There’s a major difference between “know that” and “know how.” The latter comes from deep practice and a development of tacit knowledge that comes from first-hand experience. And airline executives too often lack know how in loyalty marketing and make big mistakes that undermine profits as a result.
The former head of the Malaysia Airlines Enrich frequent flyer program says devaluations hurt airline profits, and that there are unnecessary pain points in delivering benefits and services to an airline’s best customers.
In fact he even cites the revenue-based move at Malaysia Enrich as a money loser. Reading between the lines that suggests to me that it was imposed by airline management rather than coming from the loyalty marketing team. At American Airlines Scott Kirby and Andrew Nocella demanded copying Delta and United on revenue-based earn, over alternatives presented by the AAdvantage team. It’s no surprise that with those executives now in top leadership roles at United, MileagePlus eliminated award charts.
It’s always struck me as incredible that with frequent flyer programs in some cases accounting for the entirety of an airline’s profits that they’d be so cavalier upending the value proposition of those programs. Creative destruction matters, even in profitable businesses, but there needs to be some pretty clear upside before risking multi-billion dollar businesses.
Mark Ross-Smith says delivery of benefits, and cavalier attitude towards programs themselves, stems from a lack of understanding of the programs on the part of airline executives who do not use and experience their key product offerings personally.
Not only don’t employees buy expensive tickets, use airline lounges, find pre-reserved seats changed, and experience redemption frustrations but the mechanisms they use to supposedly understand their customers are unhelpful: “outdated surveys..annoying focus groups..inaccurate often bias[ed] feedback forms.”
When the airline staff are more invested in the program, when they’re feeling the pain on a regular basis – they’re more likely to take action.
Mark Zuckerburg famously forced Facebook employees to use the Android App – because it was so bad. Outcome? The Android app is now superior to the Apple version. Considering most of the world use Android phones – this was a positive move for the majority of Facebook users.
This isn’t unique to frequent flyer programs. Famously it took nearly a year for Doug Parker to try his airline’s new domestic product that was being rolled out across the entire airline. It’s important to experience the product being sold to customers or else you won’t understand your customers.
Ross-Smith argues that senior executives should be trained in the frequent flyer program, and loyalty executives have actually earned elite status as a frequent flyer. He also argues for a staff frequent flyer program
Instead of earning miles when flying – perhaps it reduced status earning. Allow staff to fully utilize FFP benefits if they hold elite status with the airline or in the alliance. Accelerated miles earning for staff who spend on the airline co-brand credit card. Do a deal with the issuing bank so that all airline employees are automatically approved for the co-brand credit card (and charge the bank for the deal! — see my commercializing loyalty programs for more tips)
The most fundamental lesson of marketing is to understand who your customers are, and find more people like them. That starts with understanding your customers.