What do you do when you have a solution in your hand in search of a problem?

If you’re the creator of the solution, you sell, sell, sell, crafting magnificent stories describing the power of your solution to change lives and create profits. That approach is mandated by fiduciary responsibility to those investors who brought your solution to market. The effort and persistence are admirable, but in time the substance of your solution will come clear, as will the reality of market demand for that which you are selling.

There are lots of examples of solutions seeking problems to solve. At the moment, contactless payment, many online reward applications, and almost every piece of exercise equipment sold through infomercials come to mind. One exception in the exercise category is TRX, which I’ve used and think is worth every penny.

I’m also thinking of QR codes.

I’ve written about QR codes before, highlighting the digital curiosity they can create and some practical uses they can provide to connect local merchants to their customers and enhance the value of print media at a time when it is teetering on the edge of destruction.

American Airlines seems to agree with my take, as the envelope I received this month with my AAdvantage frequent flyer status inside carried a big fat QR code on the back. If you own a smartphone and have just a wee bit of marketing curiosity in your blood, I don’t know how you could not click through the code.

I did and it took me to a landing page online which featured special fares and offers that American Airlines is promoting at this time. It took me all of 30 seconds to look at the offers and, while it wasn’t for me this time, I would check back for future offers if presented in the same way.

American’s use of the QR code is a practical example of how to create customer engagement and how to reap a little better return out of every piece of direct mail stuffed in the box. After all, there was nothing but white space on the envelope before this QR experiment, and the ROI calculation must be astronomical as the denominator (cost) is minuscule.

While solution sellers carry on with big promises, brands and marketers are wise to sit back and determine how they can put new technologies to use to meet their own needs. Often the answer is not the one being sold by the creator of the solution.

Some new technologies won’t survive your next brainstorming session. Others, like the QR code, can be selectively used to create customer engagement and help create incremental revenues.

The Mega Event wrapped up last week in Montreal with the first annual presentation of the Mega Awards honoring the best in airline frequent flyer programs (FFP) and a second day of presentations that covered social media, coalition marketing, and a keynote which unveiled the term “Trustability” from Don Peppers.

Mega Awards were conceived to recognize marketing campaign and product development excellence in the airline industry covering Loyalty, Social Media, and Ancillary Revenue.Freddie Laker hosted the awards evening. A founder of Sapient Nitro and son of legendary airline innovator Sir Freddie Laker, he was so entertaining that an ESPY hosting gig might be in his future.

You’ll have to visit the Mega Awards web site for all the details, but here are three highlights that stood out for me:

Best Merchandising Product
Wessco International won top honors here for creating a co-branded offer that bundled a $10 off $30 coupon for Bed Bath and Beyond with a blanket and neck pillow package sold on board American Airlines. With airlines fracturing the flight experience and turning each piece into a revenue opportunity, passengers need a little incentive to play the game. American Airlines trialed the BBB coupon on its flights and sold over 200,000 units in 6 months, creating ancillary revenue for AA while giving travelers more coupon value than the cost of the blanket and neck pillow kit.

Best in Airline Social Media
Air New Zealand created its AirPoints Fairy as a flighty persona that listens to customers and often grant their wishes – all through the AirPoint Fairy’s Twitter account. There was lots of innovation in this category with Lufthansa’s MySkyStatus allowing people to stay connected within their networks during travel and Volaris and airBaltic using Facebook pages to deliver messages about special fares and generate big chunks of incremental revenue. ANZ leveraged its program to set it apart from competition and illustrated how social media could be used to drive tangible results.

Best in Airline Loyalty
A tough category to judge with many worthy entrants, Velocity, the loyalty program of Virgin Blue, came out a winner. Locked in a dog-fight with rival Qantas, Virgin Blue had 60 days to create and execute a campaign to protect its frequent flyer base in light of market changes impacting how banks would allow consumers to use their credit card rewards points.

The promotion was multi-faceted and included an immediate 25% bonus point award to transfer points to Velocity as well as the chance to win 25 million points – the biggest rewards based prize ever offered in Australia. 25 million points equated to a chance to go into space on the highly publicised Virgin Galactic space ship.

Using the creative premise that Velocity was offering ‘average Joes’ the chance to go into space the campaign told the story from the “civilian” side and that of a disgruntled astronaut. The fictitious astronaut, Sgt Major Scott Petersen, protested in a YouTube video that “space is not for amateurs” and circulated petitions via Facebook pleading for support against “this crazy Velocity promotion that will let mere amateurs go into space”.

The promotion achieved the overall goal of shifting a key segment of bank card point collectors to the Velocity program and notched a 1605% increase in points transfers compared to a non-campaign period.  Points transferred per day increased by over 850% compared to a non-campaign period and approximately 400,000 visitors were attracted to the micro-website.

All costs accounted for, the promotion returned an outstanding 10:1 ROI, enough maybe to even pacify that angry astronaut.

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.

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.

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.

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……

Deregulation of the US airline industry in 1978 was intended to create a competitive environment that would benefit the flying public and bring profitability to the airlines. With a number of bull and bear cycles under the belt, 2009 finds the airlines continuing to struggle for profits, and consumers once again being punished just for showing up at the gate.

The airlines pioneered the loyalty marketing business, linking customer data, profitability measures, and the reservation system to change the way all consumer facing companies viewed their customer policies. Since American’s AAdvantage program launched in 1981, the airlines have awarded zillions of miles to loyal frequent flyers and have collected untold terabytes of customer data.

It is astounding to see that the data collected remains largely under-utilized. My latest mailing from American congratulated me on my status with them and included some offers marked “specially for you”. I was disappointed to see that the offers had no connection to my preferences and looked like this:

• Offer to purchase additional frequent flyer miles
• Bose QuietComfort 2 headphones offer
• Directv – switch and receive 10,000 miles
• A credit card offer (actually two different ones)
• A sweepstakes offer in connection with MyCokeRewards.com

Not only are the airlines missing a significant opportunity to engage their best customers based on data they already possess, they are eroding their value proposition by adding fees to multiple aspects of the in-flight experience as well as their frequent flyer programs.

A struggling industry should leverage the lowest cost assets they own and use this low-hanging fruit to generate profitability as well as engender brand loyalty. Why not take steps to use the valuable data they have gathered over time.

The favorite subject for most humans to talk about is “me”. Flyers are waiting to spill the beans on their preferences and all the airlines have to do is ask.

Question of the day: Are you more loyal to your airline or to the snacks they serve?

If you’re a frequent flyer, there is a new game to play while waiting for your next boarding announcement. Have your traveling companion run through a list of favorite snacks and see if you can guess which airline offers it in-flight.

These days, there is not much to differentiate the air travel experience for business travelers and, just like you might look forward to watching some tube on JetBlue, there are people who find the roots of their airline preference in their favorite snack.

Here’s the quiz. Which airline offers the following?

1.
Animal Crackers

2.
Peanuts (old school style)

3.
Biscoff

Look below for answers……

If I were able to listen in on 100 airport conversations and tabulate answers on this little quiz, I’ll bet that Biscoff would be the most easily associated with the airline that put it on our radar.

This little cracker originated in Belgium around the 1930’s and was known by other names until acquired by Gourmet Center, an American company that supplies food to airlines. Renamed Biscoff, it has become a favorite of many travelers. The Grinder describes the cookie’s taste as “Crunchy, sweet with a lovely caramel and butter finish, this is a cookie worth booking a flight for!” I would tend to agree, and when I discovered that I could earn airmiles for eating Biscoff, I was predictably excited.

On a recent flight, while opening my Biscoff, I flipped the package over to read a message “Earn Skymiles with Biscoff….please see www.biscoff.com/delta” (oops, I gave away the answer!).

Wondering about the offer, I visited the web site to learn more. Unfortunately, the URL would not load and after some Google searching, it seems that the Skymiles partnership with Delta may have come to an end. If I discover differently, I will post further.

I was already skeptical that I would have to eat so many Biscoff, at 60 fat laden calories each, that by the time I accumulated enough points to earn a free flight, I would need a seat belt extension to accommodate the new me!

Before you scoff at my Biscoff premise, remember the “Pudding Guy”, David Phillips, a 35 year old engineer who earned 1.25 Million American Airlines miles through purchase of Healthy Choice pudding products that offered 100 miles for each cup. In the end, he earned enough miles to exchange for 48 free domestic tickets by spending about $3,140 on 12,000 deserts, a pretty good return.

I understand that fare, schedule, and many other factors influence the choice of airline. But with the industry moving to menu style pricing and lowering service quality by the day, the door is opened for travelers to latch on to the most granular of factors as the purchase decision tie-breaker. I may have missed my shot at Biscoff frequent flyer fame, but I still like ‘em.

Did you ever consider that crackers could be a key component of your loyalty program?

……. Bill Hanifin

Quiz Answers!

1. 
   JetBlue
2. 
   American
3. 
   Delta Airlines

6am Miami International Airport: Oil prices are near record highs and American Airlines grounded a slew of MD80’s last week due to maintenance shortcomings. Regardless, my flight is full and standbys number more than 40. The slug of people around the check-in area makes me feel late, though I am not. Another passenger asks what group is boarding. “Must be open to everyone” is my reply but quickly we hear that only Executive Platinum and Group 1 are invited to board. The crowding of the gate does not make sense, but then again we’re in Miami…

The Middle Seat is one of my favorite columns in the Wall Street Journal (it often addresses frequent flyer programs and loyalty programs) but not my preferred seat while experiencing travel first hand. With nearly 3 hours of flight time and gawking tourists on each shoulder, I am relegated to catch up on my reading. Only a Cirque de Soleil performer would dare boot up the laptop under these circumstances.

10am DFW Airport: The cabbie is unsure of how to find the Westin Stonebriar Hotel. When I refer to the “Westin”, he asks “It’s a hotel, right?” I give him the phone number and he obtains directions.

Since the Westin was booked for the conference I am attending, I guide the cabbie to the nearby Comfort Suites where Corporate Travel has booked me. Arriving at the desk, I observe literature on hand describing Choice Privileges and realize that it might be the only hotel loyalty program that I have yet to join. Before I can complete the application, the friendly desk clerk provides a bit of local knowledge, suggesting that I will save significant bucks by renting a car instead of cabbing it during my stay. Budget is the recommended choice and I am lucky to be offered a ride to the nearby office.

Pulling up in front of Walmart, my driver tells me that we have arrived. My quizzical look prompts her to tell me that the Budget office is inside the store. This is what I call winning “eyeballs” brick and mortar style. Just as web sites were judged by their ability to capture eyeballs during Web 1.0, Walmart is apparently the catalyst to build audience for nearly any business to succeed – at least in the sprawling suburbs of North Dallas.

After signing my rental agreement, I ask the counter person for directions to the Westin. “It’s a hotel, right?” is his response. I am starting to realize that Walmart owns higher brand recognition in these parts than does Westin. Maybe I’ll drop by the Marketing department at the Stonebriar if I have a chance. They need help.

11:30am The Westin: The conference I am attending is the first annual Customer Loyalty Summit, and the agenda is full of presenters from highly credentialized loyalty sponsors including Harrah’s, Wachovia, Neiman Marcus, Best Buy, and JetBlue. The unintentional theme for Day 1 is examination of approaches to linking customer satisfaction data to profitability while improving customer experience. It is refreshing to hear about the gritty details of program execution rather than the usual theoretical pabulum.

5pm The Westin: The highlight of the day is the final session given by JetBlue. Bryan Jeppsen delivers a folksy talk detailing how the airline interprets responses to open ended survey questions (known as contextual data) and arrives at actionable strategy to increase customer satisfaction. He closes with a video that he admits “I really like but am not sure what it has to do with loyalty”. The video is clever and draws a surprised response from the attendees. Funny stuff, but Bryan was right, it had nothing to do with anything on the agenda.

11pm Comfort Suites: Offering feedback on the accumulated customer experiences I encountered today would overflow the space allotted to answer survey questions from American Airlines, Budget Rental, Comfort Suites, and Westin ……. if only I had been given the chance.

Didn’t I say it was April Fool’s day in Texas?

Bill Hanifin