Required Reading for Frequent Flyers
Required Reading for Frequent Flyers
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Frequent Flyer Fickleness
[Apr 2014 Issue]
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Why frequent flyers choose to switch loyalties.

When Melanie S. opened her elite credentials package from the American AAdvantage frequent flyer program recently, she joined the tens of thousands of frequent flyers who, for various reasons, have decided to switch loyalties from one frequent flyer program to another. And sometimes, that change is brought about on a whim.

For Melanie, it was a matter of principle. For years she had been a loyal United MileagePlus member, but she was unhappy recently when United raised award mileage requirements for partner flights--even though she readily admitted that she wasn't quite sure that the changes would have any actual effect on her future award redemptions.

But she felt strongly enough about the more costly awards and the devaluing of her miles that she decided to take a "challenge" to move her elite status from one program to another.

While we might not think of "loyalty" program members as being "fickle"--read this definition of the word from Google:

1. changing frequently, esp. as regards to one's loyalties, interests, or affection. "Web patrons are a notoriously fickle lot, bouncing from one site to another on a whim."

Just as Web patrons are prone to bounce from one website to another, so do a growing number of frequent flyer program members switch from one program to another.

Measuring Loyalty
Customer loyalty is undergoing a major reexamination these days, not just from members, but also from the sponsors of such programs. A recent example of this is the change at Delta SkyMiles. Delta makes it clear that measuring loyalty in their program will be highly influenced by revenue contribution when determining the rewards members receive.
It's certainly not to say that this will be the only change in measuring loyalty--as witnessed by Melanie's actions. Emotional loyalty on behalf of the members of these programs plays a huge part of how the industry and members of the programs view the common practices of loyalty programs, based on outdated myths and assumptions.

Challenges and the Challenged
One reason for the fickleness of members is the growing sway social networks have on the decisions people make, and the one-click access to information to just about everything the program offers, along with in-depth analysis of every major and minor change a program makes. There are many avenues of thought being blogged about loyalty programs every day and information is a fast flowing stream.

And while it is certainly true that some of this fickleness is being driven by the options members now have, would Melanie have moved from United MileagePlus to American AAdvantage if there weren't a reciprocal "challenge" being offered by American?

We asked Melanie, and her reply was a resounding "No." She explained that once she had gained elite status, she really had no ambitions to start all over as a regular member in another program. It was only the ease in which she was able to switch programs as an elite member that made her initial whim a reality.

Is the industry responsible for creating this new-found class of flyer fickleness? Well, they certainly make it easy. In a recent announcement of a JetBlue status match, they said, "Across the airline industry, recent news highlights changes that several carriers are making to their current loyalty programs. JetBlue believes air travelers deserve better. The airline with award-winning customer service, is stepping up to the plate by offering an open invitation for customers to see what sets JetBlue apart from the rest. Anyone currently enrolled in certain loyalty programs with specified status (see qualifying list below*) will automatically qualify for TrueBlue Mosaic for the rest of 2014 simply by signing up for the TrueBlue Mosaic Challenge."

They named all other major travel loyalty programs, including Southwest, as part of their status match campaign. What's unusual about this offer is that in typical status matches Southwest is never included.

So are we fickle because we're just fickle? Or are we fickle because the industry makes us that way?

It is likely a little of both.

And here's why. While the main cause of fickleness is believed to be our increased expectations as frequent flyer program members, when that intersects with the number of options available to the average member, the term "loyalty" is quickly redefined. In the case of Melanie, her expectations were that there would be a more gradual change to any award charts, and that her ability to save and spend her miles would not be harmed in any material manner. Fact is, in her mind, United MileagePlus was unable to meet these expectations.

And of course, until industry consolidation gets down to just Airline A or Airline B, then options C, D, E and F will allow members to be fickle.

Basic Tenets of Loyalty
Let's take a look at three basic tenets of loyalty programs and their members:

1. Overrated
The first tenet of these programs is that the premium class/high airfare member is the most loyal. If that's the case, then loyalty is overrated. Most recent research indicates that the "80/20" guideline--20 percent of members bring in 80 percent of the revenue--may be closer to "50/20" with the masses of those in the middle being largely underreported.

What's significant about this is not the measure of revenue, but the measure of loyalty and value. As more and more members of these programs become more educated about their "value" by means of the social and digital age, it changes the net value to programs. Some programs continue to measure their "elite" or HVC (high value customer) by revenue contribution and miss the fact that many of these same members have become their least profitable because they know how to time their award redemption for when there is the greatest value.

"Loyal" members are the ones who press programs for redemption fairness. Delta's recent changes pushed the boundaries of their program to be revenue-based only on the earn side, and that might have been because "loyal" members would have balked at changes that would have drastically changed the value ratio of redemption.

Most of these savvy members know the value of each award redeemed and equate the value of the program to this. As they cherry pick their redemption against their idea of an HVR (high value redemption), this can and does, have an impact on the true net worth of these customers to a travel loyalty program.

We doubt that many readers of InsideFlyer would redeem 60,000 miles for an airline ticket that they could purchase for $278 directly from the airline. These same members are fickle enough to change programs if they feel that the value is diluted--which would explain why the dialogue regarding United's recent award changes have been much more topical than Delta's change to the accrual of those same miles.

We say that most programs misunderstand and overestimate loyalty by expecting the impossible from loyal customers--growth beyond what is realistic.

2. Needs
Another factor that contributes to frequent flyer fickleness is related to psychology because there is something that drives this type of behavior. Human psychologist Abraham Maslow described in his 1943 paper "A Theory of Human Motivation" that our actions are motivated in order to achieve certain needs. Changes to loyalty preference are well beyond the basic need of food and water and even beyond the level of safety and security. And this fickle behavior might be best explained by what Dr. Maslow said are other or "higher" needs once the basic needs are met. And when these in turn are satisfied, again new (and still "higher") needs emerge and so on. Over time, frequent flyers' perceived needs change.

3. Emotional loyalty
As powerful and as complicated as these programs may be, the fact remains that emotions are often just as likely to influence members' decisions than any other factor. And emotions often create a more powerful connection to a program--loyal members are less likely to switch based on factors like status or bonus promotions.

This is of course the idea, with all good intent, that every day restarts fresh with every frequent flyer and a program that wins a flyer's heart will win their loyalty.

All of these factors are sparking a new way to look at loyalty.

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