What United Used to Consider a Loyal Customer

The rumored changes to United Mileage Plus for next year very much would make the program more transactional in nature, rather than focused on loyalty.

I’ve argued that the best (most effective and profitable) programs shift member wallet-share, rather than rewarding high spend.

And I’ve contended that a program which rewards the highest spend on a given flight, rather than the most valuable customers overall, undermines loyalty over the long term.

We need to shout from the rooftops, I am not my rate or my fare!

A customer is the same person every time they board one of your planes or check into one of your hotels. We’re either valued or we’re not, loyal or we’re not. Setting a minimum spend for benefits defines what you see as loyal, though I grate at punishing people who buy the lower fares that you offer — taking seats that you think would otherwise have gone empty, and providing true revenue at the margin.

But once you’ve done that, you decide who you want to consider loyal and worth treating well, treat them just as well every single time whether on a leisure fare vacationing for the weekend or on a last minute full fare business trip, when the plane is nearly sold out and is going to go out full either way.

But for purposes of this post, I want to just illustrate the collosal shift in mindset that’s gone on.

The rumors are that United plans to

  • Set a minmium spend necessary to earn status, to weed out low revenue elites
  • Prioritize members spending miles and cash to upgrade over members using upgrade instruments given to top tier elites
  • Prioritize those elites, even those with lower status, who are traveling on a full fare ticket on a given day ahead of top tier elites when handing out upgrades

So they want to keep out low revenue elites, but even having done that they want to prioritize customers spending the most on a given day rather than the most frequent and loyal customers.

This is very much consistent with recent Continental practice of selling upgrades to all passengers at check-in before upgrading elite members on the waitlist. This sends a message that anyone with, say, $100 is more valuable to the airline on that given day than someone spending $8000 over the course of a year.

How much of a change in thinking is this? I’m not arguing that the lifeblood of a program is mileage runners qualifying for status based on cheap, upgraded fares. That’s not the point here. But the magnitude of the shift is illustrated, I think, in this chat that Randy Petersen hosted with the leadership of United Mileage Plus in April 2001.

PremEx2000
Does United frown on “mileage runs”? Next week, I’m flying to Singapore and back in a couple of days just for the miles — and I’m flying on a really inexpensive ticket.

Randy Petersen
Ohhhh, good question…..

Robert Sahadevan
It’s allowed in the program. Have at it!!!!!!

Randy Petersen
Straight from the boss….. I guess that’s an endorsement to fly….

Jim Davidovich
We appreciate loyal customers!!!!!

There is something inherently valuable, I think, in the sort of customer evangelist who loves your brand so much that they will pay to spend time with you to fly to the other side of the world, just to prove their love for you so that you’ll know how much they care when they give you business next year.

I’m not sayin’, I’m just sayin’.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I have to give you credit for getting so many people to parrot your “I am not my rate or my fare!” line. Too bad the use of it in this case appears to be so misguided. No one is saying that only fare matters for upgrades. CO has been operating a system for years where full-fare elites – customers who are absolutely more than just that single transaction fare – get priority over others who may have flown more but who represent less revenue. And I cannot figure out what’s wrong with that. Even if the goal is to only drive incremental revenue (another position of yours I’m not fully on board with) the people buying full fares are representing a larger incremental value.

    No one is taking away upgrades from 1Ks (or diamonds or whatever you want to call them). But recognizing that loyalty exists in more than just miles flown in a year makes sense. Pretending it doesn’t is burying your head in the sand.

    As for what they thought loyalty was back in 2001, well, I guess we had a great run with the inmates running the asylum for 10 years. But I’m willing to bet that if pressed further on the question Robert and Jim would admit what we’re seeing today: just flying a lot of miles is not necessarily the loyalty that the programs what to reward. It is a much more complicated system than that and trying to reduce it to such simple terms will almost certainly result in losing the battle to both understand and win the game.

  2. @Seth I tried to explicitly make clear that I wasn’t arguing for the conception as laid out in 2001, just noting the interesting stark contrast that 10 years has brought.

    Yes, they are looking at adopting the Continental (and Delta!) method of making full fare trump status in the upgrade queue. And that’s something I’ve long argued against, it’s not a new concern, and I also explain why I think it’s misguided.

    I am not making a case that (1) the way United has doen things was always right, or (2) that there aren’t unprofitable customers, or customers who are being rewarded in a way that doesn’t make sense. I’m not arguing that there can’t be improvements to tailor the program to do more to get incremental wallet share.

    Rather, I’m arguing that the Continental elite program has been more transaction based than the United one. And that moving more towards rewarding transaction value and away from overall relationship loyalty — which I believe the total package of changes represents a shift in the direction of — is a mistake.

  3. The point to realize is, in 2001 (unfortunately I was a kid then :() a customer has plenty of options for shoosing a loyalty program. Today in essence there are three(UA,AA,DL) programmes. US is unstable, WN and others are useless for international travel. The airlines know that. They can play their card as they wish. They probably have frowned at mileage running all through the 10 years but now is good time to stab it.

    I will surely ditch United. But where do I go? DL? No way, after their recent 72hr rule. The only choice is AA but Oneworld has limited international coverage and I am pretty sure they would also change their FF program.

  4. @The Nomad as a DC-based flyer US Airways offers a certain attractiveness. They’re ramping up their already-substantial DCA presence with the new slots they’re going to get from Delta (in exchange for LGA slots). They’re adding first class to regional jets. Sure, no inflight entertainment and the pitch isn’t great. No economy plus. But there may be a certain logic to it.

  5. I fled US (where I’d worked my way up to mid-tier status) when HP took over. The alignment took forever; the service went downhill; and the elite upgrade benefits became positively inscrutable. It is depressing indeed to think that going back to US might actually be in my future.

  6. In the last few years, most of my flying has been done on 747s or 777s (about 80%), when you are talking about a 200 ton plane empty, adding my 155 pounds plus 20-30 pounds of baggage isn’t going to cost them more than a few dollars in fuel. Wether or not I am in that seat, UA will be paying the pilots, F/As ramp crew, and everyone else the same. The marginal cost to fly me is a few dollars. None of the flights I have been on in the past few years have been full, so I am not taking the seat of a higher yield customer. United has gotten about $6K from me in the past fews years for a few hundred dollars. If they go ahead with this change I am going to spend my miles to cruise around the world in business class and be done with United (for the most part).

  7. I 100% agree, but from their perspective, low-revenue top-tier elites crowd out higher rev passengers with lower status. There are only a fixed number of first class seats available. The value for top-tier, of course, is in paying for coach and getting first, 99% of the time.

  8. Gary…. United is very misguided in this approach they are taking. Which helps to explain why I have rarely flown United in the past few years. I’ve found United to have significantly less value that my other main alternative, AA. I will stick with AA.

    I suspect that AA has some changes in the works, too, but I think they have a better handle on the Frequent Flyer program than UA. I could be wrong. But I will rarely if every fly UA.

  9. a option (yes, I own the USD Mint and USD trademarks, key domains and processes etc)

    United can rename Miles to USD (like Choices).
    USD United Service Dollars.
    USD United Status Dollars.
    USD buy any seat or upgrade the same as Cash.

    Choices and miles buy any seat, room, or car rental now.
    USD deliver a clear 1:1 value, with 2:1 and higher options.

    USD offer you personalized deals for seats, upgrades, packages,
    ie: free or half price upgrades, 2 for 1, special prices, deals for you.

    USD Free Pass Card for Personal Access to Sales, Services, Status.

    Status is from all Spending and Segments … your combined activity.

    Miles convert to USD at 1 to __ cents based on elite status, spending.

    Earn USD at 10% of spending +bonuses for service class, elite status …

    a option to consider … rename miles to USD to reward the customers.

  10. I can’t imagine low-revenue, top-tier elites being very numerous. Of course, it seems so when you only hang out with Flyertalkers. But could there really be more than a hundred 1K’s that only fly on promotions at .02 RDM or less?

  11. @Ben – You’d be surprised. Don’t forget there are contract fares, for example. Had I not changed projects last fall, I could have easily made 1K (rather than 1P) with a total revenue that would barely met the supposed new 1P threshold.

    I think the universe of travelers on FT/MP – or the most vocal group anyway – is probably skewed. My impression, I could be wrong.

    But regardless – despite all the blathering on FT, the fact is no one except some folks wotking for UA, truly knows the statistics. And doubtful they will be sharing that data.

  12. Seriously, if you do nothing but mileage runs all year say 200k, you spend 6k to 8k to get it. Should any company care about you??? You spend 8k tops per year, yet you expect treatment equivelent to their top revenue customer? I understand you are loyal, but you should get what you pay for. If I spend 10k a year for 27k miles. Who would you care about more? Who is a better customer?

  13. I just did the math… Despite flying over 125k miles last year, I wouldn’t’ve met the revenue requirement. In fact, I ended up around $6500, mostly because I used a bunch of vouchers. I wonder if vouchers will count toward revenue spend? I kind of doubt it.

    Last year I also moved to MSP, a Delta hub, but remained with United because the upgrade situation with Delta is horrible. If they end up with the same upgrade situation at United, I see no reason to stay with them. That’d also mean dropping my United Visa and moving my credit card spend over to the Delta card. I hope United realizes what it’s missing.

    Next year, my spend will likely be closer to $10k, with a number of trips planned. United’s likely going to miss out on that at this point.

  14. Southwest Airlines uses a secret formula to rank boarding number issuance for its A-List and A-List Preferred members. As a low-fare weekly customer, I am convinced that the formula considers only the detailed fare class (essentially equivalent to fare paid) for that one flight.

    In a nutshell, Southwest has been treating its elites as fares rather than customers since March 1, 2011.

  15. I fly to Asia for vacation two or three times a year. To get status on Continental, I have been doing a couple of mileage runs to top off my elite account. Recently, rather than putting my butt in the seat, I have sometimes also been using the Elite Maximizer. I am doing this for potential upgrades in my two or three domestic trips. Also, I like receiving double elite points which I use for BusinessFirst upgrades on Asia flights. I have been flying on Continental metal because ANA or Asiana give less points for lower fare tickets and I do not get double elite points. I currently have Platinum and will make 1K by the end of the year.

    I do not know what is fair or reasonable, but if the revenue changes go through, I will chuck the USA elite system, get a Star Alliance Gold Elite status with Asiana and fly ANA and Asiana because they are way nicer than the US carriers. In connection with this, I will chuck my Continental OnePass Credit Card to save the $95 fee. Instead, I will get a Asiana Credit Card. Domestically, instead of flying Continental/United, I will fly the cheapest Star Alliance flight, which usually means US Air.

    Actually, that would really simplify my life as chasing after elite status is expensive, time consuming, and kind of a headache.

  16. It’s a worrying trend, my friend. I hope all airlines don’t follow suit. It really is a change of mindset, as you say, and one that would spell the end of loyalty programs as we know them — not to sound dramatic about it.

  17. Sorry to hear about the downward spiral
    United is the new Delta with 50,000 round trip coach tickets typically as I rarely see the saver awards for any routes on a multitude a dates I seek and test routinely. When I do see saver seats frequently they have horrible connections at unacceptable departure times.Everything is double when I look. Don’t need to look at this program for anything.
    United is now an airline with enormous capacity and they just got bigger with the Contiental merger. This is the Exact reason why mergers are bad for customers and anti consumer.THE PROGRAM is compromised.
    I am proud to have been a member of this program for many years prior to the crash and burn of this program thanks to the management. I appreciate AA every time that much more whenever I hear about what United is doing.
    Years ago Randy stated after 9-11 that I can’t imagine American and United getting stingy with their award seats. Yet that’s exactly what has happened. American has my revenue. United NO WAY! STINGY! What a rip off. And the folks in overseas call center clueless
    They don’t know what ORD is. Somebody tell them it’s in Chicago, Illinois an American City within the United States
    Very Sad indeed……….

  18. I agree that the rumored changes are, together, strongly unappealing. I just came back from an Asia trip that epitomizes for me how UA’s current system affects my choices on the margin–and how under the new system I may have to rethink those choices.

    My wife and I (1K) spent two days in SIN before heading to PEK for a week for (my) work. I booked a revenue Y ticket and my wife traveled on an award C ticket, with some segments in Y. We booked as much of it as possible on UA so that I could have a shot at upgrading. Of course, I (or rather, work) also paid a $400-500 premium for an eligible fare. For the segment we had to fly in Y, I got my wife (no status) a seat next to me in E+.

    Under the new system, no E+ for my wife, since we were on separate PNRs. My upgrade changes would almost surely decrease, so now I’d have to weigh a long trip in UA Y (with a reduced chance of C) versus the same trip in someone else’s (probably better) Y. (E+ wouldn’t tilt the scales for UA, since my wife couldn’t join me.) So a $2200 ticket on UA might become a $1800 ticket on someone else. The SWUs would have less value (though if there wasn’t a co-pay requirement, less cost, too), making going for 1K less appealing.

    I’m not threatening to abandon UA reflexively, but I’ll certainly look carefully at other options. No idea how valuable I am to UA, but I spend about 20k a year, some of it in premium cabins. Moreover, in the past year I’ve gone out of my way to fly UA (including in C) when there were other options, largely because of the *collective* benefits I receive over the course of a year from being an elite on United. Diluting those benefits not only makes me rethink specific flight choices but also my overall strategy; maybe UA is fine with that.

    Gary, I’m wondering who you think we should contact to express over views/concerns to UA? Even if some of the rumors are not true, it’s can’t hurt to voice our opinions. 1K voice is my go-to, but is there someone else we should contact?

  19. As I have done with hotels this year, I have walked with my wallet. Flying is a commodity. There are numerous carriers. I think that loyalty is a two-way street. Many of us remained with UA during their difficult times so you would think that at this point they would realize who their loyal customers are. IF they introduce this (and realize that it is STILL all speculation), then look at which airline gives you the most bang for your buck and don’t worry about the status.

  20. ■Prioritize members spending miles and cash to upgrade over members using upgrade instruments given to top tier elites

    This isnt a rumor ive seen it happening with my 1k systemwides already

  21. My main concern is how repeating customers paying low fare tickets are being left apart although they may be repeating customers.

    If we considere and airpline flying a route a fixed cost, they are very profitable because they pay for the excess of capacity airlines have.

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