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…


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