The Changing Landscape of Airline Loyalty Programs
In today’s world, maintaining loyalty to a single airline is becoming less beneficial than it once was. Airlines are increasingly demanding more from their loyalty program members while offering less in return. This begs the question: is it still worth being loyal to one airline?
The Current State of Airline Loyalty
A recent article by CNN sheds light on the struggles of frequent flyers who feel abandoned by the very airlines they remain loyal to. Many customers who have invested years in these loyalty programs have ended up with disappointing returns. The article highlights the frustrations felt by frequent fliers, suggesting that some airlines have given them the proverbial "middle finger."
Insights from Ben Lipsey, Flying Blue’s Loyalty Chief
British Airways recently overhauled its loyalty program, making it considerably harder for customers to achieve elite status. In contrast, Ben Lipsey, the Senior Vice President for Customer Loyalty at Air France-KLM, offers an interesting perspective on airline loyalty through his leadership of the Flying Blue program.
A Personal Connection to Loyalty Programs
Ben Lipsey’s background is particularly noteworthy. He started as a teenager obsessed with miles and points, giving him a unique insight into the psychology behind loyalty programs. Understanding the emotional aspects of loyalty can lead to better programs that resonate with customers.
Key Quotes from Ben Lipsey
Here are some of Lipsey’s thoughts that resonate with many frustrated loyalty program members:
Understanding Consumer Choices: “A rational consumer would take the cheapest flight at the best time. From a psychology perspective, [loyalty programs] are about trying to stimulate irrational behavior.”
Gamification: “It’s important to let customers feel they can find gamification opportunities.”
Earning Status: “If [on Flying Blue] you do London-Paris-New York, or London-Amsterdam-Tokyo, by connecting you achieve status more easily."
Two-Way Loyalty: “A lot of companies forget loyalty is a two-way street. Trust is crucial… When the program makes a change, it reflects on the airline and vice versa.”
Value Evaluation: “BA has basically said ‘Gold is worth £20,000.’ Customers now evaluate if they’re getting that value.”
- Customer Impact of Changes: “It’s a bold move they’ve made. They’ve basically fired the leisure customer.”
Interestingly, Lipsey has noted that Flying Blue offers status matches to loyal customers from other airlines, such as British Airways. These efforts might generate substantial incremental value, estimated at around €20-30 million.
Possible Changes to the Flying Blue Program
Lipsey mentioned that Flying Blue is considering introducing a “revenue component” to elite status requirements. This could involve minimum spend or flight requirements. However, he emphasized, “you don’t put a price on loyalty.”
Currently, the process for earning Flying Blue elite status is straightforward. Members accumulate experience points (XPs) based on the number of flights, the service class, and the distance traveled. This system makes it simple—spending less doesn’t directly affect the level of loyalty status earned.
Future Directions for Loyalty Programs
If Flying Blue makes changes, they could implement a requirement for a certain number of XPs on Air France-KLM flights or mandate a minimum number of segments flown. However, introducing such requirements could risk turning loyalty into a monetary transaction.
It’s likely that Flying Blue will wait to see the repercussions of British Airways’ changes before implementing any serious modifications to its program. British Airways has already faced significant backlash from its customers regarding its revamped loyalty structure, which may discourage such shifts in how programs operate.
The Bottom Line
Ben Lipsey’s insights provide clarity in the midst of an industry grappling with loyalty program changes. He rightly points out that loyalty programs benefit when they include elements of gamification, making them more engaging for customers. Conversely, when these programs prioritize financial metrics over loyalty, they risk alienating the very customers they aim to attract.
Your Thoughts
What do you think about the current state of loyalty programs? Do you believe that the joy of collecting points and miles still outweighs the challenges customers face today? Your perspective is valuable in this ongoing conversation about what airline loyalty should look like in the future.
