The Future of loyalty -


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The Future of loyalty -

  1. 1. QUARTER 4 / 2011 AIRLINE PASSENGERQUARTER 4 / 2011 Official Publication of the Airline Passenger Experience Association ARE YOU WELL-CONNECTED? Making the right choice about inflight wireless OPEN ALL HOURS Dine whenever you want with 24-hour galleys ADD FRIENDS AND INFLUENCE PEOPLE Earning passenger loyalty through social media WIDE BODIES How to seat the larger passengerAPEX.AERO CABIN INTERIOR | Connectivity | Content | IFE | Inflight Services | Mobile | Pre/Post-Flight | Social Media
  2. 2. THE FUTURE OF LOYALTY IS SOCIAL Today’s loyal passenger with a problem will not call your hotline to tell you, says Shashank Nigam Tim Freyer was upset. An Executive earned and redeemed, and the address to which that the frequent flyer of today will call or write Platinum member of American to send his frequent-flyer promotions. to them when he has a problem, is living in the Airlines’ AAdvantage programme, Ironic, considering that anyone with an dinosaur age. he had just touched down from internet connection could trip across Freyer’s Tere’s an age-old loyalty-marketing maxim New York. While usually happy with the Twitter profile and learn that not only is he an that states, “It is much harder to acquire a airline’s service, he felt that an agent at the Executive Platinum American Airlines flyer but new customer than it is to retain one.” As Admirals Club had misguided him regarding that he reached 100,000 miles for the year in just we celebrate the 30th anniversary of loyalty availability on an earlier flight. Tis was the seven weeks; that he almost always travels in programmes – American Airlines launched second time it had happened in just a few first or business class and uses the Admirals Club AAdvantage in 1981 – this is just as relevant weeks and as an active tweeter, he broadcast lounge; that he frequents Miami, Los Angeles as ever. Te irony is that today there are more his annoyance. and New York; and, most importantly, that he is airlines on Twitter (185 as of August 2011) American Airlines had no idea that Freyer quick to share his travel experiences – good and than there are running loyalty programmes was upset because he had not called to tell bad – with the connected world via Twitter. (approximately 179). So not only are travellers54 them about it. In fact, the airline had hardly any Had Freyer called the AAdvantage hotline, taking to social media rapidly, airlines are information about Freyer at all, other than his he would surely have been catered to in a jiffy. responding by proactively engaging them personal particulars, his sectors flown, miles But any airline loyalty executive who believes through this medium. What does this mean for loyalty programmes, since airlines have traditionally been only good at driving buzz through social media? A recent study conducted by SimpliFlying and Cranfield University, of social-media use by people who fly at least five times a year, concluded that frequent flyers are twice as likely to post comments and critiques on social media than regular American adults. Moreover, over 80 per cent of frequent flyers are on Facebook and over 60 per cent regularly share photos and videos online, often of their travels. Tese are trends that airline loyalty programmes need to tap into in order to be of value to today’s socially connected frequent flyer. DRIVING LOYALTY THROUGH SOCIAL MEDIA Even before Virgin America cut the ribbon of its gleaming new Terminal 2 (T2) at San Francisco International Airport, days before it began operating flights from it, there was plenty of “checking-in” going on during the Terminal’s grand opening celebration. Tat’s because Virgin cleverly set up a social scavenger hunt for guests to discover T2’s innovative features, guided by Foursquare “check-ins”. By virtually “checking in” at different locations set up throughout the Terminal, and announcing their presence on social networking sites like Facebook and Twitter, participants earned badges QUARTER 4 / 2011
  3. 3. SOCIAL MEDIA A LARGE MINORITY OF FREQUENT FLYERS FOLLOW A MAJORITY OF FREQUENT FLYERS LIKE SEVERAL OF THEIR FAVOURITE AIRLINES ON TWITTER AT LEAST ONE AIRLINE ON FACEBOOK 6.3% + 11 4% + 11 3.7% 6 to 10 5% 6 to 10 24% 1 to 5 53% 1 to 5 66% None 38% Noneredeemable for prizes. Grown women and menwere literally running around the terminal THE FREQUENT FLYERhoping to see their names on the leader board Frequent flyersset up in the main hall. Around the same time, low-cost UK-basedcarrier bmibaby announced a partnership with PARTICIPATION LADDER* Creators 27%Gowalla, a location-based network similar to (publish content)Foursquare, that introduced gold, silver andbronze “pins”, not for actually logging miles on 55bmibaby, but for checking in virtually at any of Critics 38%the carrier’s 39 airports. Check-ins earned entry US adult (comment and post)into a lucky draw to win free tickets on the airline. online consumers JetBlue began awarding actual TrueBlue points 13% Collectors(good for free flights) and partner discounts (use RSS or feed readers) 18%for virtual check-ins at its airports via its “GoPlaces” application on Facebook. Meanwhile, 19%Air New Zealand started granting Foursquare Joiners 28%“mayors” (those who have checked in more 15% (publish, comment, share)than any others) free access to its Koru Lounge,regardless of the cabin class they were flying. 19% Spectators However, to achieve major goals for the loyalty (read, watchprogrammes, social initiatives cannot be ad hoc, but don’t interact)as has been the case with most of the airlines 54%mentioned above. Tere needs to be a clearlydefined social loyalty strategy that is profit- 33%oriented, not just buzz-focussed.CAN SOCIAL LOYALTY DRIVE PROFITS? * Figures for 2007, ladder and descriptions adapted from Forrester’s NACTAS Q4 2006 Devices and Access Online SurveyOne of the readers at askedrecently, “How can airlines monetise socialmedia? Tings like brand advocates are all welland nice but how do they add to the bottom line?” is likely to increase. Ultimately, these social will become more loyal based on two things: Tere is a strong potential for monetisation. On actions might also earn him real-world rewards rewards or recognition (or both).average, 85 per cent of frequent-flyer programme such as free lounge access. Eventually, airlines can be creating a(FFP) members have fewer than 25,000 miles in Tese are just initial steps in what might whole new tier of frequent flyers, who needtheir accounts. Tat means they can hardly ever signal a new evolution in loyalty programmes. not earn or burn miles by flying, but throughuse them for redeeming flights. Tat also means Te ultimate goal is to drive loyalty, which virtual incentives. Tis would attract newthey see no value in FFPs. Giving even 100 miles requires reciprocation from the customers. partners for the airlines, which then drivesfor sharing trip photos on Facebook can activate Te good news is that there are potentially revenue. Having such an incentive systema “sleeping frequent flyer”. infinite ways (if you’re imaginative enough) of creates a differentiating factor for the FFP with Not only will the person’s activity go up creating a successful initiative. What airlines regard to other programmes, which is revenuewithout even flying, but his earn-burn ratio need to keep in mind is that most customers driving in itself. APEX | AIRLINE PASSENGER EXPERIENCE
  4. 4. SOCIAL MEDIA THREE STEPS TO GET STARTED WITH A SOCIAL LOYALTY PROGRAMME In the SimpliFlying-Cranfield survey, 72 per cent of frequent flyers said that they would join a FREQUENT FLYERS WHO social loyalty programme given the chance. If airlines do this right, there are substantial benefits to be derived for both parties. WOULD JOIN A SOCIAL LOYALTY PROGRAMME 1 THE FIRST STEP is a paradigm Yes Fifty-three per cent of the SimpliFlying- shift in which airlines reward Cranfield survey participants said that they actions taken online – just preferred to check in at locations where they like Virgin America rewarding get virtual rewards from airlines. In fact, 61 72% check-ins at Terminal 2 with per cent are willing to share their positive virtual badges. Such virtual experience with an airline online in return for rewards come at hardly any cost virtual goodies. Tis ties in well with the fact to the airline, and can be used to that a majority of travellers would pay more to incentivise the frequent traveller to take actions fly an airline based on a positive review by a favourable to the airline. friend, rather than picking the cheapest fare. 2 THE SECOND STEP is to there should be the option to convert virtual give real-world rewards for points into real frequent-flyer miles. virtual actions. Fans can Pluna Airlines of Uruguay has put in No redeem points earned from place a system, called, which allows virtual actions, like sharing passengers to share their booking details with photos and videos from friends on Facebook, Twitter or LinkedIn, their trips, with Amazon while they are still in the booking path, after gift cards, priority check-in on the next flight or even lounge access for the they have made the payment, in return for 100 frequent-flyer points. Tat’s a good way to 28% “most liked” photos. At a point of development, reward virtual actions. 3 THE THIRD STEP to between the real value of a frequent-flyer56 creating a successful social benefit, and the perceived value of a benefit. loyalty programme is A social loyalty tier would make a lot social breakage. Loyalty- more business sense, once the concept of programme managers breakage applies. Very simply, this would have long obsessed about mean a benefit like a virtual badge costs the breakage, which in simple airline much less than its perceived value by terms is the difference the traveller. FREQUENT FLYERS SEEK MULTIPLE BENEFITS BY FOLLOWING AIRLINES ON SOCIAL NETWORKS 50% 43.8% 37% 22.2% 14.2% To get the latest info To stay updated with To get real-time To contact the airline To affirm loyalty about deals and latest news from flight updates and to the airline competitions the airline announcements QUARTER 4 / 2011
  5. 5. FACTORS THAT ENCOURAGE FACTORS THAT MAKE FREQUENT FLYERS LOYAL FREQUENT FLYERS TO FLY A TO A PARTICULAR AIRLINE PARTICULAR AIRLINE 26.5% 6% 10. 26 . 23% 23% 3% % 15.6 Reading about friends’ experiences .9% 2 5.6 21 % 15% .6% 27 12 . 11% 7% 14.5% Deals and promotions on Facebook and Twitter 4% 2 . 3.9 21 % 2% 8.8% 15% 38.58 The ability to sit 1% next to a friend or someone with similar interests .1% Good customer service Good safety record Cheapest fare Earn frequent flyer points Onboard experience Other 18 20% 6% 10. 34 16.1% .2% Ability to earn points/vouchers through social media sites % 6.8 1 22. 4% % % 4 1.2 1 ASSESSING THE FUTURE OF LOYALTY 34. 2% Airline’s social 21.1% media presence (viral, videos, games, etc.) 29.2% 4 years old 30 years old DEGREE OF INFLUENCE 191 179 Very strong Moderately strong Somewhat strong Airlines with Not much Airlines on Twitter loyalty programmes Not at all QUARTER 4 / 2011
  6. 6. SOCIAL MEDIAA successfully executed socialloyalty tier would have a numberof benefits, which may be hard toenvision with traditional loyaltyprogrammes:1. A brand advocate with a strongsocial network could act as a hugemultiplier for the airline’s loyaltyefforts by getting members from hisnetwork involved with the brand.2. Tere is very little lag betweenimplementation and measurement.Te results can be seen veryquickly indeed.3. Tere is a sizable opportunity tomove away from traditional loyaltyprogrammes and offer somethingdisruptive and innovative.4. Low-cost and regional airlinesthat often do not have a loyalty 59programme to begin with wouldfind a social loyalty programme agood one to start with. GET IT OFF YOUR CHEST. Frequent flyer – and even more frequent tweeter – Tim Freyer’s comments on his experience with American are an example of the potential wealth of passenger feedback airlines can engage with via social mediaCULT RELATIONSHIPMANAGEMENTTe biggest paradigm shift airlines will needto come to terms with while building a socialloyalty programme is to reward non-customersas well as those who fly often. A person whoflies only once a year and then with a cheapercompetitor, but jumps to the airline’s rescueduring a snowstorm to answer questions on EVERYONE’S A WINNER. bmibaby used social media to offer points for checking in virtually at the carrier’s airports.Facebook may just turn out to be as valuable as a Check-ins earned entry into a lucky draw to win free tickets on the airlinetop-tier frequent flyer. But the former may not even be in theairline’s customer relationship management information – more than any gurus or expensive create a social media presence, whether(CRM) system. Hence, in order to reward non- studies can provide. It is simply a matter of they will use social tools to engage withcustomers as well as keep track of them, CRM unlocking it, and with the resources with which customers effectively or merely as anotherneeds to be redefined as “cult relationship social media has armed airlines, there is simply channel to push the same behaviourmanagement”. no longer an excuse for failing to deliver the right becomes a question of culture. Te passengers actually flying, along with marketing messages to the right customers all the Talking may create sales, but listeningthose voluntarily engaging with airlines, contain time, every time. creates relationships, which sustain anwithin them the most valuable marketing While hundreds of airlines have scrambled to airline in the long run. A one-way email APEX | AIRLINE PASSENGER EXPERIENCE
  7. 7. SOCIAL MEDIA BOOKING BEHAVIOURS “The social era may be frightening for an industry that has traditionally held firm control Where do you go BEFORE you book a flight? over marketing and operations, Facebook 0% but it has also given airlines Twitter 1% the unique opportunity to understand what drives customer 45% Airline’s web actions better than ever before” Travel web 43%60 Travel agent 2.5% list is not a CRM solution, since it doesn’t engage customers, speaking at rather than corresponding with them. But neither is simply having a Twitter account, if the proper communications infrastructure is not established to enable pertinent and useful information to be exchanged in a timely fashion. Where do you actually book a flight? Te social era may be frightening for an industry that has traditionally held firm control over marketing and Facebook 0% operations, but it has also given airlines the unique opportunity to understand what drives customer actions better than ever before. Tis requires airlines Airline’s web 81% to prioritise social media engagement as a strategic marketing priority, rather than the tactical afterthought Travel web 14% it often is today. Te next time Tim Freyer is unhappy, and expresses himself on Twitter, AAdvantage should be able to Phone 1% address his concerns just as if he had called them up on his priority line. All check-in agents, as well as the Travel agent 2.5% Admirals Club receptionist would be aware of these interactions, and be able to make up for any misgivings. Tat is the future of loyalty. PREFERRED WAYS OF EARNING LOYALTY POINTS VIA SOCIAL MEDIA 10% 8% 15 % 2 7% 9% 13% % % 5% 10 12 33 15% Provide Become the 17% 13% 36% 40% Contribute % 38% 40% positive Recommend airline’s brand 17% Check in to ideas on the Tweet about 17% feedback airline’s social the airline ambassador to locations the airline 19% about an media page to a friend on social % % airline media sites 17 % 16 2 5% 22.4 28% 18% 17 19% 18% % 27% Strongly preferred Moderately preferred Somewhat preferred Slightly preferred Not at all QUARTER 4 / 2011