Magazine article Marketing

More Than Miles

Magazine article Marketing

More Than Miles

Article excerpt

Having blazed a trail by setting up successful loyalty schemes in the form of frequent flyer and Airmiles programmes, airlines have since fallen far behind other sectors, writes Suzy Bashford.

The airline industry has been under greater pressure than most other sectors recently: staff strikes, volcanic ash, the rise of the 'staycation' and greatly reduced business travel budgets are among the challenges it has faced. In such a tough climate, building loyalty has never been so important.

One might assume, then, that airline loyalty schemes - for many years the leaders in loyalty management - would be coming into their own. Yet, customer satisfaction surveys suggest the majority of these programmes are underperforming.

For example, according to Millward Brown's BrandZ global brand equity study, airlines' average 'brand impact factor' is relatively low - 22%, compared with an average of 34% for all other brands. UK airlines score only 21%.

Loyalty programmes have changed beyond recognition since Airmiles, which operates the British Airways scheme, was launched 22 years ago, and many experts believe that the airline industry has failed to build on early gains. At that time, air travel was still a luxury purchase, which made the scheme highly aspirational, but air 'points' lost their cachet as budget airlines began to offer low-cost fares.

'Through their loyalty programmes, airlines should know who customers affected by various crises are,' says Jon Ingall, managing partner at agency Archibald Ingall Stretton, which recently picked up the bmi account and has previously worked on marketing for Airmiles. 'They should be doing everything in their power to ensure that they remain loyal through these difficult times.'

He argues that many carriers have responded by pressing 'the self-destruct button' through a 'flagrant disregard for customers' Ingall accuses the companies of 'desperately trying to raise revenue through extra charges, reductions in service and a lack of communication'.

Greater accessibility

Some airlines have sought to broaden the scope of their programmes. Virgin Atlantic has made its Flying Club scheme more accessible by enabling members to earn points through activities other than flying, such as using Virgin Trains.

Similarly, Emirates, launched its High Street programme three years ago to provide more rewards and better targeting. Nonetheless, airlines in general have been slow to adapt their schemes to meet the needs of cash-strapped consumers.

'The travel sector is no longer the industry leader when it comes to loyalty. It has a powerful currency in Airmiles, as these still have a high perceived value, but there is a perception that they are hard to access,' says Janet Titterton, business planning director at loyalty marketing firm Collinson Latitude. 'Retailer loyalty programmes are much more sophisticated in their use of technology and the manner in which they manage interaction with customers.'

According to a report published last month by research company GI Insight on how different industry sectors relate to their customers, supermarkets top the 'intimacy index', with consumers rating them most understanding of their needs and preferences - 26% above the norm.

As Drew Thomson, chairman of digital agency Iris and former chief executive of Airmiles, says: 'Airlines lag behind brands such as Tesco, which has mastered 'individual loyalty', where the benefits you receive feel relevant, personal and valuable.'

Hotels, too, have modernised their programmes more effectively than most airlines. With its absence of date restrictions or complex redemption processes the Starwood chain's Preferred Guest loyalty scheme is often cited as a good example. This uses a website as an essential central hub where members can customise their experience by listing their preferences and receiving relevant offers. …

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