamentally, travelling has lost the attractiveness for many travellers.\nTravelling around the world behind a protection shield in order to end up\nsomewhere in quarantine might be something passengers are willing to accept if\nthey have to travel – but they are unlikely to consider this anymore an\naspirational experience they wish to spend their hard-earned miles on.<\/p>\n\n\n\n

The\nrecognition part is mostly reflected in the tier programs, providing the top\ncustomers with additional benefits in order to create that critical stickiness.\nThe most recurring benefits include – with some variations between programs and\nmarkets – lounge access, upgrades, bonus miles and priority services\n(check-in\/boarding).<\/p>\n\n\n\n

However,\neach of these key benefits is broken these days. The lounge experience is no\nlonger what it used to be. Packed food instead of freshly cooked food, no open\nbars, capacity restrictions etc. will significantly reduce the value of this\naspect for elite members. Complimentary upgrades won’t be anymore the result of\na (calculable) load factor science, but become very much random as airlines try\nnot to overload a premium cabin if the back of the plane is empty, for reasons\nof social distancing or simply to ensure the operational weight balance of the\nplane. Bonus miles contribute to the reward side – see above. And with ground\nservices being changed, for instance with many airlines moving to boarding\nplanes from the back, status-related benefits don’t really necessarily enhance\nthat ground experience anymore either.<\/p>\n\n\n\n

As a\nresult, members certainly question the value of being part of such club and, as\nconsequence, the efforts they are still willing to put into achieving or\nmaintaining that membership. Extending the status validity and\/or easing the\n(re)qualification rules is certainly nice, but doesn’t address the underlying\nproblem from a customer experience perspective.<\/p>\n\n\n\n

In order to\nstay relevant, there is no other choice for loyalty programs across the travel\nindustry than redefining how they want to position in the near future. In\nabsence of such adjustments, they will become even less relevant in the\ndecision process of customers, raising some (justified) questions about their raison\nd’\u00eatre<\/em> by top management – what might be better avoided. Quick, even if\nunconventional, measures will definitely be required here and can make that\ncompetitive edge everybody will need. The focus needs to be on addressing the\nreal needs of members during this new – though temporary – reality, what would include\ncooperation with partners such as authorities rather than the traditional\ncurrency-based partnerships.<\/p>\n\n\n\n

The good\nnews is, however, that the industry will return to a normal state at one point.\nBut it becomes unfortunately clear that that point is too far away as that we\ncould afford just closing our eyes and sitting it out. A special edition of\nloyalty programs is most certainly required, before returning to the game we\nmay all master better.<\/p>\n\n\n\n

It also becomes\nclearly visible that nothing should be taken for granted anymore when it comes\nto surviving that crisis. Many might not yet have fully realised that, but\nloyalty managers definitely have a role to play here in order to put their\ncompany on the right side of that line. Not by hoping for miracles, but by\ntaking the appropriate management actions. Now.<\/p>\n","protected":false},"excerpt":{"rendered":"

13 July 2020 Loyalty programs widely work on rewards and recognition. But both elements are kind of broken in the current market environment, meaning that loyalty programs would need to reconsider how to remain relevant during the crisis.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_links_to":"","_links_to_target":""},"categories":[37],"tags":[],"_links":{"self":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5065"}],"collection":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/comments?post=5065"}],"version-history":[{"count":1,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5065\/revisions"}],"predecessor-version":[{"id":5066,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/posts\/5065\/revisions\/5066"}],"wp:attachment":[{"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/media?parent=5065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/categories?post=5065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.globalflight.net\/german\/wp-json\/wp\/v2\/tags?post=5065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}