Technology: Loyalty schemes
The concept of loyalty and how travellers are rewarded is long due for a shake up and it’s got everything to do with data.
Airline frequent flyer programmes have access to vast amounts of data – from transactional and behavioural to sociodemographical – but carriers are not really using it, yet.
But there is recognition of the value there for airlines as well as travellers. Imagine the potential to really serve companies at a corporate level and/or the individual business traveller if the dots were joined.
“It’s a currency you can only spend in one channel and you know how much people have in their account so it’s a goldmine,” said Dominic Matthews, Group Head of Loyalty for Amadeus. He was part of a panel alongside senior airline executives at the recent CAPA Airline Leader Summit in Dublin who debated
the issue. They stressed that it’s about changing the mindset, getting the relevant skills on board, ensuring programmes are relevant for today’s travellers and developing the technology to bring it all together. Setting the scene, Evert de Boer, Managing Partner of On Point Loyalty, said that 35% of all credit card spend in Australia earns Qantas frequent flyer points.
Pat Byrne, Executive Chairman of Cityjet, believes loyalty is about really knowing the customer and “building an emotional relationship” with them.
He says loyalty has to be earned and it’s down to two principles: “Frequent flyer programmes ignore the two most important things in the customer vocabulary – to be recognised whether during the booking, at the gate or on board, and to be accommodated or apologised to if my needs can’t be met and given access to someone who can help me. That’s where the money is not invested. The last thing I want is another free seat.” Juha Jarvinen, Chief Commercial Officer of Finnair, predicted that the current form of loyalty schemes would not be around in a few years time. He believes they will evolve to become more of a lifestyle product with partnerships and products that are relevant to the audience. Getting there is not going to be easy. Dominic Matthews, Global Head of Loyalty for Amadeus, said airlines have to deal with the tension between rules and regulations they have to comply with and the desire and drive to differentiate.
He believes bringing in people from other industries with experience in digital transformation would help.
Byrne, who supports this view, said: “We are great at putting out fires but if you really want to monetise the passengers it’s a different skill set. There’s knowledge in the airline but I would have someone from Google to lead it.”
He drew the conversation back to data saying that airlines lack that person “who lies awake at night saying ‘how can I serve my customers better’”.
“You have got to have someone who is really hungry, alive and alert to the possibilities,” he said.
Byrne added that money needs to be invested in looking after existing customers and rewarding their loyalty.
“We are in an industry where we have a fantastic opportunity to build up a relationship because we mess up a lot. If we recover well then that person will dine out on it. You can’t do that if you are not recognising your customer and giving them access to solve that problem. That’s where the dollars should be going.”
As a final word, panellists were asked whether the industry is on the “cusp of revolution in loyalty or if it's business as usual in three years time”. Byrne felt it would be a constant recalibration of loyalty and recognition and both Matthews and Jarvinen broadly supported this view saying schemes would evolve beyond flights to be more about lifestyle experiences.
Airlines are not making the most of the data at their disposal in frequent flyer programmes, writes