As noted in the Nov 5 New York Times Article How Frequent Flier Programs Are Changing in a Changed World, business travel is still way off of pre-pandemic levels, and US Airlines are battling to retain the loyalty of frequent travelers. Tactics include lowering elite tier thresholds and increasing the credit allowed for non-flying transactions such as credit card spend. In addition, they are reducing focus on mileage due to the environmental concerns related to the notion of travelers taking unnecessary trips just to earn or retain their status.
Much of this response is due to the changes felt due to Covid-19, though as the author notes, some “may be disenchanted with airline loyalty programs, which, in the years leading up to the pandemic, had made upgrades and free tickets more elusive”.
Loyalty Design Perspective
From a Loyalty Program Design standpoint, my reaction to this news is that the airlines are taking just another step on the same path towards devaluation of the core currency, with too much focus on trying to retain a customer who may have stopped traveling. It seems clear that many of the changes brought on by COVID-19 will have a long lasting effect on travel patterns and the future of work. The travel market will not be dominated so disproportionately by the “road warriors” of old that so many of these programs were developed around.
At the same time, there is no doubt that there is huge untapped demand for travel for those who have been trapped at home for the last 18 months. And for many who will still work remotely for the foreseeable future, the desire and opportunity to travel for personal reasons has never been higher. This will have tremendous impact on hotels, car rental companies and airlines, and their loyalty programs need to adapt quickly to find these new audiences and develop relevant propositions.
Loyalty Consultant Brainstorm: Three New Segments to Focus on
To help illustrate the opportunity, we held a brief brainstorm to address these changes. Here are three potential segments that the travel category should consider capitalizing on to capitalized on new audiences and build true loyalty.
- Digital Nomads: The move towards remote working has enabled a new generation of Digital Nomads, or more properly called “Location Independent Professionals”. Websites like theprofessionalhobo guide workers on how to set up the lifestyle, and travel related sites like nomadpass help them find new and exciting destinations to work from. In a recent study by Emergent Research and MBO partners estimates there are 10.9MM American Digital Nomads. The Harvard Business Review has acknowledged this trend, suggesting that companies need new strategies to manage and attract this well-educated, high performing set of workers.
This audience is a fascinating opportunity for airlines, and a completely new take on the frequent traveler. Hotels already offer all-inclusive packages targeting this audience. Subscription travel products come to mind offering a set number of flights or miles per month for those with flexible schedules. Digging deeper for insights into this non-traditional audience who demands ultimate flexibility and spontaneity will be critical, and co—creation could be a viable approach. - Satelliters: According to the NTT 2021 Global Workforce Report, only 39% of employees prefer to work in an office full time, with 30% preferring hybrid and 30% preferring remote work. And according to a PWC study, 87% of executives are reconsidering their office portfolios, consolidating space in premier locations and/or opening up from satellite locations. A key part of the future of work is regional collaboration spaces, and getting to these satellite locations will require travel.
Rather than a daily commute, these travelers will need to take short regional trips to their closest satellite office a few times month to work in person with their counterparts. These travelers will be frequent, though nowhere near the frequency of the traditional road-warrior. Their routes will be much more predictable however, which could provide an opportunity for airlines to offer highly targeted incentives -- for example bonuses on a single route of choice. And there may be opportunities for enhanced coalition offers in the destination market to make the experience that much better. Artificial Intelligence could be used to identify this type of repeat behavior and capitalize on it. - Status Cravers: Many of the former road warriors will have their travels reduced or even eliminated if they’ve changed jobs. However, the status they formerly enjoyed from the airlines (or perhaps are enjoying for one more grandfathered year), will be very hard to give up.
This provides a unique opportunity for the airlines to use many of the tools already at their disposal for loyal customers, but perhaps differently. Rather than diluting the requirements for status, why not offer a new paid level for travelers who crave the status. This could be combined with airport clubs, a minimum number of upgrades guaranteed per year, and other services not yet imagined. While the benefits for those who still qualify for the Elite levels would need to be different/better, this would be a great option to retain the Status Cravers and provide a strong revenue opportunity.
LoyaltyLevers Take
These few examples are simply the product of a Loyalty Consultant brainstorm, but they illustrate how new thinking could be applied to new audiences for the airlines to take advantage of the pent up demand for travel that is undoubtedly going to be satisfied in the coming months and years. The airlines that move first with progressive offerings will show that they are in step with these new audiences.
About LoyaltyLevers
LoyaltyLevers provides loyalty program consulting services to top brands who want to go beyond cookie cutter schemes to build true loyalty and maximize ROI. Most brands follow the same rewards recipe, and as a result the minority of members report they are “very satisfied” and less than 20% feel special or recognized. The majority of C-Suite executives question ROI. Through our proprietary LoyaltyLevers approach, we tap into proven psychological motivators behind the tangible rewards and emotional benefits that drive loyalty success, and engage members with the benefits through-out their customer journey.
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