There’s nothing quite like kicking off a major loyalty conference by suggesting that most loyalty programs operate in a punitive manner and that their customer retention efforts are unlikely to end well for the programs in the long term. As it turns out, that’s what we heard this morning at the Loyalty@Freddies conference from Scott Resnick, JetBlue’s Director of Loyalty. And while some of this is his hopes for the industry, not necessarily what is currently happening, Resnick took the opportunity to share how TrueBlue is trying to push boundaries on that front.
For many newer successful companies the concept of a loyalty program is something very different from what hotels or airlines operated for the past 30+ years. There are ways to capture a consumer’s attention and loyalty without barriers such as points expiry, multiple tier levels and relatively high priced redemption rates. In hotel programs the most recent development for general members of a program is access to free wifi on site. For airlines the day-to-day benefits of being a member while traveling are roughly nil. For some of the newer programs there are additional touch points in the programs that draw customers in and give them rewards – even very small things – to drive engagement. Trying to change that level of interaction is challenging for travel providers but in many cases it seems they aren’t even trying. Instead, the changes to program rules are seen by members as punitive.
Being punitive, adding more tiers and devaluing points may make a program more financially sound. It can lock some customers in but it does not end well.
The main challenge with this view, of course, is that the value of the program is typically demonstrated by looking at the miles sold by a loyalty program to partners. It is easy to document an income line and show its progress year over year. It is much, much harder to document customer behavior and determine the impact of the loyalty program on incremental travel purchases. In each of the first three sessions it was suggested that just throwing more miles at a business traveler is probably not the best reward. That’s heresy in some segments of the market, of course, but for many customers loyalty is about reducing friction, not necessarily getting rewards.
— Seth Miller (@WandrMe) April 26, 2017
The JetBlue TrueBlue program is relatively young and was one of the first in the US market to go to fully revenue-based. But along the way the company added things like the Badges program to drive engagement and activity in small ways, touching on gamification of the program and also delivering tiny rewards to keep customers coming back. An extra 50 or 100 points is unlikely to drive travel patterns but it fulfills the goal to “be generous in little ways.”
So, are we ready for an end to “punitive” loyalty programs? Does the travel loyalty industry need to evolve wholesale to keep up with consumer demand? And can that happen without trashing the travel redemption part of the operation that is still a major (though shrinking) part of what the programs represent?
Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.