Article: Loyalty Programs Creating Two Tiers of the Same Status

[AFF Editor]

Loyalty Programs Creating Two Tiers of the Same Status is an article written by the AFF editorial team:

Loyalty Programs Creating Two Tiers of the Same Status

We're seeing a new trend of airline and hotel loyalty programs reserving certain elite benefits for members who earned their status through actual flights or nights.

www.australianfrequentflyer.com.au

You can leave a comment or discuss this topic below.

 

[SYD]

QF Points Club and PC+ (in particular) probably should rate a mention:
a. PC+ comes with complementary QANTAS Club membership - so approaching QF SG status, without the OWS benefits.
b. 100 SC rollover, and
c. SC earn on QF CR flights that help attain/retain QF FF status.

Pulling the thread of the article, will we eventually see PC provide an alternate route to PS, SG or higher status levels?

 

[levelnine]

I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

By contrast, in the US forums I frequent, they love it. I regularly see people who are top tier in American, Delta, Hyatt, Hilton, IHG & Marriott simultaneously even though they only travel 2-4 weeks per year as a result of shopping portals and credit card spend. Why do they do it? Partly because it is a fun game — people like to brag about how they have more elite nights than nights in the membership year. Partly because it is easy if you know the right techniques. And partly because it means they get to travel well for those few weeks a year they do get off work.

 

[Rich]

Pulling the thread of the article, will we eventually see PC provide an alternate route to PS, SG or higher status levels?

Maybe, but PC/ PC+ vs. Gold is a good example of multiple tiers already in place. You get a benefit with PC+ (or QP paid) but it doesn't go as far as SG on lounge access, let alone other benefits. I would think Qantas already have the balance largely right on this one (for their purposes).

I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

To be fair the article says "Overall, that’s a great thing as it makes status more accessible and means more people can benefit from the perks" which is not an unreasonable argument. The 2 tiers seems a necessary step and here to stay.
I would also argue that increased access generally leads to a better product with time. There was a time I recall that you could only get lounge access with paid membership or flying F/J. Now Qantas has 2 levels of lounges at some domestic ports. How many here who don't like non frequent flyers getting lounge access are only accessing the QF lounge on SG? I am sure they wouldn't want to go back to the previous arrangement.
Airlines will need to keep offering something better to the actual frequent flyers and that has to be a good thing.

 

[CaptJCool]

Before the spend or after the spend

Point in time vs over a period of time

Loyalty v Choice
Initial Offer to First time buyers?
Incentive v Reward v Appreciation and Recognition

We all know of the Australia tax (for being loyal to the cause we will charge you more up-front and then “trickle-down” post spending rewards (in effect giving you a non-cash discount) to redeem on anything from us (golden handcuffs)

And then there’s attraction carrots (credit card churning comes to mind) to get you to sign up

Then there’s potential retention Strategies - sharing the spoils of the profits

And potential maintenance strategies ( keep you in the game
Previously known as JASA (RIP) with the current strategy Double Status credits or triple points for example of 50% bonus on Top-up points

And there’s retention strategies like comp’d status membership or extra points to stay (like with AMEX)
Bizarrely if you’d like to keep your status please spend 80,000 - 120,000 points to do so - they should be gifting me points to stay but there you go (supply and demand) like a riveting video game that keeps you coming back for more and more

UNTIL
You discover the ease of earning is not quite the same as the complex web of redeeming and no, I don’t want another toaster even if it’s fancy light green one like my mother has)

UNTIL
you self-fund after quitting that job that was providing all that “free to you” travel (in our case, status credits but zero FF points) AND professional allowances to keep our CPD Upto date. (Negatively geared just like a rental property = perfecto)

UNTIL
life time Platinum is so out of reach that why bother

How to Use Predictive Purchase Behavior Modeling to Understand Consumers

Learn how to use likelihood to buy models to improve your marketing.

blog.hubspot.com

“Using predictive analytics, the system is able to differentiate discounts across customers, leading to higher sales and retention without increasing costs. Customers are ranked according to their likelihood to buy. Based on that ranking, the business is able to determine which discounts would obtain the optimal response from each customer and offer minimal discounts through email or mailed postcards to customers who were already deemed likely to buy and offer larger discounts for customers who were less likely to buy. This drove incremental margin from customers who were already motivated to buy and incremental revenue from customers who previously felt no incentive to buy.”
That’s the loyalty side of the business. I think airlines have a way to go to really personalise offers



And then the epiphany
AFF can offer you far more tips, tricks and features than any airline loyalty program which has morphed off into the lala land of “share of wallet” across all categories

Phew because of AFF, many spent $2,500 - $3,600 on WP status
Instead of the “slow-burn” way of around at least $15,000 (if not considerably more)

This savings in its own way is reward enough with no thanks to the actual Loyalty program itself We learnt the rules, we adopted an adventurous exploratory approach, we scooped up discounted fares at the right time when DSC came our way (and even got DSC Barcaldine - Longreach FLEXI fares to put into credit to use later on to keep racking up them DSCs to keep status going for another year or two) or flying offshore with a nested ticket to Asian capitals to skewer that Australia tax to pieces

So What’s the Q airline response ?

A long running 35% discount on inflated price domestic J Fares
Well, it’s a start but almost always does the bank win.
The only fair price on dynamically priced fares that appear anywhere close to the cost of running the business are on the LCC Where there’s no loyalty offering

Fair priced Fares ?
Dream On!

 

[Berlin]

I'm surprised the article describes this development as a welcome one. For most people on this forum who are actual frequent flyers, they almost certainly hate it.

By contrast, in the US forums I frequent, they love it.

True, I’m also not a fan personally. The article briefly mentions this- my main gripe is that it devalues the actual benefits if every Tom, Dick and Harry gets status just by means of having the right credit card.

Case in point- both Marriott and Hilton Gold is near worthless these days. Which is a main reason I’m a Hyatt loyalist, ensuring I manage to clock in my 60 nights a year- Hyatt has far fewer “fake” top status members, especially outside of the US. And as a result, pretty much every stay I end up in a way better room category than booked, often even a suite.

 

[tdimdad]

Just yesterday I got an online survey from QF about the company and their loyalty offerings. Lot of the loyalty part seemed to be testing ideas on non-flying status. It also asked about my satisfaction on ease and value of redemptions.

In the free text fields, I pointed out that giving benefits to every man and dog with a credit card dilutes the value and reasons to be loyal. There needs to be a clear differentiator between the purchased vs earned status.

Redemptions? Not interested in toasters, domestic flight redemptions are ok, international too rare and unpredictable to offer value. I also suggested they consider guaranteed int'l upgrades (subject to availability) similar to domestic Y->J upgrades.

Because printing money through the FF programs seems to be a lot easier compared to running a hotel or flying planes, it's understandable that the companies seek to maximise that revenue. The more 'low cost, high perceived value' benefits they attach to it, the more appeal and revenue. It works for them only too well.

 

[tdimdad]

As an afterthought, I wouldn't be surprised if we see a hotel chain to offload heir properties to a completely separate operator. What was the hotel chain, is now merely a marketing & booking & "loyalty" company which purchases capacity from suitable property operators.

 

[pangwen]

As an afterthought, I wouldn't be surprised if we see a hotel chain to offload heir properties to a completely separate operator. What was the hotel chain, is now merely a marketing & booking & "loyalty" company which purchases capacity from suitable property operators.

That's not too far away from the current model of the chain being the "brand" and the hotels being operated as franchises - e.g. Hilton, with >95% of their properties being franchised (source). It's a contributor to some of the inconsistent treatment elites get at different properties.

 

[SYD]

That's not too far away from the current model of the chain being the "brand" and the hotels being operated as franchises - e.g. Hilton, with >95% of their properties being franchised (source). It's a contributor to some of the inconsistent treatment elites get at different properties.

Conversely allows a hotel chain to readily expand into markets eg DTs appearing in Oz overnight through a combo of rebadging and operators in new builds. Before that, HH was a bit of an overpriced proposition domestically.

But overall, not unique to Hilton.

 

[outthere1000]

Loyalty Programs Creating Two Tiers of the Same Status is an article written by the AFF editorial team:

Loyalty Programs Creating Two Tiers of the Same Status

We're seeing a new trend of airline and hotel loyalty programs reserving certain elite benefits for members who earned their status through actual flights or nights.

www.australianfrequentflyer.com.au

You can leave a comment or discuss this topic below.

Air Canada's Aeroplan has affiliated credit cards, and (amongst several things they offer to holders of these cards that non-holders don't get) in a queue for an upgrade, someone with one of these CCs will rank in front of someone else with the same FF status but no affiliated CC - and that's even if the latter has million-mile status, attained only by actually flying on AC services. I hate this, and an AC employee has told me they don't like it much either.

 

[Laptop Jockey]

It makes sense, I've always thought that travellers in that bracket roughly equating to silver status were where airlines and hotels were leaving a lot of money on the table. The lack of any real benefits to silver (equiv.) mean the airlines are effectively freeing still relatively frequent travellers (particularly domestic Y) to shop around on price rather than coaxing that loyalty aspect. Sure someone who travels ten or twenty times a year domestic Y and maybe an overseas holiday once a year may not be the most lucrative, but right now it isn't worth it from the travellers perspective. And it isn't as though they travel enough to actually add any real operational cost on the airlines side.

As for people being unhappy with these sorts of programs "devaluing" their "hard work" to attain status, let's be real here: The majority, or at least a plurality, of Platinum holders got there primarily through work funded travel, it's not as though there was any massive sacrifices at play here.

 

[Berlin]

As for people being unhappy with these sorts of programs "devaluing" their "hard work" to attain status, let's be real here: The majority, or at least a plurality, of Platinum holders got there primarily through work funded travel, it's not as though there was any massive sacrifices at play here.

Not so sure of this is still the case post-Covid. With companies getting stingier on business travel and more savvy with remote meetings, I get the feeling that this mix is shifting. Lots of self-funded travel these days even “up the front”, whether for pleasure or as small and medium business owners.

I myself originally attained Platinum status through work travel but these days it’s all self funded and I find that I bump into more and more similar cases when chatting to fellow travelers.

 

[Laptop Jockey]

Not so sure of this is still the case post-Covid. With companies getting stingier on business travel and more savvy with remote meetings, I get the feeling that this mix is shifting. Lots of self-funded travel these days even “up the front”, whether for pleasure or as small and medium business owners.

I myself originally attained Platinum status through work travel but these days it’s all self funded and I find that I bump into more and more similar cases when chatting to fellow travelers.

Definitely agree the ratios are changing at least somewhat in the last two years (have experienced the same personally) but it is still definitely a thing (just go into any domestic lounge on Monday morning; Stevie Wonder could see it is mostly business travel)

Also, don't discount the "bump" factor of work travel. A long haul J once a year and maybe a domestic flight to see mum, plus the work travel adds up, but the work component is the difference for most.

 

[tdimdad]

I'd hazard a guess that a year from now, the number or ratio of business pax in lounges on weekday mornings might be lower. The last status supports wean off and companies are continuously seeking efficiencies in meeting practices (plus the virtual environments are gradually becoming better). The number of true road warriors might get smaller and smaller over time.

For me, work travel kept me firmly on silver in one program (QFF, in my case). Anything above that has been self-funded. Now the work travel is at the bronze level because of virtual meetings so any status is all from my own personal budget.