Saturday, December 29, 2012

Tale of Missed Opportunities - Are Loyalty Programs Serving the Purpose?


I fly a lot on the domestic circuit. I fly on airlines which have the frequent flyer programs and also on those which do not have. Since I also fly on value airlines like Indigo, Spice, Go Air etc., simply because of the convenience of timing, I was moved down a tier on Jet Airways as I did not fly on it that often. There were also instances wherein I flew a cheaper airline at the same time as the difference between the fares of Jet and the others was huge.
The moot point is I lost a tier and I lost it for some reasons. However Jet or for that matter any other airline is not bothered about it. - Maybe, I as a customer flew other airlines (which were the case); maybe I found the fares on other airlines cheaper - which were the case sometimes. There could be many reasons why I did not travel that often on Jet.
Just a few months back I was a member of the highest level/ tier on Kingfisher. This certified to other airlines that I travel a lot, but they tended to ignore the fact even though I had a baggage tag which showed my membership status.
As a marketing person I always wondered if other airlines chose to ignore that I am a frequent flyer and could make business sense for them or are they not bothered. And what is even more perplexing to me is why the ignorance?
As typical business people we look at Life Time Value (LTV) of the customer but somehow this seems to be ignored.
While I have used the frequent flyer programs as an example, some of the departmental stores are equally guilty of the same missed opportunities.

  • Complaint # 1

As I had mentioned before I was downgraded on Jet and all I got were a few mails informing that I would lose a tier. The mails did not really enthuse or tickle me to fly more. If they had delved deeper they would have seen that I seemed to be cutting down on my flights on Jet. If not a call at least a mail would have done. Throw in a small offer. And then maybe I would bite the bullet. Ah! Yes I did get a pack welcoming me to the lower tier.

  • Complaint # 2

After standing in the long regular queue for the general members, I reached the check in counter, not irritated that I stood in a long line but an enquiry as to why I have not been flying often when I gave my frequent flyer number would have helped.  Just imagine the wealth of information which would have been available to the marketing/ sales team.

  • Complaint # 3

In the flight, just imagine if the cabin crew welcomed me and asked me a few questions. The crew could have access to my FF number and it would be a great feeling if the crew member welcomed me back.

  • Complaint # 4

While the airlines do a fair job of treating high value customers differently, many retailers do not. I am a member of loyalty programs of practically all the chain stores in India, infact at one of them we shop every week. It is unfortunate that we are still treated the same way 4 years back, even though we are avid shoppers now. We buy our provisions, apparel, accessories etc., practically everything we need but.....

Frankly we do not care much above the loyalty program much less about the points. Infact there have been many instances wherein we do not even record the transactions. How about a separate line for bill check outs for the high spending regular customers? How about some special offers? 
High value customers like me can be treated differently in many ways - gifts, significant number of reward points. The point is that the high value customers are high value not only in terms of revenues but also from a loyalty standpoint. It is true that the cost of getting a new customer is far higher than retaining an old one.  Sometime these golden thoughts are so relevant!

  • Complaint # 5

I have a name and so do all others. Most of them like their own name. If the retail brand/ chain have my name why don't they use it? Why I am a nameless person? Incidentally the airlines companies in India do a fair job of this where I do get personalized mails, a greeting at the check in counter and so on.  
One of the easiest ways of establishing a personal connection between a brand and its customers is to get a little personal. When you acknowledge a person you are actually telling him or her that he/she is valued. In real life too would you liked to be called by a name or by somebody who calls you boy! 

  • Complaint # 6

Some programs have tiers which do not make any sense. They seem to be there merely to provide a psychological high. 
Some programs do have tiers, and treat customers differently once they hit a certain spending threshold. Others also have tiers but fail to provide any real differentiation once the threshold is hit.
For example Jet Airways has tiers Blue & Blue Plus but I simply have not figured out why there is an extra tier. The benefits once someone finally makes it are negligible.  No lounge access, no priority no priority check-in, nothing. While the program is successful, the absence to differentiate is galling to say the least.  People will see through pretentions and ultimately it is a big let-down for members (and I speak as one)
It  is a big let-down for those members expecting additional benefits, and as such, careful attention should be paid to how tiers are designed.

  • Complaint #7

Why is it that most loyalty programs are devoted to only increasing the customers spend size/ bill value. I cannot think of a program which drives more visits. If I were to visit a particular store/ stores many times, I am pretty sure that I would eventually spend more than what I would normally. Naturally it should be worth the while for me to visit an outlet multiple times in a particular time period.  
This comes from the thinking that the customer will only buy so much and the objective is to compete for the larger piece of the pie. The same loyalty program can also be used to create demand for products which otherwise would have not been bought. If only the Shell gas station near my office offered me a program which incentivised to me a come more often to fill up there. What’s more they could give me a good discount for picking up engine oil or even tires!

  • Complaint #8

In this day and age of real time information technology use data to get the insights- it has the ability to provide useful data about customers. The data can both produce insights about general buying behavior and allow the seller to target promotions to individual customers.
 At the rate we buy merchandise in Lifestyle/ Auchan, I am sure by the Inner Circle program would have a fair idea on our buying habits. It is perhaps sad that it has not been leveraged enough. Most programs in this country don’t seem to use analytics to the level it needs to be.

  • Complaint #9

When a loyalty program pledges to reward customers with special treatment it must ensure that the services provided are better than those available to regular customers. This is really galling when I see my luggage come out of the conveyor belt much after the regular customers have got theirs, even though my luggage has been appropriately tagged with the bright priority badge.

Let me be very clear, these are emotive responses but customers are irrational. Only some customers are logical. As a marketer I do understand some of the problems but I  am also a customer and I am also all of the above!

And sometimes you don’t realise what you are missing until it’s gone…


5 comments:

virgovim said...

Happy New Year Vejay. The fact is that most Indian businesses have no clue about analytics or the power of using data to make and drive business decisions. Using data to drive marketing promotions? That's an even longer way off.

Forget data and analytics; it's pointless to even think that check-in counter staff, cabin crew, check-out retail staff etc. are even trained to seek customer feedback or information. their job is to "process" the transaction, that too within a certain time. Their job is not to engage you in a chit-chat about why you're not flying anymore or how your last shopping visit was. As for your loyalty indicator on the baggage tag, believe me, it'll be 1-in-a-million staff who will notice that; and that person is the one I'd hire by the way!

I'm not saying it's right or wrong, it's just the way it is.Frankly, given the length of check-in and check-out queues, I'm actually happier if the staff just "processes" the transaction quickly and accurately.

The question companies really have to answer is - how are we going to use the data that we have to drive our business and marketing decisions, instead of willingly competing only on price?

S Vejay Anand said...

Thanks Vimal and I wish that you have a great 2013.
I loved the last question in your comment. I agree the crucial differentiation for Indian businesses how to leverage data. I can understand because I am not a value only customer. I give a premium on experience and so do many many others.

Yash said...

A good post summarizing whats most commonly unsaid.

Most Indian Business have no uniquely identifiable data and in cases where they have, they have no idea about how to leverage it. In most cases, the insights are too little too late and hence the rewards for " privilege" customers are too little too late.
There have been cases where loyalty programs have turned off many customers.So, Implementing loyalty programs is NOT the only way to treat regular customers well.That's where segment based personlization helps. Brands that have adopted this approach have realized benefits and are setting new benchmarks in customer satisfaction.

Customer facing business should unlock the potential of the data that they possess and proactively act to win the hearts of customers. In most cases, its a simple gesture of addressing you by name, asking you how your last visit / stay in that hotel was and in case there is any special request this time around.

Problem with most businesses is that they equate loyalty program with customer engagement. Customer engagement is a continuous journey while having a high loyal customer base is a good destination for any marketeer.

For this, marketeers need to step up and use technology to understand what customers are saying when they are spending money with them.

May data be your new best friend this year, have a Happy 2013 ! :-)

Siddarth Shah said...

Vijay,
There ar multiple issues with Loyalty programs in India. Most large organizations think its a Fad to introduce a loyalty program. Even the indian customer is to blame to a great extent. Our Indian customers love filling up a loyalty program form and getting a card..
The first issue is that Loyalty programs come at a COST!! It hits straight at the bottomline of the company!! Companies are already operating at such wafer thin margins and they realize in the middle that the loyalty program really hitting their bottomline!! So they end up not caring for the customer at the end!!
Where as we as customers expect the company to treat us differently if we really utilize their loyalty program.
In case of all airlines - they are incurring losses, Large retailers are yet to break even, Hotel chains are not doing well etc. No body has the money to really AFFORD a loyalty program. Companies do not know that the are dong MORE HARM to the customer by not doing Justice to a loyalty program.

S Vejay Anand said...

Thanks Yash and Siddharth. I agree with both of you. Loyalty programs are conducted for the sake of doing so. I am sure that if we can leverage properly the program there can be significant and tangible difference to any company even if it operates with low margins.

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