Are customers truly engaged in loyalty programmes?

The question of whether loyalty programme operators are actively seeking redemption is nothing to do with a moral or ethical quest for inner peace, but more to do with whether or not they are encouraging programme members to redeem the points or currency they’ve earned, according to Mike Atkin of MJA Associates.

Loyalty experts tell us that programme members are not fully engaged with a loyalty scheme until they have redeemed their points or miles and, therefore, operators should encourage ‘burn’ in the same way that they encourage ‘earn’.

Of course, some cynics say that many operators would prefer to enjoy the ‘breakage’ rather than endure the redemption. Indeed, we are seeing lots of creative ideas and offers that encourage participants to earn more points and miles (with double or triple points promotions and other bonus offers abounding), so why aren’t we seeing similar campaigns to encourage redemptions?

Typically, Tesco is enabling its Clubcard members to increase the value of their points by redeeming them for higher margin products, or with programme partners (thus reducing liability, increasing the perceived value of the points, and driving business for the partners).

This not only improves the value proposition for the customer but, of critical importance, it also means that customers don’t use their points to buy things they would have bought anyway. In other words, it avoids discounting the shopping basket.

We see offers from airlines, hotels and other travel loyalty schemes that are designed to get consumers to book flights and accommodation, and to earn bonus points. So why can’t consumers have offers that encourage them to burn their points? There have been a very small number of these campaigns recently, but why shouldn’t every programme offer “points are worth double” offers for the right kinds of reward redemptions?

Technology has improved significantly in respect of bonussing capabilities, and it is time to see some more creative bonussing efforts to help reduce funding liability and increase customer satisfaction.

This article is an extract from the 30 chapters of detailed coverage in ‘The Loyalty Guide 4’, which is The Wise Marketer’s latest global guide to customer loyalty and engagement techniques, best practices, models, metrics, practical advice, market data and research. The report provides hundreds of detailed case studies, forecasts, trends, tables and visual materials to support new initiatives, presentations and proposals. See how customer data can increase profits, reduce churn, and increase frequency, spending, and share of wallet, and find out where your competitors are succeeding or failing, and why.

Ever heard of Hotel Haggle?

HotelHaggle.com, a new site that lets consumers negotiate hotel prices, has been launched.

Launched by Ronan Carr, an entrepreneur based in Cork, Ireland, the company says its site’s value lies in the consumer-driven travel itinerary and the consumer-tailored results. Rather than putting the burden of finding a hotel bargain squarely on the shoulders of the consumer, HotelHaggle creates a collaborative approach to finding the best deal.

Users create an account, log in, share the details of their travel itinerary and the price they are willing to pay for lodging. HotelHaggle’s software filters the results, contacts the appropriate hotels and then puts the user’s business up for ‘bid.’ The resulting list of hotels that meet the location, schedule and price parameters is supplied back to the user for final decision and online booking.

The site says it offers a safe environment for confrontation-free bargaining and puts the customer back in the driver’s seat. Hotels in turn, enjoy a broader reach, receive valuable insight on consumer priorities and can book unsold rooms at an acceptable rate.

The site says it is possible to save anywhere up to 70% on a single hotel stay, with some bidding as low as $20 per room.

HotelHaggle.com will focus solely on hotels in the beginning, but will soon expand to include B&B listings, vacation rentals and timeshares. There are more than 120,000 hotels in the HotelHaggle.com database, according to the company.

www.eyefortravel.com reported on this yesterday, could be a great way for customers to save money on their hotel bookings, but more interestingly for the industry its a very innovative way for hotels to reduce distressed inventory!

Airline industry facing up to death of Airmiles

New research we commissioned, in conjunction with Airline Information, shows that 90% of airlines are being forced to find new, more profitable ways for customers to redeem their frequent flier currency.

These include partner offers such as hotels and insurance, with less than 50% of Airmiles programmes reported to be profitable.

Respondents cited accounting pressures, such as the need to record loyalty currency on balance sheets as a taxable liability, rising operational costs and shrinking seat capacity as a combination of factors causing the majority of airline brands to lose money on every seat they give away.

This shift to airlines seeking a broader range of redemption platforms is reflective of a wider trend in Airlines’ ancillary revenue and loyalty activities.

Consumers today demand more choice of how they redeem loyalty currency, and airlines are increasingly able to offer additional products and services from partner brands, seamlessly and securely, via their own sites. This allows airline brands to both enhance the customer value proposition and deliver enough revenue for redemption programmes to be, at the very least, self-funding.

Airline brands are clearly being forced to continually adapt their loyalty programmes in what is still an incredibly tough business environment. New models demand high levels of customer engagement, with tailored reward and recognition content that drives loyalty from a wider customer base.

Whilst broadening their redemption offering to consumers, it will be crucial for Airlines to add value by using their customer data, developing genuine insight and applying it to offer customers more relevant benefits, products and services. Airlines are uniquely placed to leverage their customer data, as they not only have a large volume of data collected about their customers but more importantly they have permission to use it.

Offering memberships via unique bundling of, for example, travel insurance or wi-fi and airport lounge access provides a platform for airline brands to build a relationship with customers. It’s by focusing on the relationship instead of the revenue, that the airline industry will be able to develop additional sustainable streams of income.

 

Airline Redemption Opportunities Survey

Thought it might be interesting to update you on our recent redemption survey. Working in conjunction with Airline Information for the 6th Annual ARAC / FFP Mega Event in Montreal this year we surveyed attendess and found some interesting results.

The survey revealed that:

• 100% of airline industry respondents wanted to have more redemption content in their portfolios
• Only 50% have redemption offers which deliver them profits rather than costing them money
• Two thirds feel that customers who engage with a redemption programmes are more loyal to the core loyalty programme

It seems that airlines are starting to look into how effective redemption programmes are, as well as considering additional partners and methods of delivering content to customers, perhaps to widen programme appeal, so its not just frequent flyers that get value out of FFPs. This should be great for the not so frequent flyer, but also should provide even more benefit for frequent travellers!

If you want to see the full survey results and report please give me a shout.

Paul