Invited to participate in a QF Loyalty Virtual Focus group

[mviy]

it would be way too easy if it were simply a balance of 1 million points.

Yes, if maintaining a balance of 1+ million points was enough to get P1 there would be a lot more P1s here.

Earning 1 million points in a year is far beyond what I expect to ever earn in a year for the foreseeable future.

 

[SYD]

Yes, if maintaining a balance of 1+ million points was enough to get P1 there would be a lot more P1s here.

and an interesting alternative route to LTP (since it’s hard to burn them anyway…).

Earning 1 million points in a year is far beyond what I expect to ever earn in a year for the foreseeable future.

Especially when only 20k from flying count! (Not including the extra 20k now available from QBR transfers).

 

[levelnine]

But their maths is all wrong. We know that filling a vacant J seat on a return MEL-LHR route costs QF about $1,800 based on their any seat redemption rates exposing the value of 0.6 cents per point, and the maths of 289,200 points for a J classic redemption on that route. The revenue price for that route using sale fares is $9,500 - so they make a return of $7,700. That passenger might fly several times a year. Compare that with someone who spends a whole year amassing 1,000,000 points through credit cards and that's worth $5,000.

It is an interesting thought exercise — it can't be anything more than that as we don't know the precise figures. For example, OMAAT estimates that Qantas sells points to US banks at USD 1.4c per point. At current exchange rates, that is AUD 2.2c per point. It's probably not that high in Australia, but probably higher than your 0.5c estimate. (I wouldn't use Woolworths as a gauge for sale price as Qantas undoubtedly sells them to different customers at different price points.)

Qantas Loyalty's operating margin is nearly double that of Qantas International and 2% higher than that of Qantas Domestic. That makes me think they can afford to be a lot more generous to points earners than flyers when it comes to awarding status, especially because awarding status to customers that bring in lots of revenue and buy almost nothing from you is the dream. A P1 that brings in thousands of dollars revenue each year and only redeems their P1 benefits once or twice per year is a golden goose.

 

[Seat0B]

Excellent effort and thanks for comprehensive summary @Seat0B , hopefully you were "heard".

I did feel heard by the consultant running the session, and very in line with the comments of the other participants. Whether any of us are heard by QF remains to be seen....

 

[RooFlyer]

It's the start of a reverse takeover process. My money is on PC eating the main QFF program in the next 5-10 years. PC becomes more and more spend for status then is merged into, and replaces, the main QFF program.

Finally sort of like Aeroplan was in its previous incarnation? I got thrown heavily into it for about 4 years when I was commuting back and forth to Canada and then IIRC most aspects were run by points.com and your Air Canada earning was just one form of earning in your 'account'; Air Canada only handled things like upgrades, done via e-certificates. Hazy memory now, but I remember it was all about points, not so much about flying.

 

[Seat0B]

I am slightly puzzled by the focus group if it was aimed at how to encourage Gold and Plats to engage with PC. They are already engaged with an airline programme that is significantly better than PC. If that's not enough to get them to steer business Qantas's way then nothing will.

Yes I had the same sort of feeling about it. I was actually quite disappointed that this was the focus for the focus group, when I really wanted to talk about the FF program and the QF web site. But it really felt like we had been deliberately selected to this particular group - and when I registered, there was a question about the number of flight segments taken in the past 12 months, so they were really looking at people who genuinely fly quite a bit.

The main focus of the session was what they could offer us that would make us interested in actively trying to retain/upgrade the PC or PC+. I suspect that they want our "on the ground spend" as much as they want our "in the air spend", and they must have some data that suggests (probably quite correctly if this was a realistic representation of the group), that higher tier FF feel pretty "meh" about most of the PC/PC+ offering and so don't really care whether they retain or move up at all. Honestly, the main thing that was attractive to any of us was the SC - either the roll over for PC+ or the SC on CR seats for PC/PC+.

 

[Seat0B]

I put forward @Seat0B to replace Olivia

Awww thanks @Flyfrequently - I think . I will be busy between this and my role as CLEO (thanks to @MARTINE)

 

[encryptededdy]

Only thing of interest I saw there was exchanging the PC+ QC membership for 150k points.

 

[Mr H]

It is an interesting thought exercise — it can't be anything more than that as we don't know the precise figures. For example, OMAAT estimates that Qantas sells points to US banks at USD 1.4c per point. At current exchange rates, that is AUD 2.2c per point. It's probably not that high in Australia, but probably higher than your 0.5c estimate. (I wouldn't use Woolworths as a gauge for sale price as Qantas undoubtedly sells them to different customers at different price points.)

My understanding is that Qantas sells the points for 1.1 cents and redemptions typically cost Qantas about 0.6 cents - so a net gain per point of 0.5 cents.

Qantas Loyalty's operating margin is nearly double that of Qantas International and 2% higher than that of Qantas Domestic. That makes me think they can afford to be a lot more generous to points earners than flyers when it comes to awarding status, especially because awarding status to customers that bring in lots of revenue and buy almost nothing from you is the dream. A P1 that brings in thousands of dollars revenue each year and only redeems their P1 benefits once or twice per year is a golden goose.

I would bet that the operating margin for premium cabin flyers vastly exceeds anything that could be achieved with selling points. And the key thing is that each individual premium cabin flyer would bring in much more profit than a points churner. Personally, I reckon most churners would top out at around 700k-800k if they go gangbusters. The number of million point collectors would be few, and most of them would be doing it anyway without additional incentives. All for a really rather modest gain for Qantas - as per my estimate of $5,000 per million points.

 

[levelnine]

And the key thing is that each individual premium cabin flyer would bring in much more profit than a points churner.

I'd say the key thing is they have already saturated that market. Qantas can only entice substantially more premium cabin flyers by lowering the price or upping the service, either of which would eat into margins and thus kill their biggest profit centre as you rightly note.

By contrast, there's hundreds of billions more points capable of being sold to credit card users. That would span the gamut from points whales directing their spend to better programs (ie foreign airline programs or cash back) to families that think Qantas points are only worth chasing if you fly often.

And it makes sense to start by targeting the whales. For many people putting huge spend on their cards, there is very little reason to chase Qantas points because it is currently such a terrible program for big spenders/infrequent flyers. Earn 1 mil points a year and get pretty much nothing for it — a coughpy QC membership (with access to dreadful international business lounges in the two key departure ports) and some points you can't redeem for flights you want. Give them P1 status and now they're enticed by First Lounge access, the hope of actually being able to use the points for flights they want, etc.

 

[Mr H]

And it makes sense to start by targeting the whales. For many people putting huge spend on their cards, there is very little reason to chase Qantas points because it is currently such a terrible program for big spenders/infrequent flyers. Earn 1 mil points a year and get pretty much nothing for it — a coughpy QC membership (with access to dreadful international business lounges in the two key departure ports) and some points you can't redeem for flights you want. Give them P1 status and now they're enticed by First Lounge access, the hope of actually being able to use the points for flights they want, etc.

The accounts show that most points that are earned are redeemed.

I am not sure that attracting points whales is the best place to start. I would be trying to target the masses who use low fee cards and don't get points with their purchases. They may not spend as much as a points whale, but they are the bulk market that needs to be tapped. The whales probably already collect points. There would be very few people who would generate large amounts of points and who would be persuaded by free gifts. After all, the points themselves are "free gifts" and if they are not attractive in and of themselves, I'm not sure a shiny card is going to make the difference. Plus, as I have asserted several times, I just don't think an individual whale is worth terribly much.

 

[levelnine]

The accounts show that most points that are earned are redeemed.

As we all know, not for high value redemptions (ie long-haul premium cabins). So people are spending them on things that make Qantas a lot of margin. It's a great business to be able to print your own currency and control what it can be spent on!

I am not sure that attracting points whales is the best place to start. I would be trying to target the masses who use low fee cards and don't get points with their purchases. They may not spend as much as a points whale, but they are the bulk market that needs to be tapped. The whales probably already collect points. There would be very few people who would generate large amounts of points and who would be persuaded by free gifts. After all, the points themselves are "free gifts" and if they are not attractive in and of themselves, I'm not sure a shiny card is going to make the difference. Plus, as I have asserted several times, I just don't think an individual whale is worth terribly much.

The shiny card unlocks the value of the points. It turns 1 million useless points (redeemable for toasters or 2/3rd of a flight to London) into 1 million valuable points (redeemable for multiple flights to London). On them not being worth terribly much, I go back to margins. Qantas Loyalty is the most profitable arm of Qantas. It brought in more profit than Jetstar last year.

The upside is enormous. They continue to expand into the holiday market, the home loan market, the insurance market, etc.

On every one of those transactions, Qantas is clipping the ticket and making a healthy margin for itself.

 

[Fifi2207]

Thanks for the update that was really interesting and a great summary.

I suspect most people with 1million + points balance earn a good bulk of those from QBR or running business expenses through a points earning card. An individual who works for someone else even on a high salary isn't likely to earn 1 million annually without churning lost of black/platinum cards and the exclusion periods make this more difficult to sustain.

As someone who lost their hard earned points when Ansett died, I personally try to spend mine as soon as I have 318k for a OWA in J.

1 Million is actually doable (without a business and without CC churning, but you have to be focused!!! You do have to put all household expenses through a non capped credit card and earn them everywhere you can (without being gauged eg. Qantas hotels and Car hire!) But P+ and 1 million points a year is achievable

 

[Fifi2207]

Warning: Long post summarising the focus group.

OK, well that was interesting.

There were 6 of us on the call (plus the facilitator from an outside market research company). 4 x platinum and 2 x gold FF, 3 x PC+ and 3 x PC. Age range from 30s-70s. Three working, 2 retired and me (semi-retired). The main focus of the call was improvements to PC and PC+ - which is a pity as although that certainly needs improvement, it's definitely not my main gripe with QF. It was quite tightly stage managed, but still, I managed to get in a few points from the list above, and interestingly enough, there was a very clear agreement amongst all of us on the call on similar points.

They asked us how we came to know about PC and PC+

• For all of us it was not an active thing, we just got notified we had achieved it.

They asked us how much effort we made to keep PC and PC+

• For all except one the answer was not much effort at all, because the benefits are so marginal when you are a higher tier FF as well that it isn't really attractive to make an effort. We did however all agree that the various SC benefits of PC and PC+ such as the SC rollover for PC+ and the SC on CR seats for PC and PC+ did make it generally attractive and that if these benefits were improved/increased we would be likely to try harder. Four of us managed to get into the conversation that getting SC on CR seats was only going to work if you could actually get an award seat, and that at the moment that was all but impossible. Actually that point was made several times over the course of the focus group.
• Several people also noted that the points levels needed were getting harder to achieve given the recent round of devaluations of credit card points earning, and the tigher conditions impacting credit card churning and the three retirees also pointed out that credit cards are not really an option in retirement.

We were then asked questions about whether we used each of the benefits of PC and PC+.

• For most of us the answer was "no, because I already get this some other way" eg QP invitations or QP membership not relevant to status fliers, Accor ALL silver irrelevant to most as already have Accor Gold from previous promo, Accor Advantage plus or enjoy status with other hotel groups, Avis upgrade not especially attractive and the one person who had tried to use was refused by Avis, $50 wine voucher not really useful as most of us only buy QF wine on discount and therefore can't use the voucher which is only for non-sale items, $50 hotel voucher also not really useful as most time QF Hotels are more expensive than other providers.

They asked us to suggest things that would make us want to make an effort to keep PC/PC+ or upgrade between PC and PC+ and some good suggestions were made by the group. These included:

• make SC rollover 100 SC for PC and 200 SCfor PC+.
• give a loyalty bonus offer for PC in the same way as given for FF - so say every 50,000 points you could choose 8,000 FF points or 50SC.
• provide earlier access to CR seats - only 2 supported this - the rest of us did not want to be competing with an even bigger pool of people to get those unicorn J international seats. This led to a lot of discussion about the need for better seat availability, and I got to slip in "yeah no one really wants all those economy reward seats on Jetstar between MEL and OOL". This was immediately picked up by the others who basically said yep, totally agree, international J is what we want.
• first class lounge invitations.
• one chance each year, say for birthday or PC/PC+ anniversary to make a personalised DSC booking - for PC this could be domestic maybe and for PC+ international.
• ability to make changes/cancellations to CR bookings without paying the points penalty at least for 1 or 2 bookings per year.
• ability to gft any of the PC/PC+ benefits to a family member.

The we were shown a prepared list of "enhancements" being considered by QF. These included:

• merchandise to celebrate achievement of PC/PC+ such as key ring, PJs etc. This was not attractive to anyone in the group "I already get this" "I don't want more branded junk"
• personal greeting by cabin crew for PC PC+. This was not well received with everyone agreeing that the current greetings are cringe worthy and don't add any value at all, and often just done "performatively to tick a box". We all agreed that something better would be a glass of better wine, some food from a higher cabin or similar.
• Amenities kit when flying Y on a flight with premium cabins. All except one thought this was a fair enough idea, and similar to the suggestions already made in relation to the personal greeting.
• Better discount on points flights (both points plus pay and CR) - but level of discount not revealed. People thought this was a good concept, but likely to be mean and scrimpy and not of any real attraction given the low levels of other points/discounts offered.
• Priority boarding for PC/PC+. This was widely rejected as "soon the whole plane will be priority boarding" and "QF can't ven manage the current priority boarding, why make it worse".
• Points millionaires to get P1. This generated a lot of discussion. Does this mean a points balance of 1 million or that ypu have to earn 1 million in a year? The consultant said it was a points balance of 1 million. Well I'd be in favour of that - but I'm pretty sure that is not what they mean. Most of the focus group also thought it was likely to be earn 1 million in a year, which several then equated to the total insulting irrelvance of the illusion of LTP and the inability of almost anyone to actually achieve this. However, one person said it made sense to them that it was the points balance because that would mean that people would then want to keep a balance of 1 million points to keep P1. Therefore the demand for ways to spend points would decline and everyone would be better off, including Qantas as they would not have to give up much to lock up a million points that could otherwise be exchanged for a whole lot of J and F international flights (assuming you could get them). People with fewer points might decide to save them to get to the million mark. And those who wanted to spend their points would now have less competition for the available seats. I quite liked this way of thinking, and I hope QF does too (she says with a very healthy points balance, and also Mr Seat 0A). I wonder how many people actually have 1 million or more points? I'm sure a lot here do, but overall, I wonder how many. On FB I see so many posts with people saying "I have a heap of points, almost 200k" so maybe there are not that many with million or multi-million point balances?
• Free subscription to AFR (yes really!!!)/Australian/SMH. This was rejected as not much value and the group said, but a free subscription to a decent streaming platform would be attractive.
• Valet parking vouchers.
• And I forget the rest, but honestly they were not particularly attractive.
• We were asked to specify our favourite 3 things, and I have highlighted the ones that were mentioned by the group.

Next we were shown some more ideas by QF which basically involved allowing the PC/PC+ member to select any 2 of a list of the current benefits such as hotel voucher, wine voucher, or new benefits such as car rental discount voucher, insurance discount voucher, 2 x hoyts movie tickets, Westfield valet parking, QF valet parking. Voucher value was $50 for PC and $100 for PC+. PC+ also got a QP membership or 150,000 points, or an unspecified number of SC or an unspecified number of First Lounge invitations. The also suggested a loyalty bonus at 250,000 points - 2,500 points or 10 SC.

• The group thought that overall it was attractive to be able to select the benefit you wanted.
• The group thought that overall these benefits were pretty cheap and nasty given how much you have to spend to get PC or PC+ membership especially if you cannot do the credit card churning. One member of the group pointed out that for 500 SC of flying you currently get an offer of 8000 points or 50 SC and that this was nowhere near what was being offered for the improved PC/PC+ (2500 points of 10 SC).

At the end we were asked again how much effort we would put into achieving/maintaining/upgrading PC or PC+. No one had changed their opening position which was basically "meh - if I get it I get it, it's OK, but I would not really exert myself to get/maintain or upgrade." Other comments were along the lines of "just stop with the shopping list of bitsy offers that aren't attractive and have 3 or 4 really fantastic benefits that wow people into spending their cash in ways that generate QF points" and I said that in fact I now felt more negative than when I started the session today. This is true as I realised how much money has to be spent these days to generate 150,000 QF FF points, and then they offer me a bunch of things I already get (lounge access, Accor ALL silver), don't want (Avis upgrade, piddling discounts on their overpriced online store, voucher on overpriced hotels) or can't use ( wine discount, QF travel insurance - my pre-existing conditions are not all covered, and my free credit card insurance is actually better value plus covers all conditions except the recent leukaemia). The only actual benefit I get as PC, and I do value it, is the SC earn on CR flights, but realistically I would be better to just spend money and buy flights and get the full SC. And it is really, really hard to get those CR flights in the first place, so.....

I hope this summary is of interest to the group, and happy to keep the conversation going on here if people are keen.

This is a fantastic summary and a privileged insight into some of the research Qantas has commissioned. Thank you for sharing this with us all, hopefully Qantas listen and improve. Be interesting to see if you are now on a call back list!

 

[Mr H]

1 Million is actually doable (without a business and without CC churning, but you have to be focused!!! You do have to put all household expenses through a non capped credit card and earn them everywhere you can (without being gauged eg. Qantas hotels and Car hire!) But P+ and 1 million points a year is achievable

Anything is technically doable. But there can't be many people spending $1 million a year on household expenses on credit cards.

 

[Fifi2207]

Great summary - thank you so much for taking the time to follow up (as well as taking the myriad of suggestions into the meeting!).

It does reveal where the thinking is at. I find it interesting that the majority of the (OK, group of 6) people seemed to not worry about PC/PC+ too much = as in knowing they got it when notified and it seems not overly fussed to chase it (I know some do for things like the 100 SC rollover and reward flight earnings of course).

I do find the mix of status members intersecting with PC "status" members interesting - if they were focused on examining the impressions and thoughts on PC/PC+ I would have thought they'd actively avoid higher status members as that might dilute the impressions of benefits that involve SC's (like the DSC on birthday offer etc). Just my initial 10 second thoughts on that though.


As for the "1 millions points for P1"? Yeah, it would have to be in a year.. but sorry.. really? As a P1 for near 10 years who has earned it the hard way (and of course extensions and via DSC too) this seems ridiculous - the points churners, and I imagine reasonable SME owners and higher could generate that in a year pretty easily and this would potentially dilute the P1 membership base. Far better, imo, to create a PC++ tier (which had been mooted a while back iirc) that could have some P1 like perks, but not all of them imo. Seems like a loophole into very high status perks for some. One would hope if this is a serious or likely thing that QF has done the numbers and know how many or few actually meet this criteria - who aren't already P1 or CL. imo.


IMO as for the ideas to make it "better" - PC was supposed to be all about ground spenders getting something useful - so I think they should follow that theme - and yes, offer things like the movie vouchers, gifts for shopping, discounts etc rather than more air travel related ones. I do quite like the idea of PC loyalty bonuses that could kick in after initial qualification. eg I earned 250k PC points last year - so not enough for PC+, but a fair number above qualifying - getting "something" for that might be something. Would I chase the option to get a $50 voucher for something? probably not... but maybe some would.

Again, thanks for the great summary!

A great response from a longterm P1. I had to rush off and check my status (as you as a P1 hadn't earned PC+ I doubted myself ) and PC+ perks. Well funnily, as I checked, up popped a new bullet point- you can now transfer 20,000 QBR account points into your QFF account and have it count towards PC OR PC+ !!!!
Why would you?
I earn a lot of points by being strategic on the ground as well as flying every week, hence PC+ but it gets me nothing I would fight for apart from 100 SC roll over and SC on QF CR flights.( and those are like hens teeth)

Post automatically merged: Oct 17, 2023

Anything is technically doable. But there can't be many people spending $1 million a year on household expenses on credit cards.

not 1 mill dollars - I wish!!!!

 

[RichardMEL]

I suppose one might assume as a P1 that I'd earn enough for PC+ - either through natural spend and so on or even by potentially chasing earn (ie QF points with a fair amount of wine thrown in ). Well I'm not. Perhaps that implies I don't spend "that much" on QF to attain P1 (relatively I suppose) but when one considers that even say a $50k spend on QF (which I spend no where near!!) would only earn say 125k on something like the Amex Ultimate, and only 20k of the flying earn would count, so a fair spender could well fall short.

(I just pulled $50k as a big number out of my rear end - that's not intended to suggest anything about costs for P1 earn or anything like that).

And, as you noted, for me at least the current offerings from PC+ wouldn't actually gain me anything in terms of either being a high tier QF elite or someone who flies a lot - at least over and above PC (where I think the most valuable thing is the SC earn on CR tix - and more than one of those have contributed to recent years' P1 retain). That's OK, because PC has never been aimed at the high status flyer. Sure, many high tiers likely ARE PC/PC+ members through volume of spend, business stuff, whatever, but that's probably more coincidental to their main activities rather than something specifically chased.

Just why I think mixing high tier FF benefits (like P1) with high spend in PC probably doesn't mix....

... unless it's a step towards the almost certain move to an all revenue based system, and AA style ?Loyalty Points" based on both spend, flying etc, where big linked CC use can result in high status.

So, the 1 million points for P1 idea may not specifically be related to any moves to such a transition, it's certainly in the same ballpark imo.

 

[Flyfrequently]

Awww thanks @Flyfrequently - I think . I will be busy between this and my role as CLEO (thanks to @MARTINE)

Have I missed something @Seat0B ? CLEO?

 

[Seat0B]

PC+ but it gets me nothing I would fight for apart from 100 SC roll over and SC on QF CR flights.( and those are like hens teeth)

for me at least the current offerings from PC+ wouldn't actually gain me anything in terms of either being a high tier QF elite or someone who flies a lot - at least over and above PC (where I think the most valuable thing is the SC earn on CR tix

…which is pretty much the sentiment our group conveyed - “if you give it to me and I don’t have to do do much/anything to get/retain, then great, but really I’m not going to exert myself to get it or keep it with the current offering”.

Like others I’m quite interested in why QF would care whether tiered FF members care about PC or PC+.

 

[Seat0B]

Have I missed something @Seat0B ? CLEO?

In the thread about Chairman’s Lounge for High Court Judges and politicians, it was suggested by @MARTINE that I might be the right person for the job of CL Ethics Officer (CLEO)

High Court reveals every current judge is a member of Qantas' Chairman's Lounge

Absolutely speechless...there must be some serious conflict of interest here as Qantas appeals to the High Court re the 2021 decision in the Federal Court which found the airline business had contravened the Fair Work Act when it stood down employees working at 11 airports during the pandemic...

www.australianfrequentflyer.com.au

edit: typos