What you might have missed - 1 - FREE ACCESS
Charting the progress of travel loyalty to an unknown destination -
In a series of exerpts over the forthcoming holiday, we share some of the articles published in our printed magazine that got people talking.
Where is Loyalty going? And how long is it going to take to get there? These are questions that absorb the minds of all those working in loyalty.
According to a raft of recent research, Millennials don’t feel well represented. In addition, one in ten are LGBT (lesbian, gay, bi-sexual or trans-gender) and virtually ignored.
Travellers feel misunderstood, underwhelmed and ignored and lacking respect and appreciation. The loyalty programmes they belong to are unintelligible and offer little of any worth.
“There is a tug of war between loyalty and price,” says Henry Harteveldt, analyst with Atmosphere Research, and price is winning.”
Only 15% of active travellers are loyal to only one brand. While this may be questioned as a problem, it suggests that there is not one programme in the world that is better than any other. THIS is the problem.
Hotels are doing just a little better than airlines, although travellers are increasingly uncomfortable about sharing data, and there is little research being done anyway, on what they really feel.
Some suggest that both airlines and hotels should segment more to take note of gender differences and demographics. This may fix the overlarge dressing gown problem, but are the needs of millennials, women or other sectors any different from the average middle age, middle class male? Are we not all looking for a better travelling experience, more compelling rewards and more focus on safety, security, speed of check-in, response from housekeeping, and health food.
The biggest question for the airlines is what are the advantages to changing their proposition. What would they gain?
Currently, despite the PR, redemption isn’t big on their priority list. Some of the biggest frequent flyer loyalty programmes run on a redemption of 5%. This fills empty seats, provides revenue from distressed inventory, but doesn’t in any way compromise the profitability of the airline.
It causes problems for frequent flyers though. If only two seats per airline are available for loyalty programme redemption, then families wanting a flight together are out of luck. Flights in school holidays have always been impossibly difficult. Unless the booking is made a year in advance, any flight availability becomes a challenge. Is this a way to run a loyalty programme?
While there is a very real danger that complacency may lead to loyalty losses, no airline is currently going public on a change to their business model. Why would they? At the same time, there are plenty of new players working very hard to shake up the model. Currency Alliance, Points.com, Kornchain, Yudonpay are working on an exchange or aggregator model that may well be disruptive in this space. There are also the online platforms such as Trip Advisor, Booking.com, Expedia and a multitude of others that run very lucrative businesses on providing flights, hotels and holidays much cheaper than is available going straight to an airline or a hotel group. As many of these also run loyalty programmes, they are a real and fundamental threat to the existing model.
But as Teresa Camparato, Senior Director and Head of Loyalty, Carlson Rezidor Hotel Group commented: “When you need a blogging website to decipher the gibberish of frequent flyer loyalty programmes as an industry we need to revisit it. “Loyalty programmes are taken for granted, [by airlines] but the message is repeated in research time and again: travellers need choice and control. We ignore this at our peril.”
Can you overdo data?
Personalisation is a hot topic in loyalty, and particularly intravel. Most companies have it as a priority, but few achieve it, and those that have are now pulling back and sending far less messages. Why?
There is a danger of overload, says Johanna Jakala (left), CMO and VP Brand, marketing and customer Loyalty, Finnair.
“If we are sending messages as a service to customers, then we must be careful of the content. We are working on modelling. It takes time and confidence, but it is all worth doing.”
Isabelle Birem, SVP Loyalty, Le Club Accor agrees on the importance of personalisation, and suggests that it is possible to share it while remaining within the data rules. “Enriched data can be passed from one brand to another, and remain GDPR compliant. Then we can create sparkle.”
Travellers need respect and hotels are responding
Loyalty only comes after a great experience, believes Teresa Comporato of Carlson Rezidor.
“We can look at what Amazon is doing, but we are different. We can look at the technology, and at the customer and then we need to review the experience. Loyalty is a wrapper for brands. It is about good service, and very definitely a mobile experience for everything from check in and out and room service to housekeeping. Millennials expect a digital footprint of a brand to reflect the stay experience. It is finding a balance between the two.”
Andrew Watson VP Loyalty, digital and partnerships for Marriott was involved in the merger between the loyalty programmes of Marriott and Starwood, which involved moving 4 billion pieces of data. “We managed 99.9% of it, but it is the 0.1% that matters,” he said. “We have acted on the feedback, keeping the customer in mind during the whole process. We have moved thousands of staff to help the call centres.
“Loyalty has to be a mindset, not just a team effort. Everyone has to think loyalty. It is not just the rewards, it is the experience.”
Alvin Argus of Scandic Hotels said: “We need to be better at gathering insights from reviews, Trip Advisor and guest surveys. The key thing is Sentiment Analysis. Last month 77% of housekeeping comments were good, but it was the lack of cleaning of the bathtub that was the important piece of information and this could have been missed."
Addressing the challenge of new data regulation, he said: GDPR is elevating the importance and value of the loyalty programme and its data and customers understand that in general terms, if they want to participate they must share.”
Things are going to have to change
Putting Helena Holmstrom of Head of EuroBonus Program Development and Management, SAS Scandinavian Airlines, Kristin Mollerplass of Norwegian, Frederic Kahane VP Customer Loyalty at Air France KLM and Gerald Schlogl of Miles & More, Lufthansa on the same panel could have gone two ways.
As it was, there was a remarkable degree of agreement that loyalty needs to change. Although Mollerplas of Norwegian believes her company already has.
Norwegian is a low-cost airline that gives rewards very early in the relationship. There is a reward (that you can pick yourself, such as legroom or baggage) after just six flights and it is this mixture of immediacy and choice that has proved a successful proposition.
New technology and market innovation must be used to combine analysis of users with rich information for partners and to enable personalisation. “That is where we are,” said Frederic Kahane of Air France KLM. This is the challenge. The reason for the change is because of market expectations and the voice of the customer. “We realised we were a perk for the rich, for an elite. Only 5% of the customer base were rewarded, but what is good for the 95%. They were saying to us: “Don’t make me wait, and have to dream for two years or more. I want it now and I want it on my mobile.”
Gerald Schlogl of Lufthansa says big changes are afoot for his German airline, and the reason for change is is similar. “We are investing a lot of money. The ideas are more or less in place but the problem is the data, it is all spread out over the organisation. It is not in one place. It is time to create a new loyalty programme but we cannot throw away revenue based on new technology. However, if I was starting from here, I would design the loyalty programme in a very different way.”
SAS loyalty programme Eurobonus is investing a great deal in emotional loyalty, recognition and appreciation of customers. “It is amazing how important that is,” said Holmstrom of Scandinavian. “As long as we are able to create revenue from our distressed inventory, we will be relevant. As long as we can create dreams.”
Social media and operations sitting at the same table
American Airlines is not the only airline to elevate its social media team to a position of power in the same room as operations, but it is certainly the largest.
Operating 6,700 flights with nine regional carriers and with a fleet renewal programme of US$18bn, AA is the size of a small country.
But after the events of April 2017, when David Dao, a dentist of Iranian descent was injured while being dragged off a plane, and this went viral on social media, airlines have been taking what happens online much more seriously.
This isn’t easy, because AA alone is mentioned in 4310 tweets on average every day, at a rate of around 180 an hour. The vast majority are on twitter, but not all. Most are about the issues travellers are facing at the time but occasionally, there is a potential public relations disaster.
It is the job of corporate communications to sift these messages and raise the alarm when there is an issue – in real time.
“Sometimes,” said Ross Feinstein, things show up on social before the operations team know about it. There are comments such as ‘are you aware what is happening on flight xxx? For example, there were 100 students appearing at a concert in Rome. They had invested in this concert for a year, but their flight was cancelled. We saw what had happened on social media and fixed it. They made the concert.
On another occasion, a woman with a push chair was having trouble with the flight attendant, who pushed the push chair and hit the woman. Film of the incident from five different angles was on social media within seconds. “Because we knew,” said Ross, we could immediately apologise to the lady and she was upgraded to first class for the second stage of her journey.”
In order to achieve this level of reaction to incidents, American Airlines uses Dataminr to keep up to date with social media content, which claims it is used by “every single media outlet in the US” as well. This means that often, American Airlines and the world’s press get to hear about something at the same time.
“It can’t be helped, said Feinstein. “Social media is the new wire. At least we know why the media are on a call now.”
Jonathan Barrett CEO of Dataminr Europe argues that social media clamps down on rumour. “When there is misinformation, things go out of control. We have been building the AI for ten years and now the algorithm has worked out how to cross reference. Then we share with the client – 400 of the world’s media outlets use Dataminr. So everyone knows what is going on – even if it is just unusual snowfall.”
Twitter owns about a 5 percent in Dataminr, which is the only company it allows to access its entire real-time stream of public tweets and sell it to clients.
Everything on the app
With nine out of ten travellers arriving with a mobile phone, it is reasonable to expect that the most loyal of these will have the hotel app on their phone, so they can connect with special offers in the restaurant and local opportunities, but there is much more to a good experience than offers.
An increasing number of hotels are actively encouraging travellers to work in their lobbies, even if they are not buying anything. “There is nothing worse than an empty space, says Teresa Comparato, of Carlson Rezidor Hotel Group, “you are better to fill it.”
Alvin ArguS of Scandic said: “We need to be better at gathering insights from reviews, Trip Advisor and guest surveys. The key thing is Sentiment Analysis. Last month 77% of housekeeping comments were good, but it was the lack of cleaning of the bathtub that was the important piece of information.
“GDPR is elevating the importance and value of the loyalty programme and its data and customers understand that in general terms, if they want to participate they must share.”
EasyJet launching a loyalty programme
EasyJet is one of the world’s leading low-cost airlines, and its CEO Johan Lundgren, speaking at the Aviation Festival, admitted that the airline aims to be the leading data-driven airline in the world. Lundgren plans to use artificial intelligence (AI) to create the automated experience. It will be key.”
EasyJet is evaluating the possibility of developing a full loyalty programme and Lundgren looking for ways it can reward customers. “Loyalty programs absolutely fit in. Every company needs something where you reward your customers. I think for us, it is to find ways that are the EasyJet way. We need to bring something that has clear benefits for customers. We can certainly do much more before we look at crypto currencies (in this way),” Lundgren said.