Three Things Airline Loyalty Programs Should Be Doing Right Now

Apr 24, 2013

There’s no denying it’s been a rough few months for airlines – not for their bottom lines, but in airline programs and customer satisfactiontraveler perceptions. Delta Air Lines recently ended its policy of allowing SkyMiles members to pass on unused points to relatives after their death. The merger of American Airlines and US Airways has raised concerns that loyalty program perks won’t be honored in the same way as before (read: more rule changes). And, according to the 2013 Temkin Experience Ratings, the airline industry’s overall score on customer satisfaction landed it right on the border between “OK” and “poor.”

Then there are the furloughs that the Federal Aviation Administration has begun implementing as part of government spending cuts known as sequestration. Fewer staff is likely to cause longer lines at airports, unnecessary travel delays and overall traveler frustration.

But enough with negativity. Airlines pioneered the frequent flier program more than 30 years ago and today they net billions in revenue. As a result, these loyalty programs rank very high on an airline’s priority list. So how can airlines leverage this priority to ward off customer angst?

Here are three recommendations to help improve the relationships airlines have worked so to build:

  • Be Transparent: Airlines must spell out how their loyalty programs work. What are the rules? How, where and when can accrued mileage be used? And if there is a rule change – even one that raises the points-for-miles threshold – don’t use crafty language that calls something a traveler benefit (like narrower seats yielding more leg room) when it’s not. Passengers aren’t stupid and they’ll read right through such efforts.
  • Be Engaging But Be Simple: A recent study by Dr Andreas Liebrich of the Lucerne University of Applied Sciences and Arts found that an airline’s website layout is critical in driving loyalty. Mobile apps and mobile web pages shouldn’t be ignored either as smartphones and tablets are the centerpiece of SoLoMo – social, local, mobile – initiatives. The same goes with rewards technology. Virgin Australia recently announced the launch of a new prepaid contactless payment credit card, partnering with American Express. Contactless payments streamline payment processes and continue to test the waters of the still-nascent mobile wallet era. By making this an opt-in experience, the airline leaves loyalty program control in members’ hands.
  • Measure, Manage, Mitigate: Don’t wait for the findings on some macro airline study to gauge your airline’s loyalty success. Customer relationship management software and loyalty program data work better when they’re operating under the same de-siloed roof. The goal here is to measure how well your airline loyalty program is working. That means asking how many members are actively engaged and discovering what their travel experience is truly like. Raising these questions across an omnichannel loyalty framework is critical if an airline is to best manage the results and mitigate any downstream errors.

So airlines, the time for action is now. Some 9.7 trillion frequent flier miles go unredeemed every year. While airline loyalty programs remain successful, the 9.7 trillion-mile sieve needs to be plugged and traveler perceptions require some serious improvement.

Later this week, I’ll be attending the Loyalty Innovation Show and Freddie Awards in Washington, DC with my colleague Bram Hechtkopf, Kobie’s VP of Business Development & Marketing. We’ll be meeting with airline loyalty execs to discuss latest the developments and trends their programs must stay ahead of.  With airlines facing criticism for being loyal to revenues first – and not their customers, I’m sure there will be a lot of discussion about how airlines can go beyond the typical points-for-rewards stereotype and deliver engaging experiences to their passengers.

I’ll report back on those discussions in a future post but in the meantime, what recommendations do you have for airlines to improve their customer loyalty programs?

Hungry for more airline tips?  Check out Turning the Tables on Airline Loyalty Turbulence: How Big Data and Omnichannel Loyalty Can Help.