Rapid Rewards 2.0 is growing up. Now a precocious four years old the revenue-based program has seen a few changes since its initial launch in 2011 but it still mostly looks the same as day one. And, to Rapid Rewards Director Jonathan Clarkson, that’s a key aspect of the program’s ability to mature in a competitive landscape. I spoke with Clarkson recently and we discussed the recent points valuation changes as well as future plans for the program.
Speaking to the most recent change, uncoupling points from a strict per-dollar fare value in the Wanna Get Away fare family, Clarkson was rather candid about the motivation:
We adjusted the redemption rate on Wanna Get Away seats; it is essentially just a way to help manage costs on the loyalty program. We came out with some static prices for point redemptions and the change this month reflects tweaks that we’ve made to the program in the interest of ensuring that we can maintain the other great things that we’ve implemented in the program.
Okay, so he’s proud of the program, but what is really the motivation for adjusting the rates? Not surprisingly it comes down to making sure that the rewards program part of the business continues to contribute its fair share into the overall revenue ecosystem. Clarkson continued:
Just like any aspect of our business from time to time we have to look at it [and see if we’re charging the right amount]. Sometimes we take another look at things and make adjustments accordingly. What we think is important is that we don’t change the core tenets of the program.
Things like no blackout dates and no extra fees are factors which consumers appreciate and which likely contributed to the program winning for “Best Redemption Ability” at the Freddie Awards this past year. Clarkson and his team seem to be betting that a few tweaks to lower the point values in some cases will not be so poorly received as to change customer views on that front. And he’s probably right. Shifting the points value proposition a smidgen while maintaining the customer service focused bits is likely to keep most Rapid Rewards members happy; even with the previously fixed rates odds are most didn’t do the detailed math to figure out the system anyways. And avoiding fees, even those you aren’t going to incur anyways, always feels like a win to consumers.
Check out more interviews with program executives on the LoadFactor blog.
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I really dislike that there isn’t a fixed point value now. I don’t think it makes collecting rapid rewards other than for essential southwest flying or getting a rapid rewards credit card a wise investment.
People hate the variable rates where you never know what points are worth. And people hate the fixed rates because the programs cannot be “gamed” enough to “win big” with redemptions. I cannot figure out what the rograms could do to actually make customers happy at this point.
The points are not a fixed value but we know what the best case scenario and the worst case scenarios are and that’s better than many programs offer. That has to count for something.
As I see it that they want it both ways, they initially moved to fixed value points because their old scheme was too generous to low revenue flyers. But the problem with the new scheme is that they lose revenue when people redeem points on flights that would sell out. And they have to keep selling Wanna Get Away fares because Joe Public doesn’t bite on Anytime fares. If they could have found a way to be more transparent about it, like say introducing another tier, but keep the value per point within a tier constant, I would have preferred that. The way it is now they want the cost benefit of awarding a fixed percentage of revenue received, and now they also want the benefit of controlling redemption opportunity cost. It’s basically squeezing a ton of value out of the program and members will realize this.
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