Ai Editorial: Loyalty currency not ready to go down the “digital currency” road yet

First Published on 10th October, 2018

Ai Editorial: The trend of airlines letting their members burn their loyalty currency on 3rd party sites is yet to pick up in a big way in Asia, writes Ai’s Ritesh Gupta

 

The likes of GetGo in Philippines and India’s JetPrivilege are associated with the biggest shopping players in their respective markets. But the way, for instance, Hilton, is allowing its members to redeem their Hilton Honors Points for purchases at Amazon.com, such a trend is yet to become common in the Asia Pacific region.  

·          E-commerce players in India, including Amazon and Flipkart, are ready to unleash their mega shopping deals in mid-October. Consumers, too, are ready to capitalize on offers, mainly owing to the biggest festive season in India. JetPrivilege, with a base of 8.5 million members, is offering its members earning opportunities directly on their purchase at Amazon and Flipkart. The programme, which is managed by Jet Privilege Private Limited (JPPL), a joint venture between Jet Airways and Etihad Airways, has been looking at ways and means to delight it’s members across various customer touchpoints. JetPrivilege understands that when members are offered choice and flexibility in the way they earn and redeem their reward currency, their engagement with the programme increases, which in turn leads to them sharing more data about their choices with the programme.

·          GetGo, the lifestyle rewards program by Cebu Pacific, works with Lazada Group which operates Southeast Asia’s number one online shopping and selling platform. Users earn GetGo points when they shop with Lazada.

·          In case of Air China's Phoenix Miles, members can buy non-travel products from 300 partners. But this shopping is only restricted to the airline-owned site/ app. Members can't shop with their loyalty currency on other e-commerce platforms or offline outlets.

It’s about flexibility and convenience 

So all a Hilton member needs to do is link their Hilton Honors account to their Amazon.com account, and as announced last year, one could redeem their points every time they made a purchase at Amazon.com. One could use as many or as few points they wish to. In fact, as has become the case with loyalty shopping, one could also partially use points for part of their order and have the remaining balance charged to any other eligible payment method. All of this could done and accessed at the time of check-out.

Letting members redeem loyalty currency at Amazon or any other e-commerce app that is opened quite frequently is about the ease of shopping, flexibility and convenience.

“Our currency is limited in terms of how (members) can spend it (mainly around flights and ancillaries),” says Nik Laming, General Manager – Loyalty,  Cebu Air Pacific Air. As per the information available, GetGo is close to having a base of 4 million users, in a span of three and a half years. 

We are evaluating how far we intend to go down the road of becoming a digital currency (especially in the context of redemption options). We are undecided but we are likely to land somewhere in the middle. Or at least to start off so that we expand the redemption options, which might include to shop (with loyalty currency) at Lazada or other partners. We may not go the whole way of saying they (points) are equivalent of dollars and allowing it to be  spent anywhere,” indicated Laming, who was recently in Bangkok for Ai’ s #MegaAPAC conference.

Frequent vs. infrequent travellers 

There has been discussion around whether FFPs should become a two-sided marketplace. “The decision to participate on 3rd party sites depends on several factors, and one of them is related to the profile of travellers. If an airline believes that running a classic frequent flyer program that tends to rely mainly on frequent flyers and can be actively engaged via flying benefits, rewards etc., then they might not open up to be a completely digital currency,” mentioned a source. “On the other hand, a lifestyle rewards program is different from a frequent flyer programme. It could be after a traveller who only travels once or twice a week, for them to open up a range of earn and burn options is understandable. It is important for such progammes to understand who their members are, what motivates their purchases, how they eventually spend money etc.”    

“Our big focus is on the earn side. So we wanted to build the ecosystem of “earn” first. Because the average infrequent traveller we are trying to appeal still aspires to travel, so the reward they want is travel. Also, to make it appealing to a broader audience, we also need to look at other redemption options. Could be of a smaller ticket size – redeeming a burger at the airport to a hotel accommodation – still could revolve around the travel experience,” mentioned Laming.

 

Hear from senior industry executives about loyalty at the upcoming Mega Event Worldwide (Ancillary, Loyalty & Co-Brand Conferences) to be held in Long Beach, California (31st October – 2nd November, 2018).

Follow Ai on Twitter: @Ai_Connects_Us

 

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