One challenge that loyalty programs have in their elite tiers is what to do to continue incentivizing business after a customer has reached all of the thresholds they have to offer?
Some programs like United and American have offered continued bonuses, though not additional elite tiers, for travel beyond their 100,000 mile top status level. So there’s an opportunity to earn more international upgrades or bonus miles or to gift status to others. It’s not always as rich a benefit as it might be, but it’s something.
Both Marriott and Delta have pursued a rollover concept — stays or miles above the level of status you qualify for count towards status in the next year. So you can keep flying or spending hotel nights and that activity counts towards status… next year. That’s attractive, it also leads to some interesting gaming. Does a member stretch and shoot for top tier, or do they stop just below top tier and roll over a ton of nights or miles for a head start on next year? Or what if you requalify for an entire extra year this year, what will incentivize you going forward? It pushes the problem down the road, but it’s an interesting experiment and interesting that it’s taking place both with airlines and hotels. Folks in the loyalty industry are very much working on the same problems.
Sometimes you just need to create a higher status tier. Delta did that with Diamond, in addition to introducing the rollover concept. The worry is that a higher level angers your previously top tier customers who don’t reach that level. And doubly so if the new top tier gets more or less the benefits you gave the old top tier, just at a higher qualification level.
(Hilton’s program head has suggested the need for a new, higher elite tier as a way to keep members on the treadmill but that only works with more benefits not just status for status sake (I’m even letting my “Opentable VIP status” lapse this year, have credited several dines to my wife’s account instead to top off towards a reward, no reason to requalify for a level with zero benefits..).
Personally I’d hate to see a new higher tier when I just signed up for the Hilton Amex to put $40,000 in qualifying spend on the card in order to reach the program’s top tier. I hit the goal pretty quickly. And of course it can’t be worth much when a bit of credit card spend is all it takes to get there. Guess what? Hilton Diamond isn’t worth much, breakfast/lounge access is really all.
Though I suppose this is a program more than any other that could use a higher top tier, at least if they aren’t going to give suite upgrades at the Diamond level the way Starwood, Hyatt, and Intercontinental do (in different ways, to varying degrees).
Another program that could possibly stand a higher tier is Starwood, with its platinum status at 25 stays or 50 nights and falling behind some of the more innovative benefits in the industry. They’re no longer the leader in upgrades (Hyatt lets their Diamond members confirm 4 a year at booking). And they no longer distinguish themselves in redeemability of points (since Hilton and Hyatt have matched, even their other competitors have gotten better). They were early to the party with internet, behind Hyatt but ahead of Hilton and Marriott, but that’s now pretty well standard. They’ve focused a bit on under-the-radar treatment of top spending elites, but at some point they’ll need to enrich the elite program. A new level is on possibility, though it isn’t without risk.
In the meantime, Starwood has a band aid for the problem as we approach the end of the year. And this is the promo that led me to write about the topic in the first place today. Starwood is offering (registration required) Platinums an extra Starpoint per dollar spent on their stays in the last quarter of the year after they’ve requalified. So it’s a 33% bonus on points earning as an incentive to keep staying with Starwood after wrapping up status for the next year.
One extra Starpoint really isn’t much, but it’s an extra incentive to keep staying (in addition to the nice treatment one gets as a Platinum at some properties!). And they database gurus will the work to untangle whether it helped retain folks that have already hit their mark.