Personalization Is the Name of the Game
Personalization Is the Name of the Game
There's a pervasive misconception in the airline loyalty industry about how well these brands know their customers. There's an inherent contradiction, too. The elite-tier traveler who flies 100K+ miles per year and receives business credits with the same major U.S. carrier is supposed to be considered a highly valuable—and valued—customer. In fact, frequent travelers of all tiers have come to expect relevant and timely offers that speak to their needs. They want their preferred airline brand to know their behaviors and needs very well—based on all the loyalty program and transactional data being collected about them. However, that's not how our story unfolds.
Meet our high-value frequent traveler. In his frequent flyer quarterly print statement, he's offered 60,000 bonus miles to sign up for the airline's “Executive Traveler Credit Card.” It sounds like a great deal, but our elite traveler already owns the card. And he's reeling. Not only did he not receive 60,000 bonus miles when he originally signed up for the Executive Traveler card, he also pays an annual fee for the privilege. Compounding the issue: Our traveler also received an offer of 25,000 bonus miles—and a free NFL Sunday Ticket package—for signing up with DirecTV, a service he already pays for through the same credit card provider. He thinks to himself, “I shop with this card every day, I travel with this airline, I spend a lot of money with both and they have all of my information. How can this happen?”
Although I've masked the identity of the airline and its credit card partner, the above scenario is one that many readers will be familiar with. With the wealth of customer information—and the technology to gather and analyze that data—available to today's loyalty marketers, it floors me that brands are still sending irrelevant offers to the top-tier customers they're supposed to know best. This type of customer engagement mishap isn't restricted to the airline industry; it's rooted in the problem of loyalty programs not communicating with their partners, co-brand credit card, or otherwise.
The result: Mismatched rewards and failed attempts at personalization that can erode brand loyalty.
The reality is that, in most cases, no offer at all is better than a poorly matched or irrelevant communication. Untargeted offers like the above example are far more common than loyalty marketers care to admit. They send customers the following message: “We do not know you,” or worse: “We know you, but we simply don't care.”
Why aren't the communicators communicating?
You can see this approach in some of Neiman Marcus' efforts. Despite being considered a high-end luxury department store, the brand is sending its loyal customers increasingly frequent emails, sometimes up to three a day, offering deep discounts of up to 80% off. Consumers are intelligent enough to know that perpetual discounts dilute the real value of what products should actually cost. To me, this illustrates a massive disconnect between what the store's physical environment is attempting to promote (luxury goods) and an e-commerce push that is all about discounts and not driven by a team focused on customer experience and loyalty.
With so much focus being placed on getting out certain offers or communications, it seems some loyalty marketers have lost sight of the fact that they're damaging their brands by putting the wrong offers in front of the wrong people.
A consequence of several factors including poor data sharing, operating in silos, and organizational misalignment, these incidents can be the reason why once-loyal customers are rethinking their brand allegiance.
For airline loyalty programs, this problem cuts deeply.
The RX starts with the strategy
Marketers across every vertical are dealing with relatively new challenges: many more channels, mobile and multi-screen engagement, masses of data, social, and so on. Couple these with poor partner communications and the road to disengagement looms closer.
Airlines and their credit card partners must strive for improved leadership and organizational structure. And they must build their communications strategy together, agreeing on specific customer engagement goals from the outset.
Is the partnership looking to grow an elite customer base? Drive new card acquisitions? Drive redemptions? Overall spend? Or is the goal to encourage longer-term engagement and loyalty? Success starts with understanding the goals of each individual communications piece—what the specific call to action or intent is—and how each plays into the larger customer loyalty picture.
While every loyalty program, regardless of the vertical, will have different expectations for member engagement and ROI from its partner, a prescriptive fix is in sight.
Get your house in order
Specific to airline and cobranded organizational structure, this advice is straightforward. Brands must take ownership of their loyalty program goals. Departments can't be siloed from one another and there must be C-level buy-in. There must also be specific individuals at the enterprise level who can be counted on to communicate throughout the organization. In other words, the leadership must be in place to ensure that the loyalty program's messaging is seamless, efficient, and effective.
Stop motivating the wrong behaviors
Brands spend a lot of money on communications but they're killing their brand equity by doing these poorly, without strong calls-to-action and without a strategy that aligns every department's interests.
Huddle with different teams and huddle often
Review and combine data from all departments and brand partners on a weekly, monthly, and quarterly basis to achieve the kind of detailed and accurate picture that tells marketers what customers want and need, segmented by tier and broken down by engagement levels or even geography.
Data is in the details
Driving long-term loyalty is about using data intelligently to know customers' preferences well enough that offers are consistently fresh and relevant. It's also about having a communications structure in place that lets company departments as well as brand partners share all customer information so that messaging is consistent and members don't receive offers that add zero value to their lives.
Work smarter, not harder
While collecting huge quantities of information is well-understood today, less appreciated is the need to analyze that data to discover unknown customer insights. Companies need to know where to prioritize their investments and, in some cases, slow down their rapid-fire efforts to engage customers. Poorly planned customer engagement is not a prescription for driving ROI nor does it reflect creativity. All it does is highlight an organization struggling to find its footing.
Will such efforts stop all future misaligned communications and irrelevant reward offers? No. But the better brands know customers and their preferred engagement channels, the more likely they are to earn those customers' loyalty. It's really about understanding corporate communicative structure and how to allocate resources in the right locations in the right amounts.
Story update: In this customer's next frequent flyer statement there was no offer for the cobranded credit card but there was the same offer from Directv.
Bram Hechtkopf is VP of business development and marketing at Kobie Marketing.