Is loyalty dead?

[marki]

[QUOTE=TonyHancock;......



Loyal subjects of the Qantas F Lounge brekkie menu! That's the other way loyalty works.

 

[NZflygirl]

I explain more here - The Psychology of Loyalty Programs

That was quite funny. I like the toaster vs F reward flight comparison as the toaster thing is what puts me off a lot of cc programs, it's either cash back or airline reward for me. I mean there comes a point in life where you're happy with your toaster and that is quite early on!! Not to mention there's some obvious price differences between the two.

You can see on here some people give advice to go for the status run or not depending on how far away people are from it. Would be interesting to know how many airlines actually turn to the "psychology of loyalty" vs leave it up to marketing. Anyway, what will be will be and I guess I'll evaluate things on their merits and decide if it fits me or not.

 

[Deleted member 29185]

I still use the saying "this place is as noisy as Coles cafeteria"!

Quite an apt description of the breakfast rush in the Qantas F Lounge in Sydney.

At least we know of what you're speaking ... when I mention Coles cafeteria, most looks tend to suggest the listener is likely thinking I've finally gone senile(r) ... who ever heard of Coles having a cafeteria, ol' farts, that's who (admittedly, I was just a boy when they ditched them and can only just remember them)!

 

[Deleted member 29185]

I explain more here -

Just had a read. Thanks for linking to that article. I sort of think that reinforces (there's that nice loyalty program term) my view that loyalty (at as far as inducemnet programs go) is on life support at the moment. Many of the points made in that article are the exact opposite of what many programs are currently doing. Either the program cannot support the cost, the head honchos don't understand the concept of cost/benefit ratio, the head honchos believe they don't need loyalty or the concept in that article just doesn't work as expressed. Maybe it's a combination of all of them.

There is another thought that I've had. Manufacturers have for ever employed a tactic termed "reverse engineering". Simply put, you engineer a product that works as designed and then you start removing parts to make it cheaper. When you finally pull out a component and the thing fails to work, put it back again and that then represents the finished article. Not as good as originally designed, but workable at the cheapest price. I wonder if the travel industry is in the "reverse engineering" phase for their loyalty programs.

I made a comment in one of the VA program change threads that I predict more changes to their "game change Mk II" program because of this "reverse engineering" thought I've had (remember they may not have found the component that breaks it yet, so the changes may not be "customer beneficial") and I note trippin_the_rift has since mentioned he has more info on their changes this week, so I'll be very curious to see what they are. I keep thinking about AVIS in Australia though. They appear very successful and have resisted implementing any loyalty program, so is it a case that they are successful in just trading off their name or are their contracted clients enough to keep them successful without the loyalty program in print (I have has AVIS rentals booked via gov't and received good upgrades without asking) or do they realise that loyalty programs cost money and don't return what they claim?

 

[Deleted member]

I have said this many times before. It's a frequency program, not a loyalty program.
As QFF LTS and LTQP , I am basically on a par with LTG. So maintaining WP and maintaining that level of status is about me and my needs.
Loyalty as we know it is a symbiotic relationship. Keep doing what you do, do it often and we will "reward" you occasionally with a few perks the casual customer doesn't receive. Any business that understands itself, will know that keeping a customer is a better bet that trying to find new customers. So talking to them , listening (as far as is possible) is the key to repeat business.

 

[Deleted member 29185]

Any business that understands itself, will know that keeping a customer is a better bet that trying to find new customers. So talking to them , listening (as far as is possible) is the key to repeat business.

I agree totally, that's why I've been so amazed at (for example) VA being so desperate to shaft their existing clients (for many years now) in a vain attempt to lure new ones. Did anyone else listen to those audio cassettes that MYOB used to send out to subscribed clients? I remember as a realitively new businessman, taking heed of one of those which gave the advice of "identify those clients that hold up your cash flow by slow payments and get rid of them and do everything possible to keep all your other clients ... even the lower spend ones". I used to listen to those cassettes in the car on the way to work and something must have been right, as my business is now over 30 years old, has done reasonably well for itself, has never had an industrial dispute, has never had a safety incident (certainly no compo claims), has lost under $10k to bad debt in over 30 years (most of that in the early years), has never failed to pay it's bills and has never been belly up and I put a lot of that down to a set of rules for clients which are fair but practiced, yet as a small business owner, it just amazes me to see big business think they can shaft clients at will and those clients will keep crawling back like a kicked dog.

 

[anat0l]

Any business that understands itself, will know that keeping a customer is a better bet that trying to find new customers. So talking to them , listening (as far as is possible) is the key to repeat business.

That would be the traditional advice, and it still holds true for small and medium sized businesses.

Larger businesses these days seem more predisposed to think that the potential pool of growth is so large (perhaps endless) that they spend more effort on attracting new customers than keeping longer term ones. Perhaps, as dfcatch alludes to, they are hoping that some of those longer term customers are in the "emotionally attached" state and thus are more likely to stick with the company.

 

[DaveB]

Loyalty pretty much died when bean counters started running most shows.

 

[dfcatch]

Just had a read. Thanks for linking to that article. I sort of think that reinforces (there's that nice loyalty program term) my view that loyalty (at as far as inducemnet programs go) is on life support at the moment. Many of the points made in that article are the exact opposite of what many programs are currently doing. Either the program cannot support the cost, the head honchos don't understand the concept of cost/benefit ratio, the head honchos believe they don't need loyalty or the concept in that article just doesn't work as expressed. Maybe it's a combination of all of them.

......

Yep - Trippin's data shows some interesting stuff - namely that TBH - VA have been pretty generous in the new SC earnings.

I also believe there are further changes coming in the future, and I do believe that VFF management are aware of shortcomings to the appeal of the VA status offerings and are looking to improve on them (notwithstanding that for an International flyer - VA and QF are very different loyalty propositions).

They do operate on knife-edge margins, long lead-times, complex structures and a competitive environment... which leads back to your main question.

Short answer is that it's a combination of all of the above. Most loyalty program staff are not "loyalty" people at all and most don't have a clue about consumer behavior. Most are a mix of low-paid data, analytical, and "agency-chick type" marketing folks - again, mostly underpaid which indicates their experience level.

And loyalty teams don't make the final decisions on these things usually - they have to win the argument with senior execs, and revenue-management usually have a larger seat at the table.

And RM folk - have even less of a clue about consumer behavior and how to influence it. In fact, most loyalty concepts are completely counter-intuitive to RM-types.

BUT - even to those who do "get it" - there is constant pressure to reduce what is known as the "cost-per-point" - which is exactly as it sounds. Obviously it refers to the ultimate redemption cost.

There are also a LOT more theoretical, academic and psychological concepts that go into a major loyalty program including reciprocity, prospect theory and many others, and even "willingness-to-pay" in regards to price premiums.

There's also ongoing constant battles in boardrooms over whether to best reward high-value vs high-loyal vs high-customer-lifetime-value etc etc.

 

[dfcatch]

That would be the traditional advice, and it still holds true for small and medium sized businesses.

Larger businesses these days seem more predisposed to think that the potential pool of growth is so large (perhaps endless) that they spend more effort on attracting new customers than keeping longer term ones. Perhaps, as dfcatch alludes to, they are hoping that some of those longer term customers are in the "emotionally attached" state and thus are more likely to stick with the company.

There is a belief (prevalent currently with the US Big 3) that customers will "buy-up" to higher fares to maintain elite/points earning & benefits.

Whilst I strongly disagree with the strategy, and also discount the effect of the "buy-up theory" - there is 'some' research to suggest that in 'certain situations', FFP members will in fact engage in price-premium purchases to maintain status (for example). Mileage/Status runs would be the best example of this.

 

[andye]

Just had a read. Thanks for linking to that article. I sort of think that reinforces (there's that nice loyalty program term) my view that loyalty (at as far as inducemnet programs go) is on life support at the moment. Many of the points made in that article are the exact opposite of what many programs are currently doing. Either the program cannot support the cost, the head honchos don't understand the concept of cost/benefit ratio, the head honchos believe they don't need loyalty or the concept in that article just doesn't work as expressed. Maybe it's a combination of all of them.

There is another thought that I've had. Manufacturers have for ever employed a tactic termed "reverse engineering". Simply put, you engineer a product that works as designed and then you start removing parts to make it cheaper. When you finally pull out a component and the thing fails to work, put it back again and that then represents the finished article. Not as good as originally designed, but workable at the cheapest price. I wonder if the travel industry is in the "reverse engineering" phase for their loyalty programs.

I made a comment in one of the VA program change threads that I predict more changes to their "game change Mk II" program because of this "reverse engineering" thought I've had (remember they may not have found the component that breaks it yet, so the changes may not be "customer beneficial") and I note trippin_the_rift has since mentioned he has more info on their changes this week, so I'll be very curious to see what they are. I keep thinking about AVIS in Australia though. They appear very successful and have resisted implementing any loyalty program, so is it a case that they are successful in just trading off their name or are their contracted clients enough to keep them successful without the loyalty program in print (I have has AVIS rentals booked via gov't and received good upgrades without asking) or do they realise that loyalty programs cost money and don't return what they claim?

OT but Avis partner with BA-if they do in Australia you could chalk up quite few Avios

Enjoying the discussion and article

 

[Princess Fiona]

OT but Avis partner with BA-if they do in Australia you could chalk up quite few Avios

Enjoying the discussion and article

You can earn Avios on Australian Avis rentals. I credit all of mine to BA.

 

[Deleted member 29185]

OT but Avis partner with BA-if they do in Australia you could chalk up quite few Avios

Enjoying the discussion and article

Yes and with others (currently they have a 4000 KF miles for 3+ day rentals) but I was referring to their own "loyalty" program.

You can earn Avios on Australian Avis rentals. I credit all of mine to BA.

I though BA are expensive and problematic with redemptions. Is this not true?

 

[Isolar]

You can earn Avios on Australian Avis rentals. I credit all of mine to BA.

Usually do the same with AAdvantage

 

[Princess Fiona]

I though BA are expensive and problematic with redemptions. Is this not true?

The online booking tool can be a bit tricky but there's definitely some sweet spots
Headforpoints

 

[TonyHancock]

I though BA are expensive and problematic with redemptions. Is this not true?

It can be relatively easy, and inexpensive to pick up QF domestic flights using Avios. MEL-PER on a random date this month gives me a price of 20,000 Avios and GBP9. (This is partly a quirk of BA zones - MEL-PER falls inside the 2000 mile mark)

The bigger redemption benefit with BA comes with status. At GGL level you can pretty much pick and choose when you book a reward flight and the more TP's you earn the more opportunity there is to spend Avios. Reaching GGL gives, along the way, one Gold Upgrade for 2, and Two Gold Redemptions (Jokers) The upgrades can be used for a return trip and the upgrade is for one class and can be used on Avios bookings. (For example you could book BA15/16 SYD-LHR-SYD in W+ using Avios and then upgrade the entire trip.)

If there are no rewards seats available the joker can be used, for the entire trip, to force open availability if A, D, T, B revenue classes are available.

As you progress further you receive 2 Gold Upgrades for 1 (3500 TPS) 1 Gold Redemption (6000 TPS) then at 7000 you get the choice between 2 Gold upgrade for one, 5000 Avios or a Joker. Same again at 8000, etc etc.

Once could argue these keep me "loyal" to BA. I don't see it as loyalty. BA has a commercial offering and I am taking advantage of it because it is much easier for me to earn and maintain status with BA at the moment than it is with QFF or other programs. The rewards are also significantly better than QF at GGL level. This of course suits my particular travel patterns and will not suit the vast majority of frequent flyers in Australia. I don't believe there is a one size fits all solution when it comes to frequent flyer programs.

I have no loyalty to BA and would switch in a heartbeat if it suited me.

 

[Moopere]

I really do understand the big *sigh* that comes immediately prior to an OP like this. Despite the idea invoked by the word 'loyalty' it seems to me that we're currently off on a tangent thats actually better described as churn (thus, a lot of the programs could be called churn programs rather than loyalty ones).

The experience specified in the OP is likely matched by others experience in the opposite direction - that being, the treatment of new customers and the effort expended to gain new customers seems, these days, to far outweigh the effort that a lot of larger companies are prepared to spend on maintenance of existing customers.

Personally, I gave up on any sense of car rental company 'loyalty' a long time ago. I find them all to be dishonest to be perfectly frank. I will avoid if possible and if not possible I'll insure myself up the kazoo (via a third party) and take the cheapest option of the day.

Hotels have almost lost me. Though I am holding on in a couple of programs because I am vaguely aware that most of my feelings of annoyance are directed at the local arms of those chains and when overseas (mostly Asia) I often find myself saying 'ahh... this is why I keep this gold/plat/diamond card' ... whatever.

Both QF and VA have pretty much lost me. I've had too many deep sigh moments with both. I keep VA status mostly because of its value when I use SQ. I don't fly enough on SQ serviced routes however to gain any meaningful status with them directly, otherwise I would and I'd leave the domestics behind without so much as a single tear.

 

[craven morehead]

Silly thread really as I think I already know the answer, but apart from VA and SAA and the others of the aviation industry shunning loyalty, I also just experienced the dreaded Europcar doing the same.

My Europcar experience is as a VIP elite (top tier) customer and as a VIP I am entitled to add a 2nd driver for nicks. I made the booking but rang to advise that my wife would be picking the vehicle up as my flight will be later, to which I was told "that's OK but it needs to be in her name and no loyalty perks"? WTF?? I debated right up to the upper echeleons and to no avail....so I cancelled that and all bookings I had and rang AVIS. They have no loyalty program (in AU at least) but they had no issue in me paying for my wife to pick up using my CC (has the best hire car excess reduction). Where do these clowns get off with such ridiculous conditions??

Honestly, I've decided we're (I'm) better off without status. Has anyone decided something similar?

OH ... EDIT - I forgot to say, AVIS was cheaper for the next car class up!

So much for being Top Tier !! You would think you would be entitled to a decent hire price.

 

[Deleted member 29185]

So much for being Top Tier !! You would think you would be entitled to a decent hire price.

I guess I was just expecting too much! You know, I'd long since come to grips with the fact Europcar has drastically wound back their upgrades (no biggie, ROK still looks after me well) but in CNS the upgrade is generally as advertised except one thing I consoled myself with, was that almost without exception, the cars I was given were basically brand new (most under 5k on the clock). It's nice having a new car to drive, even if it is a boring white piece of cough ... and generally I book, pay and drive without fanfare or issue, but surely status is about helping your client when it's needed. My wife needed a car and there is no issue about adding her to my booking as a driver (status perk). She could of course show her current Qld drivers licence. I wanted to pay over the phone with my credit card (my CC has the decent excess reduction insurance) and it's the one they have on file to use. I could answer any security questions they wished to ask as proof it was me calling and they could have even sent me an email (also on file) with a confirmation link to ensure it was me. I understand their security concern, but what ensued (IMHO) is just pure bloody-mindedness which had the same effect as telling me to go and get stuffed.

Like VA, I'll use them again when it suits me, but no loyalty will see me racing to Europcar ever again ...

 

[Deleted member 29185]

Well, I have a positive experience to add to this thread.

I recently (like about 5 mins ago) needed to alter a H-CNS booking ($149 gov't) but the night I needed was apparantly pretty full (football fans converging on CNS I believe) and the rate had shot up to $440 a night. :shock:

I rang them to enquire if something was amiss and the lovely lady confered with her supervisor and rang me back about 5 mins later to tell me she had changed the booking and honoured my original rate. Thanks H-CNS ...