Since their launch, airline loyalty programs have become valuable revenue drivers, brand builders, marketing tools and assets.
They play a critical role in airline profitability, and competitiveness. As consumer trends change, airline loyalty programs must evolve to keep consumers engaged, especially as carriers move to revenue-based loyalty rewards.
This shift in program valuation (while justified in the business case) can negatively impact how loyalty programs are perceived, especially among status customers.
J.D. Power released its latest Airline Loyalty Program Satisfaction Study this month, revealing four key factors behind member satisfaction: the ease of earning and redeeming; program benefits; account management; and airline to member communication.
The study, based on responses from 3,387 rewards program members gathered in September, hints at how airlines might crack the code on loyalty.
A key finding is that rewards should not be limited to travel related activities.
J.D. Power finds that overall satisfaction increases by 77 points when members can earn rewards at restaurants. This is higher than the 69 points increase in satisfaction resulting from car rentals rewards, and significantly higher than the 2 points boost in satisfaction from earning airline miles.
The most appealing aspect of membership to consumers is a “lowest price guarantee”. That yields a 109 point increase in customer satisfaction. Waiving of same-day change fees, based on status, improves overall satisfaction by 104 points.
Overall, status member are more satisfied with programs. Their average overall satisfaction score is 814 points out of 1000. That is not surprising, as they receive the most direct benefits and perks.
What is notable is that J.D. Power finds that a majority of these passengers (59%) are active promoters of the brand. In their case, the airline not only benefits from repeat business by has earned important endorsement in a market increasingly driven by consumer comments on social media channels and review sites.
Ensuring that programs function smoothly is also critical. Customers who encounter no problems with their loyalty programs have an average satisfaction score that is 99 points higher than those who have experienced issues.
Rewards can also be an effective form of compensation when things go wrong. Passengers offered rewards or miles when problems occur with their loyalty program have a 48 points higher satisfaction score than those who don’t.
Airline loyalty programs can be complicated to track and difficult to redeem—perhaps intentionally so—but J.D. Power finds that making the rules clearer can have a 52 point positive effect on satisfaction.
