Since the inception of airline loyalty programs, the concept has been fairly simple: members earn points for flying, for travel-related activities and even for everyday spend through branded credit cards. Frequent flyers enjoy access to select benefits related to their value to the airline. But as the digital age propels us into new ways of identity and value management, how sustainable is the concept in its current form and shape?
A few years back, before I joined Amadeus, I was in a meeting with an airline discussing growth opportunities for their loyalty program. I suggested leveraging the loyalty program data to create dynamic pricing for commercial flight bookings. To my surprise, the idea was met with puzzled looks. The technical complexity was apparently such that it seemed an outlandish plan.
Making the most of data
Today, leveraging data at all touchpoints is a central topic in the minds of many airline folks. At Amadeus, we are working on various projects that allow for flexible and advanced flight and upgrade redemption pricing, better service recovery through new customer experience management tools, and dissemination of loyalty data for all marketing purposes including personalized merchandizing.
One project we’re working on for a major U.S. carrier enables that airline to analyze an innovative data source in order to understand how their customers choose flights, along with the impact of loyalty in relation to key factors like schedule and price. This provides a powerful method for understanding the effectiveness of the loyalty program, as well as helping to enhance the design of value propositions, not only for the loyalty program but for the airline’s core business.
What’s next in loyalty programs?
As a person who has been involved in this area for many years, it seems clear to me that we are moving into a new generation of loyalty programs.
In North America, some significant changes are happening. Air Canada is in the process of re-designing its loyalty program with a focus on a more brand-centric and digital-first customer experience. A number of major programs have moved toward a revenue-based business model. And recently, there were several announcements about the introduction of dollar-spend thresholds for different loyalty program tier levels.
Meanwhile, the always-connected customer expects offers increasingly tailored to his or her needs and circumstances. Relevant offers at the right place and the right time are becoming a prerequisite for improving customer engagement and winning their business.
Breaking through to the next level
Today’s basic air and non-air reward offerings don’t meet individuals’ needs anymore. And presenting offerings toward high-value members may seem better from the airline’s perspective, but they’re potentially leaving a lot of value on the table. It would be even better in my opinion, for airlines to serve all passengers with loyalty propositions.
At Amadeus, we see a great opportunity to break through the walls of existing programs and help airlines to break out of the silos in terms of data usage for loyalty. Digital capabilities now empower airlines to maximize their influence on value-based decision making. We strive to enable airline marketers to target all passengers with relevant propositions, combining customer insights with airline and partner offers throughout the entire customer journey.
Amadeus Loyalty Solution focuses on innovation that will establish the next generation of loyalty marketing. A platform like our new loyalty engine and our explorations into new technologies like blockchain and virtual reality (VR), will pave the road for more rewarding experiences. We’re taking airline loyalty programs to the next level and reinforcing airline brands better than ever before.