I came across an interesting analysis of the airline loyalty market this week, interesting because it is looking at the market from a company perspective and it segments the customers in a rather blunt and direct way. Even more interesting is that the analysis suggests there are segments of the market that the airlines should disincent rather than incent towards repeat business. Are you one of the customers the airlines should be shunning?
The analysis splits customers on two axes, based on average yield (how profitable they are) and NPS (how much they actually enjoy the product). Among other things, this is notable because it recognizes many airlines carry FFers on their books who actually would rather be flying elsewhere, a nod to the drive of corporate contracts, schedule and pricing in booking patterns. Obviously the article suggests that the high yield passengers be taken care of as best as possible. But it also suggests that points have nearly nothing to do with that experience. Giving them a discount (points) isn’t what drives their business so it is better to invest in rewarding them in other ways.
At the same time, the article identifies two ways to deal with the bottom of the yield curve. For the complainers it suggests ignoring them. Certainly a bold move to shun customers but taking the view that some customers simply aren’t worth the costs to provide the service they demand is a step every company must take as it matures and grows. Growth comes with the higher yields, not just by carrying more passengers. For the lower yield passengers who aren’t a complete pain in the ass, the suggestion is that rewarding them via bonus promotions and such is the best approach. In fact, the article suggests that offering bonus points rather than discounting fares is the better way to drive loyalty and revenue for the airline. Hard to argue that point, especially considering how few folks pay attention to all the promos and bonus opportunities out there.
I certainly know where I stand in the matrix when it comes to pretty much all the carriers I fly on: somewhere on the bottom half, veering to the left or right, depending on the program. Where are you with your program of choice? Do you think the designations make sense?
Read the whole report here: http://ourpax.com/uncategorized/ffps-stop-rewarding-the-wrong-customer-get-the-experience-right/.