My job ensures I am constantly on the move visiting clients. One of the brighter sides to all of the travel is the chance to catch up with friends and colleagues in a myriad of different locales around the globe. Invariably our conversation includes travel, since travel is amongst the strongest bond that we share.
Over the past few months, the recurring theme of loyalty has been mentioned in our discussions. Interestingly, all of my friends/colleagues, regardless of where they live, work or travel, have broadly similar stories of disappointment with their travels, thanks to their previous belief that loyalty is a two-way street. They are coming to the realisation that, despite being brand faithful and buying into a brand lifestyle, when it came time to reap the rewards, they have been let down. It has led them to question whether loyalty programmes have become a victim of their own success.
Here are their stories.
Paul, a member of a large hotel chain loyalty programme
For years Paul has been a member of a large hotel chain loyalty programme. He was recently notified that he had failed to qualify for a renewal of his top tier hotel status. Going down one tier in the loyalty programme hierarchy meant his much-touted benefits, which included flexi check-in/check-out times, frequent room-to-suite upgrades, complimentary WiFi, complimentary mini-bar, would be scaled back considerably. Naturally, Paul was extremely disappointed to lose such advantageous benefits. Yet something was bothering Paul. He firmly believed he had been above the threshold for renewal.
The hotel loyalty programme's top tier status did not officially have published rules until very recently so status was at the discretion of the hotel group. Paul knew this but continued to place his business with the group because year after year he re-qualified. So naturally Paul was quite surprised with the news of his downgrade (which didn't apply to several of his fellow travellers), so he queried it directly with the hotel programme's loyalty manager.
What surprised Paul was the candid response that indeed he had met the (recently) published renewal criteria, but there were other aspects of his business that had not and thus he had been demoted. He was told in a telephone conversation that he wasn't as profitable to the hotel group as other top tier members. So beyond the published criteria, the hotel was now using transactional data to attach a profitability rating to the individual traveller. Room rate was just a start; they also included payments for hotel services such as bar and restaurant expenditure, spa/health club treatments, business centre usage, conference facilities, etc. They also noted that he did not have a group affiliated credit card.
Stunned by this information, Paul has ceased using this hotel group for all but essential requirements. He is now placing his business with other groups who, having not seen much of his business in the past, are now giving him rewards and perquisites which are drawing him further away from his originally preferred hotel.
So I asked Paul whether his new found loyalty could result in similar treatment to his original hotel group? Might his newly preferred brands end up doing similar analytical exercises, and after a few years take a loyal brand ambassador and relegate him, reinforcing the harsh reality that loyalty isn't always a two-way street? It may seem unfair to the traveller that, whilst qualifying by staying the requisite number of nights, the hotel group views loyalty in wider terms, of course focusing particularly on the bottom line. In this instance, they clearly pointed out that Paul wasn't delivering the profitability the hotel group was looking for.
Such is his disappointment that a loyal customer has become vitriolic against his formerly beloved hotel group. He has shared his annoyance not only in his social and professional circle, but he has taken to social media about it, reaching a far wider audience. When someone in the hotel loyalty division made the decision to bump Paul down a tier, were they quantifying the consequences of losing a customer permanently? Had the hotel group worked with him to tell him he was at risk, to advise that they were looking at things beyond the annual room night requirement, he might have been able to take steps to amend his profile and change his habits and to work with his beloved brand as a true partnership. In this instance, the unilateral change in the goalposts was keep secret by the hotel group and has led to a breakdown in the relationship that is, more than likely, unrepairable.
It isn't just the hotel chains that are looking at loyalty through a different lens. Take some of the airlines who recently have linked spending amounts to their frequent flier tiers. No longer is loyalty based on the number of miles flown, it is now being tethered to the amount you are spending annually with the carrier.
Joel, a loyal, short-haul frequent traveller
Joel flies a short-ish hop (under 500 miles) regularly. The route is a virtual monopoly so fares are extortionately high. But Joel felt undervalued by the airline because he never accrued many miles. He has, for years, complained that his ticket price would easily fund two long-haul return trips that would yield him 10 times the mileage and a fast and easy ride to top tier status, conferring him benefits he never quite managed to obtain.
He suffered a double indignity in that his car rental company would credit him for the number of rentals, and nothing for the duration or cost of these rentals. So while the road warrior who was renting a car in three cities per week for one night at a time would benefit significantly by rising to top tier status, Joel would rent one car for six nights, paying five to eight times the rental cost of the road warrior, yet yielding one-third of the recognition value from the car company.
Joel is now viewing the shift of some players to revenue-based schemes as a positive for him personally, but he is cynical enough in his belief about loyalty programmes that he is not holding his breath for any long-term changes. In our discussion, Joel confirmed that the change in structure towards revenue targets in airline frequent traveller programmes is already starting to shift the purchasing behaviour for many of his colleagues, a band of 'loyal' travellers who have been part of frequent flyer programmes for the past 30 years.
Donna, elite status traveller
Donna has, for years, enjoyed "elite" status with a large airline, offering her great rewards and "free" travel that she had earned during those marathon business trips around the globe, much of it during non-core business hours. But when we met recently, she revealed that she had been drifting from her top tier status down through the lower tiers over time. I was confused and wondered whether I had misunderstood what she said. Donna was a paid-up, card carrying, bag-tag sporting, hat and t-shirt wearing fan of the airline. And as such, she said the loyalty was omnipresent, and in both directions which kept both the airline and Donna happy.
When I told her about Joel and his cynical view that the yet-again revised rules coming into place early next year would change buying behaviour, Donna surprised me with her views. She said she had recently sat down and took a long look at loyalty and whether it still was a two-way street. She listed the previous perks that she had enjoyed which had been watered down over the past few years. Gone was the ability to upgrade from cheaper economy fares, gone was the option to bring additional guests into the airline lounge. The relaxed flexibility on same-day flight changes had been flexed off the perk list, which she truly valued as a benefit since her company requires her use of more restricted fares and she wasn't always mistress of her own schedule. Those small things that she valued the most were systematically being drained away. The additional revenue requirements needed for Donna's status was the final straw.
Donna had her travel epiphany when looking at this growing list. She realised that her loyalty was no longer being reciprocated by the airline. So Donna, always one to take on a new challenge, decided to take action and change her travel buying habits. No longer is she loyal to one carrier; she is picking the optimum fare and routing for her travel, often at a time more convenient to her. She has admitted that this had actually let to a more relaxed travel experience, as it is more on her own terms. She is enjoying using a variety of different carriers, of non-stop rather than indirect routings, newer aircraft, different catering and improved products. It is as if a whole new world of travel has opened up for Donna, and she is, at long last, quite enjoying the travel she is doing.
But Donna has taken things further. Rather than sign up with a different carrier, she is building her mileage balance not with the airline, but with her credit card company, who permits a transfer of miles to a variety of carriers and also to hotel and car rental companies. Donna can now look at redeeming these miles on a wider variety of carriers, which offers her a variety of new locations to visit in her leisure time. Donna has also given up her hotel loyalty cards, and she is discovering a whole new world of boutique hotels that offer higher standards of service, comfort, flexibility and personalisation than she ever expected. She is treated as a valued individual now, not as a card tier level or frequent visitor number, and she couldn't be more content. Donna confided that the more people she shares her travel non-loyalty story with, the more she hears back that her fellow travellers are doing the same thing.
In creating frequent flyer programmes, which stretch back to the late 1970s, airlines (and subsequently hotels and car rental companies) set out to engender loyalty to one provider, to ensure repeat business was gained; in return a 'reward' or other incentive was offered. These have grown over the years to become vast programmes responsible for up to one-fifth of revenue generation for the airlines alone. They have more-or-less been seen by the traveller as a two-way street – I'll be loyal to you provided you are loyal in return to me. There have always been those critical of such programmes, but of late I find it interesting that quite a few of the frequent travellers with whom I have been speaking are starting to question whether these hugely successful 'loyalty' programmes are just that – loyal. In quite a few instances, they have had just the opposite effect.
It leads me to ponder -- have loyalty programmes become a victim of their own success?