Randy Petersen Exectuve Travel Summit Wrap-Up: Loyalty Session Part 5-Loyalty Debate
Introduction
Loyalty Session Part 1: Swift Exchange
Loyalty Session Part 2: American Express
Loyalty Session Part 3: Points Pay
Loyalty Session Part 4: American Airlines
Loyalty Session Part 5: Loyalty Debate
Hotel Session: What issues keep you up at night?
DEBATE:
In addition to the debate over controlled (intimate) transparency vs. full (fixed) transparency, one of the heated discussions at the Executive Travel Summit was the idea of loyalty. What does it look like in the travel industry? How does it manifests itself in travel habits.
Loyalty Paradox
Central to the confusion is the idea of a loyalty paradox, which was presented using the following example:
Person A – Flies 20 Times: 10 with Airline 1, 10 with other Airlines
Person B – Flies 2 Times: 2 with Airline 1, and ONLY Airline 1
Which one is more loyal? I suppose that is in the eye of the beholder.
In the first case, Person A certainly brought in quite a bit of revenue for Airline 1. In fact, it has been estimated that 0.5% of passengers account for 48% of airline revenue. However, they gave that airline only 1/2 of their business.
In the second case, little revenue is generated, yet Person B gave them 100% of their business. And if you are judging their loyalty by their devotion to something, then they are definitely more devoted than Person A.
What is Loyalty?
So devotion and commitment to a company exists, but does that really equate to loyalty? During the panel, one attendee promptly stood up and stated “Real loyalty doesn’t exist. Give them enough miles and they will be on my airline this afternoon!”
Initially I did not buy into that, then I found myself asking if that would include Elite-Qualifying-Miles, and how many! 🙂
ANALYSIS:
Value of Elite Status
Is it necessary to always stay at the same hotel or fly the same airline? Elite status is now available, “a la carte.” Loyalty programs are not only calling some members “over entitled,” but also cutting back on elite benefits.
So is elite status really important? Really, it comes down to a personal call as to what someone calls loyalty. Personally, I think having status is very important. However, I will always say make your miles and points work for you, not the other way around.
If you have read this blog for a while, you know that I fly Delta. Most of my travel is domestic, and unless I want to route through Seattle every time I can’t fly American out of my home airport. In addition, they have a great domestic product, and I think they provide EXCELLENT customer service.
CONCLUSION:
Alternative Redemptions
The face of loyalty is clearly changing. Not only with what having “status” in a loyalty program, but how those miles and points are used. Loyalty programs are tying to find ways to prevent breakage–that is their miles never getting used. That is where companies like Swift Exchange and PointsPay come in.
These companies have created a shift from redeem for value to pay with points. In order to keep their programs stable and healthy, they have begun to seek out alternative forms of redemption. In doing so, it could be argued that their points may lose their value proposition.
Are Alternative Redemptions Worth It?
I however, would disagree. Don’t get me wrong–I’m just as crazy about using miles to sit at the front of the plane as Lucky and Gary. It’s just that sometimes you may end up with some spare miles in this hobby.
For exampled, I have racked up thousands of miles simply by checking into properties on FourSquare. But I don’t really see myself using a lot of my Best Western points for award stays, since it’s not something I put a lot of value in. Or, how I noticed on AwardWallet recently that I had been award 5,000 Spirit Airlines miles, for some bonus I don’t remember signing up for. An entertaining airline, but I don’t plan on ever flying with them.
So what do I use them for? Well, I guess SwiftExchange does sound pretty good for that use…
Point Me to the Miles 