Tiers within tiers from the loyalty programs


I’m sitting in on the Airline Information Spring FFP event today and absorbing a tremendous amount of information from both the programs themselves and the consulting and services organizations which exist around them to help make the all the points actually have value. There have been panel discussions, keynotes and product pitches and synthesizing all the data will take some time but I was particularly intrigued by one comment I heard and thought it worth sharing.

The manager of loyalty for a pretty big airline was commenting about how their program has shifted the tone of their marketing to a number of members recently. After hearing through interviews and focus groups that many members described themselves as "only a silver" or such it became clear that, while it is important to have customers who strive to higher tiers, the programs need to do a better job of having some members embrace their status at lower tiers.

Much of the segmentation comes from looking at who is actually close to reaching that next status level or if the company can incent them to reasonably make that stretch versus customers who will never get there. In other words, tiers within the tiers. Marketing to a customer who barely reaches the 25K miles level every year will be very different from that focused on a customer who is at 40-45K annually. And the marketing also can shift based on the revenue model those customers present to the company.

This is hardly a ground-breaking revelation, but it is still interesting to hear how the airline programs are working to implement it. Even more interesting was hearing about the push-back from the sales side of the house when the loyalty folks tried to explain that they didn’t want to push on some customers so hard. At least for the airline relating the story, however, the results were quite positive.

Turns out that knowing your customer well is, in many cases, an even better marketing tool than dangling status level in front of them.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.

8 Comments

  1. From the perspective of that 25K flyer, this is interesting news. Personally, I’d love to see airlines implement something like the Starwood “Nice Choice” promo, where the customer gets to choose the bonus. Right now one of the reasons I don’t strive for status is because only one of the perks – mileage bonuses – is valuable to me, with free checked bags or priority boarding as totally worthless handouts (for me). If I could choose something I cared about (a limited number of upgrade certificates or lounge passes), I’d be more inclined to stay loyal. I think it would be plausible to implement something like 25,000 miles flown = your choice of 3 perks, 30,000 miles = 4 perks, etc. with the airline determining the list of options. Of course, I don’t work at an airline so maybe a change like that would receive much more backlash from existing status-holders than I expect. Something for the “experts” to decide, but I’ll be interested to see the outcome.

  2. I miss United’s Elite Choice program, which seems like a perfect way to apply this strategy. It allows a program to provide smaller incremental benefits at mid-tier thresholds like 30, 60, and 90K miles. Even if you don’t actually reach the next elite tier, earning a perk at 60 or 90K will incentivize those travelers who might otherwise shift all of their travel to another airline as soon as they requalify for a low- or mid-tier status.

  3. Hi Seth,

    I know you have been reading all the vitriol on FT lately in the UA forum…

    In light of that, I think a better name for this blog post of yours would have been ‘Tears within Tiers’.

    Lark

  4. I’m happy I’m a (UA) silver, and I tend to use the “only” phrase only when talking to people who are speaking of different benefits due to higher status, e.g., I don’t have RPUs as I’m only a silver.

    However, having a friend sponsor an RPU has really been an education in higher elite levels, making them more interesting to attain. Pity I’m not one of the people targeted for the 20k promo, though.

  5. I feel like a “Lowly 1K” on the new “United”… can’t imagine what a Premier Silver must feel like!

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