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On September 13, Delta announced it plans to “simplify” its SkyMiles Program, making changes to the ways travelers earn status — based on Medallion Qualifying Dollars alone — as well as changes that would limit lounge access and benefits for some Delta SkyMiles American Express cardholders. While the program changes were positioned as simplifying the program, many loyal customers were angered as member status thresholds would increase, rollovers phased out, and some cardholders lost lounge access completely.
And yet, according to a recent article in The Wall Street Journal, a subgroup of program members are not bothered. In fact, they look forward to less crowded Delta Sky Club lounges and take enough Delta flights to retain their status. They hope upgrade chances will be increased due to fewer members at the higher tiers. Some embrace the idea of an even more exclusive upper tier, anticipating valuable new perks. Still, this demographic is ultimately overshadowed by the members who have lost those coveted benefits.
Two weeks after Delta’s program changes announcement, the airline’s CEO, Ed Bastian, admitted that they went too far and “moved too fast.” While the airline intended to ensure Diamond status members would continue to enjoy perks when traveling — premium seats, dedicated customer service, etc. — the draconian measures alienated a larger demographic of flyers. Bastian promised modifications would be made.
Loyalty360 spoke with supplier members and loyalty strategy experts about the fallout from the airline’s announcement, what Delta should do next, and the importance of clearly and honestly communicating program changes with members.
Leslie Lopez, Lead Loyalty Strategist, Bounteous
Aaron Lobliner, Chief Client Officer, CataBoom
Katie Berndt, Vice President, Strategy & Insights, Phaedon
Emily Merkle, Senior Vice President, Analytics & Data Science, Phaedon
An Impact on Customer Loyalty
The heated response from program members regarding Delta’s announcement suggests customer loyalty will be impacted for some time. Even with program “modifications” to be made in response to the backlash, the customer experience still might suffer as members watch Delta’s next move with a jaundiced eye.
Phaedon’s Berndt sees the changes to the program as largely detrimental to both customer loyalty and experience. While Delta chose to frame changes as simplifications, the flexibility and value proposition appear reduced for SkyMiles members and specifically for their Medallion members.
“These changes seem to have primarily focused on business objectives and appeasing the highest value members, overlooking the perspective of their broader customer base,” says Berndt. “While addressing the tier distribution was warranted, they may have underestimated the substantial impact that the remaining majority of Medallion members could have on their overall profitability.”
She lists how changes will impact customer loyalty and experience:
Reduced Flexibility: The removal of Medallion Qualification Miles (MQMs) and Medallion Qualification Segments (MQSs) limits members’ options to earn status.
Increased Thresholds: Significantly raising the Medallion Qualification Dollar (MQD) requirements for each tier (and eliminating the MQD waiver for Delta AmEx card members) appears to make it much harder for members to attain and maintain even their current tier status.
Rollover Elimination: The elimination of rollover MQMs reduces the incentive for Medallion members to fly more with Delta.
Sky Club Access Limitations: Restricting access to Delta Sky Club lounges.
It’s Your Move, Delta
It’s clear that Delta must rebuild trust with its customers. While Bastian’s assurances around modifications have been repeated across industry news sources, Delta has not yet shared anything regarding those modifications broadly.
The reasons behind program changes must be communicated clearly and without obfuscation. Next, customer feedback needs to be collected, and Delta should act on that feedback accordingly.
“Delta’s next move should prioritize not only rebuilding trust but also showing appreciation and demonstrating empathy,” says Berndt. “Keeping members informed about additional modifications to their plans should be a top priority.”
Berndt also suggests introducing limited-time promotions, maintaining exceptional customer service, and offering special perks to affected elite members to help retain members and regain emotional loyalty.
She adds, “Collaboration with American Express, Delta’s co-brand credit card partner, is crucial to enhance cardholder experiences. A long-term loyalty strategy should balance cost-saving and customer satisfaction.”
Watch and Learn
Not long after Delta’s announcement about the changes to the SkyMiles Program and the resulting customer outrage, other travel and hospitality programs looked for opportunities to enhance their loyalty programs. And certainly, other brands could learn much from Delta’s missteps. Phaedon’s Merkle points out that these developments underscore the importance of maintaining a customer-centric approach when making changes to loyalty program benefits.
“It’s a clear reminder that brands must prioritize the needs and preferences of their members or risk alienating even their most loyal customers,” says Merkle. “It also demonstrates how critical it is to communicate program changes clearly and honestly while providing members with a comprehensive understanding of the reasons behind the adjustments.”
Merkle goes on to explain that the need to balance cost-saving measures with customer loyalty is another key takeaway. Brands should carefully evaluate the impact of program changes on customer value to avoid losing members. Those that create dedicated feedback channels and act upon member concerns to inform the fine-tuning of their loyalty programs will see better alignment with customer expectations.
“The changes in Delta’s approach offer numerous opportunities for other credit card companies, including AmEx without the co-branded partnership, and for airline competitors to fill the gaps left by Delta’s missteps,” says Merkle. “This can be achieved through strategic acquisition and status match campaigns, which Alaska Airlines and Jet Blue have already promoted.”
Regardless of the approach, emphasizing transparent and authentic communication is paramount to attracting and retaining members.
Large brands known for their customer loyalty and rewards programs, like Starbucks, have experienced similar backlash when they made changes to how customers can earn and redeem rewards. According to Bounteous’ Lopez, major changes to loyalty programs take time and need to be thoughtful.
“Customer loyalty is about understanding your customer and delivering a program or experience that is valuable and creates trust and goodwill,” asserts Lopez. “Delta focused on simplifying the program in its messaging, which broke trust when members looked deeper. Consumers are savvy. They will investigate and become vocal if they see a brand has removed benefits or increased thresholds to earn.”
As other airlines take the opportunity to elevate “what’s great” about their program in comparison to their membership as well as leverage for acquisition, there is also a chance to take on a competitor conquest, like Alaska Airlines’ recently launched status match initiative specifically designed to attract SkyMiles members to Alaska’s frequent-flier program.
“Airlines can look across industries at how other brands are making things right with their customers,” says CataBoom’s Lobliner. “For example, Domino’s will reimburse you for your pizza if you aren’t satisfied. For a short time, they were even reimbursing customers who bought pizza from their competitors.”
Making changes? Here’s how to communicate them to your program members.
Brands can take a best-practice approach when making program adjustments and enhancements. Changes need to be communicated, and as discussed earlier, need to be sent before changes are made, clearly explained, and transparency is paramount.
“In general, loyalty programs across verticals are dealing with how to engage lapsed users,” Lobliner points out. “Airlines can look at how many active members versus total membership and determine ways to awaken lapsed users.”
Most airline loyalty programs are solely transactional, and members only interact when they are gearing up for travel, or they are ready to redeem points. Lobliner stresses that there is a huge opportunity to engage members when they aren’t getting ready to travel to encourage them to think about taking a trip. This helps keep the airline top of mind.
“A great example of this is Southwest Airlines Wanna Get Away promotion that provided daily offers and chances to win Rapid Reward points, round trip tickets, and even a companions pass to engage and incentivize their customers,” shares Lobliner.
Lopez cautions brands to balance business objectives with consumer needs. Research is vital to understanding customers, what they value most about a program, and what they can’t live without.
“From a communication perspective, transparency is key,” Lopez echoes the other experts.
Being clear as to what changes will be made and why will go a long way. If brands need to reduce benefits due to costs or for operational reasons, they should look at new ways to create value for members and communicate that.
And the best way to do that? In closing, Lobliner adds a bit of levity. “Perhaps a Haiku?”
A Delta Haiku
We’re sorry for the trouble.
We promise fixes!
- A Loyalty360 Poet
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