First Published on 13th February, 2018
Ai Editorial: JetBlue Technology Ventures (JTV), the corporate venture capital arm of JetBlue, not only understands the trajectory of an early stage start-up but also partners with the parent company to find innovative technology solutions that resolve pain points from the customer journey. Ai’s Ritesh Gupta learns from JTV’s Christina Heggie how the efforts are coming along.
As travel brands find themselves in the midst of what is being described as the “Fourth Industrial Revolution”, the race – to survive or to innovate as a business, to excel in the arena of customer-centricity, to outrival competitors – has clearly intensified.
In today’s era of “datafication” and unceasing connectivity, businesses have to consider a broad swath of technologies to serve travellers optimally; how to be part of the trends including the Internet of Things, data science, artificial intelligence etc. so that these businesses can emotionally connect with travellers?
Imagine what needs to be done in real-time to make every interaction with a traveller contextually relevant and personalized.
Companies today are trying to solve the issue of a digital identity in a connected world, understanding each and every click, evaluating unstructured questions, considering past interactions and buying patterns, and coming up with a relevant answer or deal via the customer’s chosen touchpoint in real-time. Yes, the conundrum is riddled with complexity, but that’s what the race is all about. Owning the customer data and shaping up experiences that fit in perfectly within the passenger journey.
So where do airlines stand today?
If one were to assess the parameters of knowing about a traveller/ customer and having a say especially in the early part of the booking funnel, then airlines lag behind. That has been the story for years, but now the gap, with front-runners being the likes of Google, Amazon, Facebook etc., will increase if airlines don’t respond.
She asserts that it is imperative for travel providers, including airlines and hotels, to gather customer data in a single database or warehouse, build on it with additional customer insight, and accordingly make progress in the right direction. “If a company can’t access their own customer data, record behavior, analyze purchase history and access all information in a single repository, then we (airlines) can’t even get close to attaining customer-centricity.”
While data platforms, or even marketing technology and automation tools, have been around for a while, airlines have rather been slow to act. And a lackadaisical approach wouldn’t help as trends like artificial intelligence-powered booking are gaining momentum. So even as there are promising developments such as voice-powered search or immersive virtual reality experience that can make it much easier to plan a trip, airlines likely have a number of steps to take before they’re able to deliver a seamless travel journey.
Heggie acknowledged that factors such as legacy technology and a siloed approach to decision making have for long bogged down the functioning of carriers but it is time to brace up for the future. Other than transforming themselves as organizations to embrace digital agility, airlines also need to be a part of the emerging digital API ecosystem. It is important to note that today’s digital economy works through a platform economy model.
Being part of an innovation curve
It’s been almost two years since JetBlue, as a parent company, chose to incubate, invest in and partner with early stage start-ups via JetBlue Technology Ventures (JTV). The team at JTV not only understands the trajectory of an early stage start-up but also partners with the parent company in removing pain points from the overall journey of travellers. In all, there are around 16 portfolio companies that JTV is associated with. Heggie shared that the majority of the JTV’s portfolio “are companies that would work with JetBlue in 2-5 years”, even though some might begin commercial pilots in less than 2 years, and a small percentage of the portfolio includes moonshot investments. Airlines are adept at doing what they have been doing over the years, and since operations are process-centric and complex, it can be challenging to divert resources into new innovation projects. “So we would typically interact with the JetBlue team, bring about the new offerings in front of them, and get closer to a point where start-ups would be ready to work (with an organization of JetBlue’s stature and size),” explained Heggie.
So, whether capitalizing on artificial intelligence for trip planning (via partnership with Utrip, a destination discovery and planning platform that helps in crafting a personalized, hour-by-hour vacation itinerary) or counting on big data to predict airfare (via FLYR) or keeping track of all interactions related to customer service taking place on a JetBlue-owned channel (via Gladly), JetBlue is ensuring that it is preparing for the future through partnerships and pilots that steadily lend a new dimension to what it has to offer as an airline.
Overall, the team at JTV focused on five investment themes which include a seamless customer journey; technology-empowered service; the future of maintenance and operations: innovation within distribution, loyalty and revenue management; and evolving regional transportation models.
JetBlue’s own ecosystem
It is being highlighted that certain companies are controlling the top part of the travel planning funnel, and airlines are increasingly relying on 3rd party sites for traffic generation. Heggie says there are clearly limitations to what technologies companies can do in this sector, and one of them is having a say in the actual consumption of the travel product. “If our customers don’t care about us as a brand, then we are just another airline and risk becoming simply a commodity transporting them from point A to B,” says Heggie.
And if airlines intend to have a bigger say in the booking funnel, including monetization via targeting the “second wallet” in the era of “Fourth Industrial Revolution”, then crafting one’s own ecosystem is must. We assess one example of how JetBlue is gearing up for the same:
“Customer service is one of the areas that JetBlue has always been laser-focused on, and we wanted to find technology that would truly transform customer service, delivered by a company that puts people at the heart of what they do,” said Heggie. Today this initiative has progressed to a level where it complements tracking every interaction on JetBlue-owned channels and then linking with a “profile” of a traveller. “We chose Gladly in order to aggregate a single view of the customer (on service channels). So all interactions (say featuring a JetBlue account on Whatsapp, Facebook Messenger, Instagram etc. or an interaction at the airport or with a call centre executive) are captured and aggregated into a single conversational view of a customer. (This doesn’t encompass conversations from 3rd party sites). This means a passenger doesn’t need to share their story or request again,” said Heggie. “This offering (from Gladly) sits on the top of a CRM and enables customer service. It can aggregate data on its own too – relating a profile’s social media handle, email id, phone number etc. So it’s an adaptable platform that way.” There are multiple benefits of this approach:
The company is also constantly evaluating other trends, for instance, blockchain technology. One of the beneficiaries has been Filament. The company’s decentralized network stack allows any device to connect, interact, and transact value independent of a central authority. The focus is on asset management, and JetBlue believes the solution’s smart contract capabilities can contribute in operations of airlines by tracking of assets. Heggie expects blockchain technology to play a significant role in loyalty, travel distribution and payment space.
Standing out in the race
As it turns out, JetBlue is taking rapid strides to stand out in the race. By adopting the corporate venture capital model, the team is focused on strategic returns in today’s world of rapid innovation. And the outcome is expected to be robust – removing pain points from the journey of the travellers, and being in control of the dialogue with the customer.
And the culture of learning and testing with the entire organization involved is a major pillar. “The goal is to learn from the start-ups, strengthen the JetBlue ecosystem, and pave way for these start-ups to transform our industry,” concluded Heggie.
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First Published on 30th January, 2018
Airline loyalty programs are too heavily skewed towards “true frequent flyers”. Is it time for full-service carriers/ alliances to open up their proposition to the segment of infrequent travellers? Be it for such move being fuelled by the need to grow the program further or being creative enough to include the segment of infrequent travellers to capitalize on the opportunity, it is being asserted that it’s time airlines look into this issue. So how about serving a passenger who doesn’t travel 30 times but say 10 times, and adding them in the loyalty-fold.
As Comarch’s Piotr Kozłowski, VP Consulting, Airline, Travel Loyalty, highlighted during the recently MegaEvent in Palm Springs, California, there is a high-yield traffic of “very frequent travellers” and for them association with the brand is about comfort, privileges and they are looking for status recognition rather than rewards. The second set is of “frequent travellers”, who have high purchasing power, are looking for recognition and privileges, in search for broad accrual possibilities, combining various loyalty programs (FFP and retail) to achieve economy of scale effect. And then there is a group of occasional travellers or infrequent ones that are not being addressed by a typical loyalty program. “They tend to be the target of multi-partner loyalty schemes, they are eager to gain a variety of accrual and redemption options, have desired redemption on award flights,” said Kozlowski. FFPs require strategy for this segment in order expand their customer base and market position.
How to open up the proposition for such set of travellers? Hear from Kozlowski, who also spoke about learnings from Norwegian’s CashPoints, in this video.
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First Published on 3rd January, 2018
The role of mobile in the realm of loyalty should be seen as that of an ally. Loyalty is being a part of one’s lifestyle, which would mean a brand would end up building trust and a positive emotional connection. And since mobile is a personal device, it needs to counted upon as that key that would work for the loyalty program member – may be that perfect holiday recommendation or using a preferred payment wallet for shopping featuring airline co-brand card.
FFPs or airline loyalty programs, just like any app on mobile, have to make an impact with the first interaction. It is surprising, but yes, onboarding successfully when an app is opened first time is a huge challenge for brands even today! Similarly, the timing and utility of each push notification has to be spot on. Also, there are certain markets featuring relatively cheaper or low-end mobile devices, where the usage of app can be an issue, so how should airlines go about mobile web development, and ensure any sort of log-in is capitalized upon to offer value to return, loyal visitors.
At the same time, mobile doesn’t mean that travellers are bombarded or presented with irrelevant messages, says David Feldman, Director - Loyalty & Reward Program Strategy, Catchit Loyalty. He also added that not many travel brands are capitalizing on the prowess of artificial intelligence and machine learning. Any piece of content, be it for an ad, offer or a message, needs to blend the profile of the traveller with contextual signals that a device like a smartphone offers. So a traveller, on a trip with his family, could be offered a ticket to an amusement park, depending upon the previous trips, location, time of the day, social context etc. via a loyalty app being used.
By Ritesh Gupta
Ai’s 2018 Events - www.aieventdates.com
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First Published on 1st January, 2018
Ai Editorial: The prowess of data in uplifting the performance of loyalty programs is increasingly coming to the fore, be it for fostering a positive emotional connection with members or working out a viable financial model, writes Ai’s Ritesh Gupta
For airlines, any opportunity that can improve the performance of their FFPs needs to be grabbed since the lure of flying for free, an upgrade or making the most of loyalty currency means travellers tend to have high expectations from their FFPs. In order to meet these expectations, airlines need to count on data. We look at some of the critical areas, especially considering the fact travel marketers acknowledge the challenges associated with personalizing offers, content, and experiences based on data:
1. Preparing for digital API economy: Airlines aren’t agile enough to embrace change. But sticking to this approach isn’t going to help, as digital API economy will not make an exception for airlines. Imagine, a loyal traveller interacting via a chabot on Facebook or WeChat, and the preferences of the same traveller along with all sorts of data – loyalty, merchandising, fare, schedule, availability etc. being combined to work out the best possible set of recommendations. The more data you will have and the more systems you will have in your digital ecosystem, the better proposition you will have for your customers. Also, other than 3rd party ecosystems, airlines also need to dig deeper into their own platform strategy, because such economy works through a platform economy model. In a recent interview with Ai, Evert de Boer, Partner at FFP Investment and Advisory, pointed out that akin to the characteristics of digital disruptors, such as Uber and Airbnb, FFPs, too, don’t own the physical assets and are in a position to capitalize on data analytics and predictive modelling based on rich datasets that such programs have worked out. “Typically operating in a digital environment, (FFPs) it is a very agile business (and in comparison far more agile than a typical airlines business),” he said.
All of this is extreme importance as there will be no single customer journey. So in order to build affiliation, the loyalty programs need to be a part of the connected world.
Specialists also point out that organizational structure needs to be in place for various stages of the digital strategy – right from defining digital transformation mission to finalizing priorities to implementing them, and then also assessing the role of a digital business unit that eventually pave way for innovative offerings. So airlines need to evaluate areas such as structure, leadership, talent, operating model etc. to succeed as digital enterprises and in turn foster loyalty.
2. Reimagining loyalty with data: Data strategy is of no use if airlines can’t act on it to offer value to members or for competitive advantage. “We take specific learnings and then we act on it, and then observe (what happens). The problem is everyone sees data and don’t really take action. We try to experiment from what we are seeing, try to stimulate activity or some type of behavior,” says Hong Kong Express Airways’ reward-U program CEO Steven Greenway.
Here are few use cases:
· Offering value: Hong Kong Express Airways is working on the concept of “Tribes”, based on overall activity, for instance, travel, retail, food etc. and a member can be in multiple tribes at any time base on a minimal level of activity. This is scheduled for Q1, 2018. Tribes is about recognizing your everyday spending and everyday activity patterns. So if a user prefers to go out, they could be a part of wining and dining tribe. When combined with some of the existing activities such as relevant and personalized loyalty communications, this can result in strong engagement.
· Customer acquisition: Loyalty data can help in overcoming generalized assumptions. Blending data from CRM programs and other sources and integrating it with a loyalty solution can help in understanding customers. According to Merkle, organizations can dig deep to assess the profiles of their “best customers”, and then build on it further via data-driven look-alike modeling. So by partnering with 3rd party ecosystems or other companies, airlines can sharpen their customer acquisition based on real customer attributes.
3. Capitalizing on prowess of mobile devices: Travel companies need to capitalize on contextual signals that a device like a smartphone offers, and blend it with attributes or data available about a loyalty program member for them to avail an offer or even enable them to plan or book a trip. For example, a traveller tends to book in specific months and going by previous trip details (social context, price, destination etc.), how about an offer or a reward with all loyalty status details or possibilities of using the currency? In fact, the option to be rewarded from everyday purchases has opened up the realms of the FFP even to the average or infrequent traveller, how about incorporating traits of one's lifestyle and even coming up with a relevant content and deal? So, for instance, a co-brand card is used for a specific event, such as tickets for a ballet concert. How about considering the same and offering a similar ticket in a new destination? Interacting with a known traveller and better even if one can predict their needs, it would be incredibly powerful when it comes to building loyalty. It is imperative to assess how and where travellers expect to be engaged on their own terms; as they are hardly disconnect from their personal device such as mobile. So airlines need to shift loyalty rewards and experiences to smartphones, digital channels and social platforms.
4. Data and financial model: Behavorial and demographic segmentation, spend-level analysis etc. all have a role to play in working out the financial model of the program. And with better data, this can only sharpen the viability and profitability analysis. The model design depends upon various factors, and the sort of data available is one of them. As Merkle points out, airlines or loyalty team can feature passenger segmentation from custom data to study the impact that various customer segments have on four main summary metrics – enrollment, revenue, cost and profitability. Overall, a deeper study of member behavior can one to precisely assess how members’ accrual, redemption and engagement would change as the terms of the loyalty program get amended.
5. Data and redemption: Retailers are relying on data analytics techniques to evaluate rewards. Similarly, airlines can also study the efficacy of redemption options via a statistical experimentation technique (data scientists alert that a wrong group of travellers can also result in sampling bias). Plus, analyze the effectiveness of each reward and figure out the incremental revenue as well. Then also further study behavior before and after the redemption activity.
Other than working on simple earn and burn policies, paving way for fast and frictionless redemption experience and offer instant, relevant, contextual options for redemption, airlines need to gear up for latest developments in the arena of data, analytics, cloud, APIs etc. and how cognitive technologies can lend new dimensions to an organization’s ability to make sense of voluminous data to reimagine loyalty going forward.
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First Published on 18th December, 2017
Ai Editorial: Counting on computing power, algorithms, airline-specific IT offerings, front-end technology and customer profiling will lend a new dimension to personalisation, writes Ai’s Ritesh Gupta
Airlines are attempting ways to differentiate their offerings, and serve them to today’s always-connected travellers as per their preferences and the propensity to spend.
There are 5 factors that would contribute in taking web personalisation deeper from here on:
1. Computing power: It includes both the personal device being used by travellers including mobile devices as well as the power underlying the server infrastructure readily available in the cloud, says Kenneth Purcell, CEO, iSeatz. These elements are become cheaper with the passage of time and the trend continues. The mobile phone is a highly personal device, and offers an opportunity to capitalise on certain innate features, such as location. So the blend of device plus user profiling can result in contextual recommendations. So information such as the time of the day, weather, location etc. can be used for personalisation. A mobile device has a massive computational power, plus it has camera, location-specific features.
As for moving infrastructure into the cloud, it is time to leverage today’s technology at a much lower cost, and avail the benefit of scaling it up. Airlines consider factors such as such as security (the role of technologies such as encryption and tokenisation comes into the picture) as well as connecting legacy applications to the cloud at enterprise scale. Travel searching is heavy, and organizations are moving swiftly in this direction. Among airlines, American Airlines has decided to migrate to cloud a quota of their crucial applications, including aa.com, mobile app and network of check-in kiosks. The plan is to enable developers to swiftly set up and modify application functionalities for American’s passengers. These customer-facing systems will be on cloud. The cloud business model that the airline has chosen is a hybrid one.
2. Algorithms that run the sort order pertaining to the results that are being shown and how does that intersect with business rules, so that two of them in harmony as per the objective laid and outcome expected by an organisation are getting sophisticated in web personalisation. They can also be categorized – basic one such as showing what’s popular on the site to what’s new. Then there is collaborative filtering. Depending upon a user’s engagement with various products, say destinations chosen, bundles or ancillaries, they are clubbed into a group of users with similar likes and dislikes. Recommendations are crafted accordingly. Also, the sort of data that helps in personalising digital experience includes the source of traffic or acquisition data, anonymous visitor data, profile data as well as real-time interaction with the website. The process of serving anonymous passengers starts with some level of contextualisation – once a prospective traveller accesses a website or a mobile app, enters city-pair, dates, type of travel (family, with kids etc.), then algorithms can match them against pre-set customer segments and serve offers accordingly. At a deeper level, airlines can also focus on precise preferences, adding them for each user via deep behavioural tracking (a bunch of factors are considered - mouse movement, scrolling etc. + IP address, geo-location, device type etc. + other signals) to sharpen algorithms and make them even more relevant.
3. Sophistication of airline-specific engines: For any airline if their systems or engines get smarter over a period of time, then they are bound to come up with better recommendations or offers. And travel technology companies are looking at using data better, for instance, letting merchandising rules deliver better results. Similarly, the industry is looking at consistency in terms of what they have to offer, another engine - for shopping and pricing – would be the way to go forward, capitalising on all sorts of data – loyalty, merchandising, fare, schedule, availability etc.
4. Front-end technology: it is making rapid advancement in the industry. “This is significant in terms showing the different search results, how the entire page is rendered and paving way for segmentation all the way to user experience. So looking at the APIs, all of this needs to support sorting of the inventory, that is being outsourced, is done in a way that it is relevant for the user and the front-end is a layer on top of it. This would include using 3rd party tools or working them in-house to set up front-end in a more personalised way,” says Purcell.
E-commerce specialists point out that the efficacy of content management systems is coming to the fore when it comes to managing, personalizing, publishing, viewing and comparing different page versions. How to create create large web applications that use data which can change over time without the need to reload the full website? (Speed is an important element – a case study of how travel search engine Wego counted upon Google’s open source initiative called Accelerated Mobile Pages (AMP). In case of Wego, page-load speeds came down from more than 11 seconds to less than one second. AMP pages are stored in Google’s cache servers and load in milliseconds).
5. Preparing for customer profiling and 1to1 personalisation: “For 1to1 personalisation, factors such as “too hard to do it” or “too much storage is required” need to be done away with. The truth of the matter is there are lots of tools out there that make it easier to do it (whether its analytics provider tailoring the user experience on an individual basis or an organisation decides to develop the infrastructure in-house, open source frameworks pave way for the same, and even storage isn’t an issue today),” Gillian Morris, CEO, Hitlist told Ai in a recent interview.
It is imperative to bank on 1st party data. “(Data strategy) It’s not about how much data you have (and big data is inherently a vague term - how big is big?), but rather the quality of the data you’ re using. Travel companies that focus on loose intent signals from many different providers are acting on weak cues that might be misleading. The ideal situation would be to generate enough data within your own user ecosystem to truly understand where and why people are planning to travel. Google, Facebook, and theoretically Apple have the biggest leg up here,” asserted Morris.
As for the journey of personalisation, as explained in this article, start with segmentation and make steady progress to rules-driven personalisation. This means setting up and further reworking on business rules that are utilised against clusters of visitors, based on information one can garner about users. The second major component is progressing toward algorithmic personalisation, where one initiates with a relatively broad set of recommendations to ones that are specifically meant for an individual.
Interplay of all 5 aspects
Eventually, the interplay of all these 5 aspects – computing power, algorithms, personalisation and front-end technology come into play to deliver a relevant, contextual, personalised experience. For instance, the benefits of knowing a customer – not only steps up the conversion rate, but it also means less time spent on browsing, taking a decision faster on an airline’ site, and this would also cut down on the server cost.
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First Published on 12th December, 2017
1to1 personalisation is the only way to know your customers best, and factors such as “too hard to do it” or “too much storage is required” need to be done away with.
“The truth of the matter is there are lots of tools out there that make it easier to do it (whether its analytics provider tailoring the user experience on an individual basis or an organisation decides to develop the infrastructure in-house, open source frameworks pave way for the same, and even storage isn’t an issue today),” says Gillian Morris, CEO, Hitlist.
“The ideal situation would be to generate enough data within your own user ecosystem to truly understand where and why people are planning to travel,” says Morris. “Once you have a user-specific data, you can understand the purchase journey and also what to recommend. Once you work on a profile of a user, you can understand travel habits and accordingly recommend something relevant, contextual,” she says. So rather than just spotting one destination that a user is looking for and coming up with generic offers for that destination, one can also understand what a user is looking for “something warm over the weekend in Miami”. Morris says, “People dont opt for a destination, they go on a trip. In addition to destination and price, equally important are timing (say weekend vs. weekdays) and social context (family, individual, colleagues etc.).”
Some of Morris’ recommendations are as follows:
1. Assess what travellers are looking for
2. Collect data, ask for it
3. Offer value
4. Leverage social connections
5. Create accounts
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First Published on 4th December, 2017
It is time airlines count on the prowess of frequent flyer programs (FFP) for being an asset-light, platform-based, digital business, asserts Evert de Boer, Partner at FFP Investment and Advisory. He points out that akin to the characteristics of digital disruptors, such as Uber and Airbnb, FFPs, too, don’t own the physical assets and are in a position to capitalize on data analytics and predictive modelling based on rich datasets that such programs have worked out. “Typically operating in a digital environment, (FFPs) it is a very agile business (and in comparison far more agile than a typical airlines business),” he said.
FFPs are in a unique position, and as de Boer says, the “theoretical access” to data is unmatched in this case. FFPs have become network players (paved way for an ecosystem of miles earning opportunities across a significant share of everyday spent), he says, with a deep insight into the activity of their members, their buying choices, the likelihood of what they are going to buy etc. “But airlines haven’t fully explored the possibility as yet,” he said. “There is a need to connect all the dots and work out a strong profile of the customers.” The drivers of two businesses - airlines and FFPs – are quite different. “It does raise questions around how to govern and optimize this (FFP) business, even though there is talk around the same shared customer,” highlighted de Boer.
(Evert de Boer, Partner at FFP Investment and Advisory spoke to Ai's Ritesh Gupta during the recently held MegaEvent in Palm Springs, California).
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First Published on 11th October, 2017
How can airlines make the most of data and focus on retailing?
A section of the industry asserts that it is time for airlines to split digital commerce from operations. Of course, areas of concerns include business continuity or the current organizational structure as embracing change in this industry isn’t straightforward. But, if airlines hope to be in control, they need to find ways to identify passengers.
For instance, the game isn’t about identifying and members of a loyalty program. Rather the focus has shifted towards infrequent travellers or even anonymous travellers. Personalisation and contextualisation are increasingly becoming a norm as airlines strive to become digital enterprises. As Binay Warrier, Head of Business Development, Loyalty & CRM, IBS Software Services says, it is time for airlines to take risk.
Hear from experts about how airlines are gearing up for optimizing of data and retailing at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).
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First Published on 10th October, 2017
Are members of a loyalty program associated with a low-cost carrier also relatively low spenders? How to engage infrequent flyers and make the most of their everyday spending?
Finding answers to such questions and in fact, even overcoming traditional ways of engaging and operating loyalty programs, isn’t an erroneous belief. Hong Kong Express Airways’ reward-U program is one such example. From no member, no 1st party data to 1 million members in 16 months to gearing up for loyalty 2.0, the journey has been quite an eventful one for this loyalty program.
“Starting a loyalty program is always difficult considering that there is no data. But we are 16 months old now, we have been accumulating data, spending patterns etc. We are getting a picture of what people are doing. The association with a low-cost airline doesn’t mean that our members are low spenders. They are high spenders,” says Hong Kong-based CEO Steven Greenway. He spoke to Ai’s Ritesh Gupta about loyalty 2.0.
Hear from experts about the futurel of loyalty at the upcoming 8th Mega Event Worldwide, to be held in Palm Springs, CA, USA (29 November – 1 December, 2017).
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First Published on 24th May, 2017
Ai Editorial: Airlines can improve on 5 counts when it comes to making their loyalty currency more valuable, writes Ai’s Ritesh Gupta
Are airline loyalty programs “trustworthy”? Are airlines content with lesser active program members? Do airlines only allocate the “lowest awards to seats they feel would otherwise go unsold”?
Such questions gain credence going by the criticism of FFPs when one tries to assess the trust quotient. According to a study by Brandigo, around 60% of travellers do not feel loyal to any particular airline. The figure shows only marginal increment in loyalty among passengers who fly more than 7 times per year.
If one tries to assess the level of trust via Google (search for “trust in airlines’ frequent flyer programs”), as per the first few links on Google, even without clicking on them, it is apparent that as an industry, airlines aren’t being trusted. A headline reads: Are airline frequent flier miles programs just rip-offs? Another link (from a piece posted by BoardingArea regarding Wyndham Rewards cancelling a promotion) explained the meaning of “trust”.
Airlines acknowledge the problem
“The legacy of being rewarded for distance travelled has set an expectation amongst customers which is difficult to reset,” an airline executive from Asia told me.
Of course, certain markets witness more criticism of the way FFPs function. For instance, certain standalone loyalty programs in the U.S. may be touching a saturation point and the viability of accruing points/ miles in one currency with a particular airline is being questioned. Also, loyalty programs have been gradually evolving – take the case of transitioning to revenue-based model.
“High yield customers will praise you for rewarding them equitably, whereas low yield customers will feel deprived – sometimes through no fault of their own, but rather due to competitive pricing amongst airlines on selected long haul routes. “Taking away” from loyal customers, even if relatively minor, can ignite a firestorm of opinions on social media platforms,” this is what a senior airline executive acknowledged as the airline chose to shift to a revenue-based FFP.
Time to take action
So airlines need to take initiatives on several counts in order to come across as an ally, adviser keen on letting travellers make the most of what they have accrued. As per one of the studies last year, Collinson found that over 50% of survey participants didn’t expect that they would “ever be able to earn enough points to redeem anything of value”. According to 500friends, airlines need to identify gaps that exist in rewards structure. Some of the areas that can be improved upon:
1. Offering a reward flight for non-travel purchases: Airlines are targeting infrequent passengers, and even introducing coalition loyalty programs. One way that is being attempted is everyday purchases points earning. So even as the lure of a free flight remains intact, the airline ends up remaining in touch, offers more ways to use or redeem a loyalty program’s currency. How do both passengers and airlines benefit? The major appeal of a coalition model is – the overall share of wallet. A person will spend a small proportion of their disposable income on air travel in a year. Adding credit card, supermarket, department store, petrol and other retailers expands the share of disposable income going through the program. With higher total spend within the program ecosystem more points are earned and so even the most infrequent traveller can attain those reward flights. Of course, the concept for rewards for everyday purchases isn’t for all. Some programs are devised for only frequent fliers. In this model there is less need for more partners as the vast majority of points will come from flying.
2. Making calculation simple and facilitating rewards: Can airlines understand the spending pattern and simplify calculation for a loyalty program member? If a start-up or a 3rd party FFP review site can explain airlines have a wide range of values even within one redemption category like flights, then why airlines can't do the same? Start-ups today are analyzing credit card spending pattern, sharing details of missed rewards and even offering personalised average reward value based on the rewards preferred by a spender! So, for example, if a user is part of an airline co-brand initiative and tends to use this card on certain categories and is eyeing a free flight, how can airlines assess the spending and come up with an apt recommendation? Can airlines highlight how values earned are calculated for each transaction and the value for what was missed by the member? As Connexions Loyalty recommends, airlines can experiment with varied offerings within various customer segments in order to comprehend who “values your brand, increase redemptions and reward your lost loyal customers”.
3. Avoid silo approach in a coalition loyalty program: Airlines, as program operators, need to consider the real-time quotient in passenger experience, and for this, all partners needs to deftly manage accrual and redemption of points/ miles in real-time (focus on their value, location, yield etc.) “(As an airline) Try to understand your partner’s (core offering and capabilities) and enable them to build their own loyalty accrual within your loyalty program, using your currency, says Piotr Kozlowski, VP Consulting, Services Sector, Airline/ Travel Loyalty at Comarch. He also asserted that every aspect of the program needs to be relevant, contextual – for instance, targeted promotions from a relevant partner, efficient use of APIs for quick integration to various systems, such as enrolment API, point – status check API etc.
4. Counting on mobile’s prowess: FFPs or loyalty initiatives should be crafted considering the prowess of mobile devices, and not merely be adapted for the same. For instance, how can loyalty program capitalize on mobile for real-time offers, personalised messaging etc.? How to make the most of Apple Pay and Android Pay, and interweave loyalty-related moves with them – say, the ability to earn and redeem rewards, and pay with a single tap? Can the currency of a loyalty program be used to pay for a transaction via a mobile wallet?
5. Overcoming loss of interest: Acknowledging that distant rewards can be discouraging and alienating to the program members, Comarch chose to combat such negativity and eventual loss of interest in the program. The company came up with their “Point Loans” option earlier this year, offering members a chance to avail a reward earlier than expected by “loaning them the fixed amount of points that are necessary to complete a specific redemption”. Comarch explained that this service can be “connected with a special fee that can be compensated in a form of money or points and needs to be repaid by the restricted deadline, otherwise either the member’s card will be charged or their account will be blocked”.
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