Steven Slater is a blogger’s dream. For anyone looking for that quirky story to opine about, Mr. Slater provided a remarkable set of actions that will earn him a bit more than 15 minutes of fame. In fact, I’ll bet the incident that took place this week on Jet Blue flight 1052 from Pittsburgh to JFK will be cited in serious business circles over the next year as some form of turning point in improving the commercial airline travel experience.

Let’s be clear. It is not acceptable for a customer facing employee, whether flight attendant, service write-up person, or cashier to lose control and address others with anger and profanity. The world is a frustrating place but my Dad used to remind me “the veneer of civilization is paper thin”. In other words, we have to maintain control no matter the circumstances.

On the other hand, flying commercially is becoming more tortuous by the day. The restrictions that the airlines deem necessary negatively impact the flight experience and, rather than the intended compliance, are bringing out the worst in many people.

It seems the more travelers are charged for things that used to be free and the less freedoms we enjoy in flight, the more rebellious that paying customers seem to become. Our sense of entitlement is being threatened and we don’t like it. The offending passenger on Mr. Slater’s flight, by all reports, was truly offensive and anyone of us that endures business travel can attest to the selfish, rude, and flat out ignorant behaviour displayed by many passengers these days.

Toddlers learn quickly that ignoring rules and responding with extreme petulance draws further punishment. Mr. Slater executed his own version of a smack down and essentially threw his entire flight into “time out”. Not good, but he certainly delivered his message.

In my opinion, the airlines could defuse frustration for all parties on board simply through improved communications.

I have always wondered if using my cell phone in flight “really” impacts flight operations. Now it seems that placing your mobile device in airplane mode is not enough as we are constantly reminded to “turn everything with an on/off switch into the off position”. I guess Apple wasted its time designing that feature for its iPhone.  Posting simple explanations of policies that impact passengers would go a long way to soothing flyer nerves.

The biggest opportunity for airlines to create goodwill with their customers is to make compliance with TSA’s Secure Flight Program a breeze. If you are not familiar with the requirements of Secure Flight, read here.

I have received notice of my need to comply from several airlines via emails and in newsletters. JetBlue published a link in an email addressing the topic but I challenge you to find further reference to the topic on their website. Delta currently requires passengers to change the name of their SkyMiles accounts in writing and to provide “legal documents” as support.

I’d rather send them my legal name that matches my passport and redeem 10,000 miles for them to make the change, not that they would ever consider making it this easy.

Neither prosecuting Mr. Slater nor further clamping down on passengers will yield good results for the airlines as a group. Giving more thought to communicating the reasons behind in-flight requirements and making it easy for loyal frequent flyers to comply with new TSA regulations would not only serve as damage control, but represent steps towards restoring civility in commercial air travel.

There’s an App for all this: it’s called social media. Why don’t the airlines considering using it to communicate with their valued customers?

Is that a juice box in the mini bar?

The next frontier in hotel loyalty marketing may reside in a guest who can barely reach the hair dryer and prefers maraschino cherries to Manhattans.

Turns out an increasing number of business travelers are bringing their spouses and kids along, and tacking on a few additional days for a little family vacation.

Loyalty marketers should see this as a rich opportunity not only to add different rewards, but also to create value in services that may often be overlooked or taken for granted. By merging business travel with recreational travel, loyalty members are expanding the potential portfolio of meaningful perks well beyond faster check-in times and suite upgrades. Instead, a children’s movie network and extra beds could be most valued by loyal guests.

A recent story in USA Today hints at so much. It cites a recent survey by Hilton’s Homewood Suites, which shows that 67 percent of its frequent customers now combine leisure and business travel. This compares with 43 percent in a similar survey taken 2000. One of the business travelers interviewed for the story said he is in fact a more demanding customer when his family is with him, asking for club access and a bigger room.

I myself have combined work and leisure travel, and what I value does shift as I transition from worker bee to travel bug. Complimentary breakfast is less important than complimentary cocktails, for instance. And wouldn’t it be nice, if on Friday, I was automatically texted a few suggested day trips, at a discount, from the hotel?

Smart hotel chains are already exploring such rewards – today’s little guests will become tomorrow’s business, after all. Perhaps one or two chains will even designate a “kids wing” that separates those who wake very early from those of us who like to stay up late.

In the meantime, hospitality’s biggest players might want to consider mini-refrigerators and string cheese. It could earn them extra points.

By:  Lisa Biank Fasig, Director Public Relations, JZMcBride and Associates

Oracle is increasingly active in the Loyalty Marketing industry and has reported success in providing technology support for some of the largest frequent flyer programs in the US.

I recently ran across an Oracle blog that recounted how Alaska Airlines upped its email game, adding a greater degree of personalization by replacing a legacy mainframe loyalty system with Siebel Loyalty and Siebel Marketing. Going beyond the sales driven copy in the post, I was interested to hear Steve Jarvis, Vice President Market Sales & Customer Experience – Alaska Airlines speak about the airline’s commitment to provide “proactive customer service” and “superior customer service and innovations” to the over 22 Million passengers they fly annually.

Apparently, Alaska could only reach the 2 Million flyers enrolled in its frequent flyer program and was suffering from the same problem encountered by many retailers – how to identify the customer and create customer engagement. The Siebel installation apparently changed all that as Steve Jarvis relates in this video.

Alaska’s new-found ability to reach its customer base with targeted emails and promotions made me think – which pattern will they follow? Will it be a judicious email policy adopted by the legacy airlines or the firehose approach adopted by the newer “discount” airlines, in particular Spirit?

Hanifin Loyalty recently completed a survey of the use of email as a communications vehicle across the loyalty programs of 22 companies in the Airline, Retail, and Hospitality industries. Full results of the survey will be published in the very near future.

As a preview of the findings, the airlines had the highest rate of email issuance at 5.4 per month. 35% of the emails were related to program membership (meaning statements and newsletters) while 56% were purely promotional and 6.75% were pitching cobrand credit cards.

Sadly, less than 1% of all emails had evidence of a behavioral trigger (i.e. the customer did something that triggered a promotion or offer) and surveys were rare indeed.

The biggest contrast stood out between legacy and discount air carriers with legacy (American, Delta, US Airways) issuing 3.5 emails per month & discount carriers 7.3 per month. Spirit stood out among all airlines surveyed with a whopping 14.8 emails per month.

The results of our email survey pointed out the importance of cadence and relevancy in managing email campaigns. Spirit certainly displays a consistent cadence with an email almost every other day. Trouble is, how many “Red Light Specials” can the recipient endure before she reaches for the delete button every time Spirit shows in the Send field?

For loyalty program sponsors, in this case airlines, two huge areas of opportunity exist.

1. Use the data they possess to send fewer emails with higher relevancy. This is the antidote for customer attrition.
2. Make it bleeding obvious (as my UK friends would say) that something the customer did triggered the email.

I want to know that because I visited the Delta Crown Room in LaGuardia that I later received a discounted offer for annual membership. Better yet, I’d like to see that my survey response indicating St. Croix as a favorite destination with American Airlines resulted in a packaged offer of hotel and discounted airfare.

I just signed up for the Virgin Atlantic loyalty program called the Flying Club. I have no immediate plans to fly on the airline. Nor do I really need another frequent flyer card, as I’ve got miles banked in three or four programs now.

The reason I joined the club is I just finished reading Business Stripped Bare, Adventures of a Global Entrepreneur, the new book by Virgin-owner Richard Branson. I’ve come away impressed with Branson’s business acumen, his marketing skills, as well as his infectious joie de vivre.

I mean here’s a guy who started in the record business and has since branched out into mobile phones via Virgin Mobile, financial services, health clubs, bio-fuel, stem cell research, health-care and even space travel with Virgin Galactic. His brand, and passion for business, truly knows no boundaries.

But, getting back to Virgin Atlantic, what might be most impressive is how he has keyed into the customer experience as the crucial element of continued loyalty. Sure, Virgin has a traditional air miles program, but Branson identified several areas he believed would offer a better onboard experience, and delivered on them.

These features, some since copied by competitors, include:

• The ability to order food from your seat on-demand, according to your schedule, not the flight attendant
• A vast choice of music and movie options, delivered to a personal entertainment screen at your seat
• Seat-to-seat chatting with friends, colleagues or the attractive woman in 9B, via an entertainment screen keyboard
• Custom designed “soothing” lighting and comfy seats

It’s a reminder that true customer loyalty is never achieved by points programs and perks alone—you also need to deliver a superior customer experience. It’s something Branson strives for across all his business lines, and has me hoping I can find an excuse to fly Virgin Atlantic soon.

Air travel has changed from an exciting and privileged experience to something considerably less elegant. Leisure travelers absorb the shock from ever-changing TSA procedures at security checkpoints, and unknowingly contribute to the woes of their fellow travelers when they board loaded down with enough bags to make the Beverly Hillbillies look like minimalists.

For the business traveler sitting across the aisle, aspirations of time efficiency and comfort are placed on a 3 hour hold each trip as seat pitch has become so tight that only a notebook computer will open up comfortably in flight.

Corporate travel is increasingly driven by economics, and many flyers who used to hold out for a legacy carrier to fly in familiar circumstances and collect more frequent flyer miles are now abdicating “loyalty to the livery” and accepting the best combination of schedule and price – period.

There is a lot of talk among airlines and consumers about how to improve the air travel experience, and last week Spirit Airlines took a bold step towards “improving” the situation by announcing it would impose baggage fees – not for checked bags – but for bags carried on with intent to be placed in the overhead bins as of August 1.

Ben Baldanza, Spirit’s President, has been making the media rounds defending his airline’s new policy. Advancing a questionable argument, he has been rationalizing the new policy saying that consumers will actual save money on a net basis because Spirit’s fares are being reduced, and that 5 minutes saved in more efficient boarding  of aircraft accumulated over a 24 hour period will save 20 hours of airplane time per day – the equivalent of having two extra $40Million planes in the fleet. If that isn’t fuzzy math, then I don’t understand the concept.

Spirit’s new baggage policy has its foundation in operational efficiency as do many similar airline policies. The trouble is, they seem to have forgotten about the customer in the process. Between the new baggage policy and the recent announcement of its “pre-reclined seats”, Spirit is either focusing ever more narrowly on its target market, or is outsmarting itself one new policy at a time.

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Spirit may be wiser than we think. They are a price-driven airline appearing to cater to the leisure traveler. It is possible that they have abandoned all thought of courting the business traveler, and are moving ahead with new policies to further strengthen its position in its chosen market.

Spirit’s promotional marketing strategy is oriented to the leisure flyer. In a recent survey of email communications used by loyalty program sponsors, Hanifin Loyalty found that Spirit was the single most prolific sender of email among 22 companies studied, with an average of 14.77 emails per month. With almost zero evidence of behavioral triggers in its email flow, Spirit uses edgy messaging to tout low prices in over 96% of its emails.

In my view, there can only be one low price leader per category. In retail it remains Walmart, and in air travel, it could be Spirit. There is risk to this strategy, and cracks have appeared in Walmart’s low-price strategy recently as consumers are questioning if in fact they offer the lowest prices around. There are several discussions on Retail Wire on the topic and here is a link to one of them. The warning is that once a company is positioned as the low price leader, they have little to cushion their fall should they lose the advantage as customer experience and quality are often perceived to be below the competition.

Time will tell if Spirit has made the right moves and, while the market decides, my vote is for the regulators to stay out of it.

I believe that many business travelers will resist these changes and avoid Spirit or any other airline who adopts similar policies for two big reasons – checking a bag limits the ability to make changes to an itinerary on the day of travel and costs business travelers precious time once landed at a destination.

Spirit has the right to choose its course, as do we in the frequent flyer population.

What do you think?

In the midst of checking a slew of emails, it would have been easy to ignore this short message from American Airlines:

“We would like to provide you with an important update to the American Airlines AAdvantage® program. Effective July 1, 2010, the Marriott Rewards program will no longer offer AAdvantage miles for stays at Marriott hotels. All qualifying stays at participating properties completed by June 30, 2010 will be eligible to earn AAdvantage miles. It is also important to note the final date to convert your Marriott Rewards points to AAdvantage miles will be June 30, 2010.”

The news registered on several levels. As a consumer and member of both programs, I was disappointed. From a business standpoint, I immediately began to think through the reasons that motivated the end of this alliance between two big travel brands. From a social media point of view, I was not surprised by the immediacy of reaction from frequent flyers but was amazed at the nature of fingerpointing taking place.

I’ve said it myself – establish a loyalty currency in the market with widely recognized value and liquidity and a sponsor’s loyalty model will be turbocharged for profitability. Advocacy aside, my take is that “Rewards as a Business” (the sale of miles to third parties) has its limits and can be jeopardized if not managed carefully.

There are two cautions worth noting:

1. Remember the importance of “liquidity”. The most recognized currency in the world isn’t worth much if it can’t be redeemed easily and for items of high perceived value. The liquidity of airline mileage rewards is an obvious challenge as consumer cynicism over redemption continues to erode the perceived value of frequency flyer miles.
2. How much is too much? There is a threshold at which the price of the miles to partners becomes so expensive that the partner is forced to consider alternatives for investment of marketing dollars as well as which brand they are promoting (mine or yours). It’s quite possible that Marriott was presented a cents/mile price that crossed this threshold and decided to focus on its own brand and points currency to gain additional leverage.

It’s unfortunate that frequent flyers are directing their ire principally at Marriott when it just might be that American Airlines is equally responsible for this divorce.

Marriott would be wise to launch some new travel related promotions around the June 30 deadline that deliver great value and make travellers forget all about AAdvantage miles, just like contrails evaporating in the sky.

Important or Ignored?

Actually, I’m just scratching the surface, but pose a few questions to improve frequent flyer programs and make airline travel a bit more bearable for the masses.

What if the airlines …… ?

1. … would allow frequent flyers to use miles to pay for a bag check charge or, better yet, waive them for higher tier members? (They could burn mileage balances and make my flight experience a bit more pleasant)
2. …  made their airport lounges available for ad-hoc visits, not for a ridiculous daily fee or mileage exchange, but with variable exchange rates on traffic? (They could burn more miles while making the best use of a perishable resource)
3. …  permitted higher tier frequent flyers to make an itinerary change within a specified time (48 hours?) without incurring a $150 charge plus difference in airfares? (Their “best” customers would actually feel appreciated)
4. … sent an occasional email with deals on flights between city pairs that I am actually interested in instead of sending a list of 30 where only two include my home departure airport? (They would be taking advantage of easily accessible data from my flight history)
5. … sent me correspondence addressed to my “real” name instead of “Dear Mr. Hanifin”? (I’ve participated in plenty of surveys and they don’t know this yet? All they have to do is ask)
6. … stopped sending me irrelevant coupons for golf and ski vacations when I don’t play golf and haven’t skied in years? (They would build relationship with me with better prospect of creating loyalty while suppressing a mercenary mentality about frequent flyer programs)
7. … start using their data to build predictive models that encouraged more business? (The flow of business dictates my choice of airline more than any other factor. Can’t they remember me as the Platinum I was two years ago and offer incentives as a “welcome back” when they notice I’ve flown their airline 20 times in 6 months?)
8. … were gracious enough to send their frequent flyers an email explaining their decisions to change program rules, charge for bags, eliminate pillows and blankets, etc? (They would be fostering relationships rather than treating all customers the same)
9. … realized that the friendly-voiced announcements inviting passengers to take a cobrand credit card application or join their frequent flyer program are negated by the flight attendants who insist that the aisle is theirs and rip your kneecaps off if you dare stray past the invisible line? (They would be acknowledging that customer loyalty is the quotient of a great customer experience equation)
10. … admitted that travel between the US & Canada is not “domestic”? (It is only so as defined in baggage charge policies. Travelers would appreciate an explanation, the more transparent, the better)
11. … found a way to be profitable without using their customers – even the best ones – as their path to profitability? (Flyers are weary of the continual excuses about saving costs while they shoulder more charges and endure diminished in-flight experience)

Don’t mistake these questions as whiny complaints from a shattered frequent flyer.

The airlines could answer each question, except the last one, without much fuss and discover new ways to engage their best customers, burn mileage liability, and improve the flight experience.

What do you think? Does this fly?

I am a frequent flyer of Delta Airlines and have a Marriott credit card and enjoy the benefits that I get from using both companies (I like free flights and frequent flyer miles). I just booked a “free” vacation using both vendors and feel pretty good about my loyalty to them, and their loyalty back.

Loyalty is built based on consumer relationships as they are rewarded for their long term relations with a company. Loyalty programs are supposed to be used to benefit long term value and reduce retention, but has the apple cart begun to spoil?

Is loyalty becoming nothing more than a price match war as we see every day in the marketing world?

I recently was introduced to a few web sites that are a bit troublesome: Flyertalk.com and Statusmatcher.com:

• Flyer talk is filled with frequent flyer users and you can actually learn many good points and tips when it comes to traveling.
• Both Statusmatcher and Flyertalk also show you how easy it is to call up other vendors and receive the same status level that it took you some time to earn through your dedication to those very same companies.

For example, I am a Delta Gold Medallion customer-here is an example of what statusmatcher will do when you go to their site:

Delta Gold to United Airlines Premier Executive

Fax to United a copy of your Delta statement, a copy of your membership card, and a description of the status you would like (Premier Executive).

Contact Name: Mileage Plus Customer Service
Phone: 1-800-421-4655
Fax: 605-341-6140

Bingo! It is as easy as that! Send a fax over to United and boom, same status. Where is the loyalty for me in flying Delta versus someone who flies United or vice versa and simply becomes a Premier or Gold customer? Are we going to see dedicated flyers bumped if their status isn’t as high as someone who only flies the airlines only some of the time?

Here is another example:

Marriott Silver to Hyatt Platinum

Sign up for the Hyatt Gold Passport program online. Fax the following information to Hyatt (see above number): Gold Passport Number, Marriott statement showing 10 stays and Silver status.

Contact Name: Gold Passport
Phone: 800-228-3360
Fax: 402-593-9449

How much are these programs devalued when it is so easy to get the goods so easily at competitors? It will be interesting to see how these programs evolve in the near future.

Editor’s note: LOTS!

Almost 10 years ago, I wrote an opinion piece for COLLOQUY questioning whether Frequent Flyer miles were still the most valuable currency in the Loyalty Marketing landscape.  The premise was that the weakening value of the FF mile might open the door for a better offer to capture the loyalty imagination of consumers. The next best high-value loyalty currency was thought to be coming from a US based coalition ala Nectar or Airmiles.

It’s 2009 and time to ask the question once again.

Consumers and the press are piling on with criticism of airline mile programs. Combine the higher thresholds for cashing in for a free ticket, the seemingly steady decline in the quality of in-flight experience, and the airline’s fascination with un-bundling and charging for services that used to be included in a ticket price and it’s easy to make a case for the demise of FF miles.

The COLLOQUY article was cautious in criticism of the almighty MILE, noting that “Americans are so attuned to earning airlines miles that it’s hard to create a value proposition, either in a standalone program or in a coalition, that can equal them.”

Time and change go hand-in-hand however and the challenge of creating that value proposition to match or exceed the perceived value of an airline mile might be easier to tackle as each month goes by. A recent Wall Street Journal article “Air Rescue: Saving Miles From the Ax” highlighted the many ways which airlines are adding restrictions and tweaking program rules to burn more miles before they can be used.

Many of the rule changes highlighted in the WSJ article are activity related and American Airline’s change from no expiration to an 18 month activity related rule has garnered lots of attention. There are two sides to every story and, if you were running AAdvantage or any other big loyalty program, you too would be under pressure to manage program liability more closely. It’s easy to see why stewards of loyalty programs conclude that customers who have not transacted for 18 months are maybe not your customers any more.

The flaw in the activity rule highlights the dirty secret of airline mile programs: that customers are less loyal to a particular airline than the industry would like to believe and carrier choice is often dictated by lifestyle and business changes more than brand affinity.  I’ll share a personal example. At one time, most of my my travel was in Latin America and I was a privileged flyer with American. Later, the work load swung to the US and I rose in the ranks of Delta Skymiles members while I watched my American status diminish. When I ventured back into LAC, I had lost my status with the airline and had to be patient until I became “visible” again.

The airlines should be able to recognize me as an inherently valuable customer and provide some relief for my straying. Through the data collected, the airlines could identify my return, send me a welcome back email and inquire if I was here to stay. I bet most people would respond to such an email with indication of preferences and plans if they were offered incentive to provide the information. That incentive, of course, would be to have the opportunity to earn accelerated status with the airline. In the current situation, I am more tempted than ever to just shop by schedule, price and airport location.

The other main criticism of airline miles is that they are difficult to redeem.  If you’re like me and redeem miles to take the family to exotic destinations like Buffalo or Cleveland, you’ll never have a challenge redeeming your miles. Try to go to New York for Christmas and you’ll have a different story to tell.

It’s possible that the airlines are their own worst enemy. They have given miles to everyone and are still inviting people to join their programs with in-flight announcements. Even the Economist agreed that this non-selective behaviour would spawn MILE inflation:

“Miles outstanding have risen by an average of 20% a year since 1995 – two-and-a-half times as fast as the supply of dollars.”  Equating this inflationary expansion of airline currency to a key global currency, the article continued, “central bankers would suffer sleepless nights at such reckless  monetary expansion were it not for the fact that they are usually up in first class collecting double or triple miles.”

The state of the FF mile is really quite a mess. There are diverging forces at work: Consumers are less interested to wait and accumulate miles as they know that rules will continue to shift against their interests and their ability to redeem will be challenged. At the same time, the cost of using miles to promote a cobrand or reseller relationship is probably the highest among options in the marketplace.

Invest the same cost per mile into a value proposition that promotes YOUR brand and is truly tailored to YOUR customers and quite likely you will have constructed a value proposition that beats the heck out of FF miles.

Turbulent times for the airlines, opportunistic times for smart marketers……

I am often asked where to go to learn more about Loyalty Marketing. Until Mark Johnson and his crew launched Loyalty 360, it was difficult to provide a useful answer.  There are occasional tracks presented at the annual DMA event and Colloquy continues to deliver its Loyalty Marketing Workshop in conjunction with the DMA, but for up-to-date industry specific information, the choices narrowed.

One new entrant that should be worth attending is the Cards & Payments Loyalty Conference slated for 2 December in New York.

If you’re looking for airline specific information on Loyalty Marketing, I’d suggest that you become involved with Airline Information, the brainchild of Christopher Staab and Roger Williams. Both of these gentleman have deep roots in the airline business and, through their conferences, are not afraid to tackle the tougher issues of ancillary revenues, frequent flyer programs, and cobrand credit & debit card partnerships.

One of the bigger topics in discussion these days is how the need for development of ancillary revenues can conflict with cost savings. Considering that a mainstay of frequent flyer programs has been the cobranded credit card, it is controversial that the airlines eagerly accept $billions earned from co-branded credit cards while mounting protest to the amount they pay in merchant fees. Edgar Dunn & Company and ARC estimate that the airline industry faces annual cost of U$1.5 billion for the privilege of accepting credit card payments or approximately U$12 per ticket, so the magnitude of the issue is clear.

You can take part in the debate by attending one or both of AI’s conferences in the coming weeks. First up is the FFP-ARAC “Mega-Event” to be held 22-23 October in Los Angeles.  This conference has a decidedly strong marketing bias while the Airline & Travel Payments Summit, planned for 2-3 December in Miami will address payment and revenue issues as well as related marketing topics.

If you can’t wait for either conference and want to stay on top of industry issues, you can also visit Roger Williams’ Load Factor blog.

I recently attended an AI Networking Cocktail in Miami and hosted Evan Liu of Spirit Airlines as he talked about the role of Free Spirit for the carrier and future plans for development. These events are well organized and attended and I encourage you to give AI some mind share if you are interested in the airline industry.

AI has been specifically looking into the development of cobranded airline debit cards as a compromise solution between ancillary revenue and cost savings.  Delta Air Lines recently introduced a SkyMiles co-brand debit card in association with SunTrust Bank, and considering the economics of the debit card, you might ask why and how can issuers/airlines support the value proposition of giving away frequent flyer miles on debit card purchases.

AI was looking for the same answers and recently published results of 31 airlines surveyed in their latest “45 Second Survey on Cobrand Loyalty Debit Cards”. They found that only 37.9% of airlines had previously looked at the benefits of issuing a cobrand debit card while over 55% consider debit cards as a “steady or significant” source of growth for ticket purchase. Today only 5% of airlines surveyed offer a cobranded debit card, though 48% responded that they were “very interested” in pursuing co-branded debit cards.

To navigate safely through the storms of commercial aviation and take part in the rebirth of frequent flyer programs, stay in touch with AI.