What are simple actions frequent flyer program owners can take to increase loyalty revenues?
Frankly – many frequent flyer programs today are behind the 8-ball in today’s competitive environment.
On one end of the spectrum, we have well-known airlines increasing qualification requirements, increasing the cost of award flights, and moving to full dynamic redemption. All of which have an immediate and significant impact on consumer behaviour which will impact airline ticket sales, for better or worse.
Then we have the majority of frequent flyer programs which are largely unchanged for 10+ years with a copy-paste model replicated from where the major programs were back in the early 2000s.
In the 90s and 00’s – airline loyalty was all about who had the best loyalty management system. As such, the loyalty strategy was heavily influenced by systems providers or management consultants – neither of whom have any deep experience with designing cutting edge gamified loyalty programs.
Fast-forward to current day; and while these old-school FFP designs may appear to be working for the airline.
Let’s be brutally upfront – many FFPs are benefiting from the uncapped interchange and the addictive co-brand revenue from banks. It’s a tough sell for management to focus on anything except bank revenues since that is where the bulk of the revenue is derived from.
On the other end of the spectrum, in countries which have interchange caps (I’m looking at you Europe, Malaysia & Australia) – FFPs have to actually work hard to extract incremental loyalty revenue from the member base.
Here are some questions to consider when looking increasing FFP revenue:
Airline ticket sales
The bread and butter for most loyalty programs, driving incremental ticket sales for the host airline is key in keeping a healthy new points creation model.
Assisting the airline revenue management, sales and marketing in generating new sales via loyalty channels, smart-marketing and hyper-targeting the member base is the single easiest way to generate incremental ticket sales for the airline. Consider adding an inducement for new members to join the program (eg: Air Asia offers MYR 10 off the flight ticket cost when joining as an Air Asia Big Member), or a points challenge to fast-track to a meaningful points balance.
Other easy-wins for member marketing to drive ticket sales could be:
