Norwegian Cruise Line announced the first major shift in the structure of its rewards program since 2005 with changes in the way passengers earn points. The new Latitudes Rewards program used to reward one point for every cruise taken, but now awards one point for every night spent on board during a cruise.
The change is significant in that passengers who take longer cruises will earn more points in the program. NCL’s change matches the structure of competitor Holland America’s rewards program and initial reaction based on comments on online message boards is positive. Apparently, passengers had been confused by the fact they earned the same amount of points for a 3 day cruise as a 7 day cruise. After all, the fares are higher for the longer excursions and presumably the per-passenger values are also higher as people have longer time on board to spend money on drinks and other extras.
The updates to the Latitudes program follow a general trend seen not in the cruise industry but also among airline frequent flyer programs. The move is to recognize the value of tickets purchased and award passengers based on their value to the carrier. Southwest Airlines made this fundamental change when it relaunched its Rapid Rewards program this past spring, and the changes have been widely acclaimed across the industry.
Something that lurks below the announcement however is mild dissatisfaction with both the cruise line and the Latitudes program. Reading through travel message boards, there are a number of comments indicating that either a Latitudes membership or tier (they have 4 tiers in the program) was not recognized on board the ship and that customer service overall was not always up to par. Commentary of this type on social media sites always has to be taken with a grain of salt, but flawless execution in the recognition of members is one key to success that Kobie has emphasized with its clients. After all, if members are not properly and easily identified, then delivering the privileges they have earned becomes problematic.
The changes to the way passengers earn points make perfect sense to us, but we do have two fundamental questions about Latitudes Rewards that impact the program’s future success.
We looked high and low to see if the program allowed members of the same family to combine their points and could not find the answer. This feature, known as “Householding” greatly impacts how quickly passengers will earn a reward. For example, a family of four taking a five night cruise could earn 20 points and achieve Silver status (tier #2) right away. The same family would have to travel three times in one year to achieve Gold status, a level at which many recognition benefits kick in.
If Householding is not allowed, then each person must spend 48 nights on board an NCL ship to earn this same Gold status. That’s the equivalent of 4 nights per month all year long, limiting the number of people who can enjoy Gold rewards.
The second question is about the privileges granted by tier. Basic Bronze membership includes Priority Check-in, Onboard Discounts, and a Members Only Cocktail Party plus a few more. Silver adds Discount on Photos and Nightly chocolate treats in the cabin. Gold steps up to offer admission to an exclusive Onboard Gathering with Ship Officers and Priority Disembarkation. Platinum goes further with free concierge service, complementary laundry service and a “behind the scenes“ ship tour.
I can’t think of a better business model than cruising where the imagination can run wild to design special recognition benefits for customers. The question is, if passengers can’t reach the tiers needed to enjoy the privileges, they remain as nothing more than program window-dressing.
Our suggestion would be to shift some of these special offers to lower tiers. They are for the most part low cost to deliver but offer high perceived value to the customers. Why not sweeten the pot for cruisers as a tool to shift their next purchase decision in favor of NCL?