Academic purists may want to kill me for the headline, but I think it makes a point. Customer Experience Management (CEM) puts both CRM and Frequent Buyer Programs in a context: generate revenue from truly loyal customers.
Despite celebrating three decades of Frequent Flyer Programs, customers have become less loyal than ever. Any serious frequent traveller has got all the cards. Points and miles have become private currencies; perhaps one day we’ll see them trading at futures markets like soybeans and other commodities.
CEM’s raison d’être is to de-commoditize products and services and to develop value that drives revenues, not discounts (e.g., miles) that bribe customers who are not buying into our value proposition. Value does generate loyalty and revenues, discounts destroy both.
That’s why both the “rewards” (points) and the “customer recognition perspectives” (CRM) must become part of a broader Customer Experience strategy.
When FFPs are transferred from their traditional inventory/revenue management (‘we are giving away an otherwise unsold seat or room’) place in the organization to financial accounting (‘we have to buy the seat or room for the pax’), the Customer Experience can be at jeopardy.
Without an adequate CEM context, the FFP can become even even become a nuisance and will therefore fail to produce the expected ROI. I would like to pinpoint just a few common dilemmas encountered by decontextualized loyalty programs:
- There are programs where benefits are hard to book and sometimes handling fees become disproportionate. Does your company consider the “loyalty” program basically a cash generator or a sales outlet, or did you create it to add value (revenue and long-term customer equity) to your core business? Do you have a clear strategic positioning here?
- Programs are biased towards full fare paying corporate customers. But their employees don’t take purchase decisions, they are just happy to take the miles and the perks. On the other hand, professionals and small companies may be more price sensitive, but they do have the power to chose your competitor tomorrow. They will react positively to tiers and perks, so what can you do to make self-payers more loyal?
- Premium tier customers have accumulated MANY miles. But they usually expire at some point. The dilemma: Pay for tickets to save the status or fly on points and lose it? Or cash them in on third-party products and services at a conversion rate that is insatisfactory for the customer but still costs the company too much “real money”?
The easy solution to the latter dilemma would be exempting active premium tier customers from seeing their miles expire, but there are options that are more satisfactory both for the customer and the company’s ROI. CEM derived methodologies can help to put loyalty programs in a new light. At the FFP Spring Event in New York on April 28th we will be discussing these and other fresh views on FFPs from a CEM perspective.