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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…

Randy Petersen Exectuve Travel Summit Wrap-Up: Loyalty Session Part 4-American Airlines

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?

I apologize for the brevity here, but I should note that  I don’t think Randy intended originally for Suzanne Rubin to be on the panel.  She just happened to be in the right place at the wrong time for an impromptu interview.

Related to the topic of alternative redemption possibilities, she was asked where in the process American is.  However, Rubin declined to comment.  In my opinion, this is most likely a yes, otherwise might have flatly said “no.”

According to her, it’s “about the Math vs. Value” equation at this point.

If you wish to hear more from Rubin, MilePoint had a great discussion with her the other night, which can be read online.

Randy Petersen Exectuve Travel Summit Wrap-Up: Loyalty Session Part 2-American Express

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?

AMERICAN EXPRESS:

Where Swift Exchange aims creating a fully-transparent operating system for the loyalty industry, American Express seeks to look at not just giving out miles, but adding value in a controlled manner.

American Express seeks to add value in an intimate, fixed manner.  In doing so, their Loyalty equation is a more balanced equation with two sides:  Not just the cost conversion-that is doling out points, but also the experience side of providing customers with lasting value.

Their co-branded Delta SkyMiles credit cards, for instance, benefit cardholders with their first checked bag free, car rental insurance, and full concierge service, in addition to earning points for spending.

Another prime example of this model is the Link, Like, Love campaign, which delivers offers based on spending habits to provide a more controlled experience.

Thus American Express aims to be ubiquitous (ever-present) without being watered down.  It is controlled transparency that is “enabling, beyond transparency.”

Randy Petersen Exectuve Travel Summit Wrap-Up: Loyalty Session Part 1-Swift Exchange

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?

SWIFT EXCHANGE:

Every year billions are spent by the Loyalty Industry programs controlling miles and points.  Thus, a common theme of the summit was the idea of not only offering full transparency, but also creating a cohesive points “operating system.”  That said the morning panel had differing views on how best this is accomplished, as I will describe:

Swift Exchange is the self-proclaimed “operating system” for the loyalty industry.  Set to launch in the Fourth Quarter of 2012, Swift Exchange will allow one to use a combination of miles and points from a variety of reward providers, as form of currency with merchants.  On the “Controlled vs. Fixed” debate, they Thus Swift Exchange is a collaborative partnership between Reward Providers, and Merchants, and the Customers–points junkies like us.

Frequent fliers and mileage junkies will be to utilize miscellaneous and possibly neglected miles (ie Spirit Airlines miles), but in this proposed system, would not be the only ones reaping the dividends.  Merchants would be paid for accepting miles as a form of currency, and the reward providers would be able to manage the spiraling reward liability costs.

“Modern-day loyalty programs have reached the limits of their current technology and methodology,” said Richard Postrel, Chief Executive Officer and Founder of Swift Exchange. “Fundamental macro-economic issues must be addressed in order to advance this industry into the next generation.  What we are seeing is an industry that is ripe for transformation. This is a wake-up call for the entire reward and loyalty industry.”

Randy Petersen Exectuve Travel Summit Wrap-Up: Introduction

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?

INTRODUCTION:
Recently, in addition to attending the Freddie Awards Ceremony and Frequent Traveler University in New Jersey, I had the pleasure of attending the Randy Petersen Executive Travel Summit.  The morning (mostly loyalty discussion) panel consisted of representatives from American Express, Points Pay, and Swift Exchange, American Airlines, and was moderated by Randy, Mr. Miles & Points himself.  The afternoon (hotel) session included a hotel panel, consisting of representatives form Starwood Preferred Guest, Hilton HHonors, Wyndham Rewards, and the new Club Carlson program.

When I started putting this post together, I realized how quickly just how long it could get.  So to make it reader friendly, I decided to break into up into the multiple sections.  My notes from the afternoon session are much more straightforward so I should be able to do summarize it all into one post.

Frankly, as a disclaimer I should point out that I have an engineering degree and not a business degree, so some of the   some of the marketing and branding details were beyond me.  In fact, the reason for my delay in writing about this has been due to trying to find a way to disseminate this information into coherent post(s).

Enjoy!

Morning Session

Coming to a Field Of Burch Near You…

I just wanted to update you guys, I have been fairly busy over the past few days with the  Executive Travel Summit, of course Frequent Traveler University, and visiting New York for the very first time.  I will be providing posts of all of these.  So please forgive me for the recent delay in posting.

Evidently, walking from Lower Manhattan to Central Park (5 miles if you walk straight, and I zig-zagged a lot) can lead to a little bit of soreness and neck pain from standing all day…

Meet Me In New Jersey!

As I have mentioned before, this weekend I will be blessed and fortunate to attend the Freddie Awards, Randy Petersen Executive Travel Summit, and Frequent Traveler University.

If you are attending any of these events, I would like to meet you!  I will have a table and poster set up with some goodies,and I would be delighted if you came over to chat with me.  Tell me what you think is working, and even where this blog fails.  Really, I promise I don’t bite!

I appreciate your readership, as you are the folks that make blogging worth while.

And if you are unable to attend, have no fear–Field of Burch is here to cover it all!

Randy Petersen Travel Executive Summit

Randy Petersen, Mr. Frequent-Flier Guru himself, will be hosting an a travel dialogue with a number of the leading travel executives. The event takes place at just the right time, situated between the Freddie Awards at the Renaissance Newark Airport Hotel (the same location as the summit) and Frequent Traveler University, which kicks off with a cocktail reception that night.

You can register via the tab on the Freddie Awards webpage here, for $99 including lunch, with the proceeds going to charity.  Also, as I just found out, you can sign up at a special rate of $49 via this link.  If you really want the private link you can email me.

Brian of The Points Guy (post here) and Gary of View From the Wing both attended last year and found the discussion intriguing, to say the least.  To quote from Gary’s own post:

The discussion was fascinating — we got advance intel on changes to the American AAdvantage million miler program, that United was looking to focus more on high revenue flyers than just elites, as well as Delta’s IT problems. And questions in the audience were particularly hard hitting for Jeff Zidell at Hyatt (what happened to Faster Free Nights and “G bonuses”..?) and Delta (why does your website price a coach award between New York and Los Angeles at 100,000 miles?). The opportunity to ask questions and interact with the heads of the programs is a real treat for any frequent flyer.

Attendees will include representatives from Marriott, Starwood, Hyatt, Choice, Best Western, IHG, Wyndham, Hilton, Carlson, Accor, and Taj Hotels.

I hope to see you there, but if you can’t make don’t worry-I will be covering all of the proceedings!

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