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Tnooz-Collinson Latitude webinar – Ancillary services or customer loyalty

The 60-minute session will give attendees a better understand of how using data more effectively can build on customer loyalty through positive interaction and engagement.

Panelists are:

Janet Titterton, Collinson Latitude, business planning director
Alexander Meili, ICLP, European planning director
James Berry, The Collinson Group, director product and planning

Moderator:

Kevin May, Tnooz editor and co-founder

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Tnooz-Collinson Latitude webinar – Ancillary services or customer loyalty

  1. 1. Ancillary services or customer loyalty: where should the focus be? 20 October 2011
  2. 2. Kevin May, Editor
  3. 3. Poll no. 1
  4. 4. Ancillary services or customer loyalty : where should the focus be? The following is intended to outline our general product direction and is intended for information purposes only. The development, release, and timing of any features described for Latitude’s products remains at the sole discretion of Latitude.
  5. 5. Janet Titterton Business Planning Director Collinson Latitude
  6. 6. Ancillary services or customer loyalty : where should the focus be? Webinar content overview: 1. Next generation ancillary revenue 2. FFP / FGP - ‘The Golden Moment’ 3. Driving program engagement
  7. 7. Ancillary services or customer loyalty – where should the focus be?
  8. 8. Poll no. 2
  9. 9. The evolution of ancillary revenues Ancillary revenues have transformed the Airline and Hotel industries Type Sample Products Product Unbundling Baggage fees Seat / room selection Booking fees Product Enhancement WiFi Lounge access Priority security Extended check-out Repackage / Re-bundle Entertainment package Business traveller package Luxury package Customer focused initiatives
  10. 10. Next generation ancillary revenues: a renewed emphasis on the customer
  11. 11. What is value creation? How can brands add value? Adding value around the core product – through best practise e-commerce (up-selling, cross-selling) and memberships FFP / FGP Core Product Core
  12. 12. How do FFP’s/FGP’s fit into ancillary revenue reporting? Reporting of Ancillary Revenues not standardised: Annual Financial Disclosures of Ancillary Revenue - 2010 2010 2009 2008 2007 Results posted by 47 airlines €15.11 billion ($21.46 billion) Results posted by 47 airlines €10.95 billion ($13.47 billion) Results posted by 35 airlines €7.68 billion ($10.25 billion) Results posted by 23 airlines €1.72 billion ($2.45 billion)
  13. 13. Top five reporting ancillary revenue Airline Ancillary revenue (Euros) Reporting ancillary revenues United Continental €3,530,000,000 Not known due to recent merger Delta €2,612,200,000 Other revenue American €1,379,524,000 Other revenue Qantas €1,087,268,000 Separate business US Airways €834,492,000 Not known
  14. 14. Some examples...
  15. 15. BMI & Air Canada
  16. 16. United Airlines & Jetstar
  17. 17. Premier Inn & IHG
  18. 18. HotelTonight
  19. 19. Trainline – web loyalty
  20. 20. Alexander Meili European Planning Director - ICLP
  21. 21. Poll no. 3
  22. 22. The strongest ancillary revenue driver: FFPs 9.3 billion $ $510 mio. 46 mio. $8.250 mio. 278 mio. 13 mio. 20 mio. $100 mio. $325 mio. 43 mio. $150 mio. Total Members of Frequent Flyer Programmes (FFPs) N W N E S W © ICLP Research 2010 Total Annual Revenues generated by FFPs through the sale of miles (estimate) E S © ICLP Research 2010
  23. 23. Is there still room for growth? Yes, but….. The challenge: “I can’t get my rewards” “My miles are not worth anything” The answer: Redemption is King
  24. 24. Benefits of “rewarding” your customer Increased VALUE of loyalty currency Reduced LIABILITY Redemption Stronger AWARENESS of program Additional ENGAGEMENT with program
  25. 25. ‘The Golden Moment’ A simple principle Members are not fully engaged with a loyalty program until they have redeemed their points or miles – at least once and after a reasonable short period of time (7-15 months)!
  26. 26. The Golden Moment – or - Who is the better client? Points accrual (revenues) Points Swinger 8,000 Points Shepherd Golden Moment X 1.5 6,000 4,000 2,000 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Months
  27. 27. Case study Points Swinger ‘Golden Moment’ 11 months Year 1 Accrual Pace (miles earned) Points Shepherd Year 2 (avg. miles earned) 1-20.000 4.505 4.095 X1.1 20-40.000 24.292 17.597 X1.4 40.000+ 54.147 46.909 X1.2 Accrued 10-38% more miles in Y2
  28. 28. Similar Logic: American Express Membership Rewards “Ease of redemption is critical to the perceived value of rewards. This is a nice addition to the American Express program” Colloquy Awards Jury – September 2011
  29. 29. Consequently, actions to best leverage the power of the Golden Moment…
  30. 30. James Berry Director, Product and Planning The Collinson Group
  31. 31. Poll no. 4
  32. 32. What is value creation? How can brands add value? o o Redemption – more choice, incl. points + cash Real time offers Airline and hotel Sees: • FFP / FGP Core Product • Opportunity to engage customers, even when they are not booking with your brand Makes proposition clearer / easier to sell Core Customer Sees: • • “This brand knows me and has everything I need” “This is helping me get better value from the loyalty points currency”
  33. 33. Convergence of travel, retail, technology Travel Technology Retail
  34. 34. Loyalty points as a valuable currency “I have a choice of cash or points to purchase with” “I want to earn or redeem on a transaction – let me decide” “I got real value out of that engagement – I won”
  35. 35. o o o o o Connected when I need it Relevance and choice Aspirational Fun and interactive Global and local
  36. 36. Technology enabling multiple touch points Mobile / tablet On board Online Global / Crossborder In the airport At check-in In store
  37. 37. Some examples...
  38. 38. Asia Miles and Velocity
  39. 39. In summary Relevance Choice Value Creation Connected
  40. 40. Q&A
  41. 41. Thank You! Archive copy of today’s webinar will appear on www.tnooz.com within a few days Send questions and comments to Kevin May, kevin@tnooz.com

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The 60-minute session will give attendees a better understand of how using data more effectively can build on customer loyalty through positive interaction and engagement. Panelists are: Janet Titterton, Collinson Latitude, business planning director Alexander Meili, ICLP, European planning director James Berry, The Collinson Group, director product and planning Moderator: Kevin May, Tnooz editor and co-founder

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