Airline loyalty programs are not working efficiently, according to a new study by consulting firm Deloitte.
“Our findings strongly suggest that the state of airline loyalty is less than what carriers would like it to be,” Adam Weissenberg, Deloitte’s Vice Chairman and leader of its U.S. Travel, Hospitality, and Leisure Division, wrote in the study. “More sobering is our finding that airline loyalty programs are far from effective in engendering that loyalty.”
Deloitte’s study findings include:
Customers have more than one program: 44% of business travelers and 72% of high-frequency business travelers participate in more than one airline loyalty program
They don’t stick to their main program: “Only 44% of all travelers and 40% of business travelers fly at least three quarters of their air miles on their self-identified preferred airline.”
“Loyalty programs matter more to some travelers than to others.” While business travelers rank an airline loyalty program as the 18th most important airline attribute out of 26, it’s the second most important attribute for high-frequency business travelers.
Deloitte’s 36-page study and report offers a number of solutions on how airlines can tailor their loyalty programs to different types of travelers. It also noted that there is an increasing trend to base a program’s points or miles on the amount the traveler spends, not just on how many miles he or she flies.
According to the report, which analyzed airline passenger behavior and preferences, travelers aren’t as loyal to their preferred airlines as they could be — and it suggests that carriers should do more to customize and personalize their interactions with frequent flyer program members.
The Travel, Hospitality and Leisure division of the consulting firm Deloitte surveyed more than 2,500 U.S. air travelers about their loyalties to specific carriers, and concluded that “perhaps at no time in recent memory is brand loyalty under such duress.”
The survey found that about two-thirds of all the respondents “were at least open to switching to a competing (airline) loyalty program even after achieving highest status level.” It noted that high-frequency business travelers stood out from the crowd (which also included high-frequency leisure travelers and low-frequency business and leisure travelers) by placing much more importance on an airline’s loyalty program — rating it even more significant to them than safety considerations.
Deloitte’s report suggests that “airline loyalty programs fail to inspire brand loyalty with a large number of travelers, particularly within the highly coveted business traveler and high-frequency groups.”
In follow-up focus groups Deloitte conducted, participants “overwhelmingly...reflected the sentiment that airline loyalty programs were too commoditized. As one focus group participant said, ‘I don’t want something everyone else is getting; give me something for me.’”
What’s more, the report concluded: “Loyalty membership databases are overflowing with information about customer demographics, travel preferences and profitability. Airlines should consider whether there is value in taking a data-driven view of the experience attributes and engagement preferences most important to each customer segment, and then evaluate the resources and infrastructure required to deliver.”
The study offered some specific examples of how airlines can leverage their customer data to create targeted offerings for loyalty program members:
• Airlines could analyze the destinations that high-frequency travelers visit most often, and offer them special discounts for hotels and restaurants at those destinations.
• Study which customers usually buy a glass of wine or cocktail with an in-flight food purchase, and offer them a free drink the next time they buy an in-flight meal.
• “Airlines should show a greater willingness to forgive lapses in loyalty program membership participation,” Deloitte noted in the report. “Airlines should think twice before a high priority customer has to start all over again to regain status.”