Are Loyalty Programs Helping or Hurting Your Product?

Mark and I visited his family in the Midwest. We used miles to pay for my ticket.

Aside from spending 50,000 miles (is it possible to get a ticket for 25,000 miles? We haven’t in years), it cost $5 for the ticket, $75 for the “services fees” and $15 to check one bag.

Yes, this is still cheaper than buying a coach ticket, but not by much.

I understand why the airlines are doing this. The real question, is what’s the effect on flyers, especially frequent flyers? Will I still fly with my family someplace I can take them on frequent flyer miles? Maybe not. Not if it’s still going to cost us $400 to get there (4 people, $100 each ticket). If our “free” tickets are no longer free, we will think long and hard about traveling and spending our money someplace.

But the real question is what about my expectations? When I originally earned those miles, the ticket fee was $5. There was no additional service fee. There was no bag-check fee.

This is the problem with “loyalty” programs. If you have to change the expectations of the consumer in the future, how loyal will they stay to you? If you’re a frequent flyer, you have loyalty¬† to some airline. If you, like me, live in a non-hub city, you have loyalty to a number of airlines (not loyal at all, is it?).

Promising a return in the future for a product you buy today is tricky business. If you’re trying to hold onto your customers with a loyaly program (this can be as little as a customer service agreement), watch out if the price of holding onto your customers increases. You could find that your loyalty program is working against you, rather than for you.

1 Comment

  1. I have been through the same situation. The airlines wrote checks they couldn’t cash. I guess that someone calculated what percentage of frequent flyers would actually use the miles they accumulated. That person was wrong in their calculations as more people want to use their miles than estimated.

    Be careful about writing checks or promising anything in the future. This goes for all of us.

    Reply

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