Building stronger relationships with frequent flyers is a business challenge that has faced airlines since 1914 when the first scheduled commercial airline, the St. Petersburg-Tampa Air Line, took its first passenger into the air. Today a study by Carlson Marketing and Peppers & Rogers Group has identified ten current keys to FFP success.
The study report, entitled 'Building stronger relationships with frequent flyers: The secret to loyalty programme success', identified four key factors in determining the strength of a customer's relationship with an airline.
What makes a strong relationship?
The four factors that govern the strength of a passenger's relationship with an airline are:
- One-to-one communications;
- A positive customer experience from ticket purchase to in-flight care, to luggage handling;
- Keeping the brand promise in all marketing communications and employee behaviour;
- Executing the frequent flyer programme well.
And, the report asserts, when an airline builds stronger customer relationships, several important business outcomes naturally follow:
- The likelihood to recommend the airline to friends and colleagues increases;
- The intention to fly with the airline more often increases;
- The total number of airlines flown (i.e. the customer's "consideration set") decreases;
- Consequently, the airline's "share-of-wallet" increases.
According to Evert de Boer, director of loyalty for the Asia Pacific region at Carlson Marketing, "With a strong relationship, the focus of the customer on his or her primary airline is sharpened, thereby potentially reducing the risk of migration to a competitor."
The FFP's true impact on loyalty
The quality of a frequent flyer programme strongly impacts customer relationships. The research identified three factors that directly influence the programme's quality:
- How well the attributes of the programme (e.g. ease of redeeming for award travel) are executed;
- How well the programme encourages and supports customer engagement activities (e.g. updating a personal profile on the programme's web site);
- How well the programme's communications are tailored to be both relevant and personally customised.
Ten insights into FFP relationships
Among the many insights offered by the report:
- Relationship strength varies widely among airlines
The customers of the large, legacy carriers generally have lower levels of relationship strength compared to customers of smaller, younger carriers.
- Airlines have different mixes of "champions" and "critics"
For most airlines, customers with high relationship strength (the "champions") outnumber those with lower relationship strength (the "critics"). Compared to critics, champions said they take a greater percentage of both business and leisure trips on their primary airline. Nearly 29% of champions said they would be likely to increase the number of trips they take on their primary airline during the coming year, compared to only 8% of critics.
- Stronger relationships fuel word-of-mouth marketing
Customers with high levels of relationship strength are more likely (9.2 out of 10) than those with low levels of relationship strength (4.5) to recommend their primary airline to a friend or colleague.
- Integrity matters, both for relationships and business results
Customers who said they intended to fly the same amount or more on any airline during the coming year, and who gave their primary airline high marks for integrity (a key measure of the trust component of relationship strength), intended to increase travel with their primary airline at a rate some 2.7 times higher than those who gave low marks for integrity.
- Understanding customers' needs drives business results
Customers who agreed that their primary airline understands their needs reported booking a significantly greater percentage of their flights with their primary airline than those who disagreed (64% of flights compared to 57%). These individuals were also twice as willing to forego offers from other airlines because of the benefits and privileges they receive from their primary airline's frequent flyer programme, and showed a significantly higher intention to increase their share of wallet with their primary airline during the coming year.
- Frequent flyer programmes do impact purchase decisions
The privileges of frequent flyer programme membership were cited by many customers as one of the most significant factors (after pricing and flight schedules) when choosing an airline for either leisure or business travel. The better the loyalty programme, the more the status (i.e. an Elite tier) and the greater the travel frequency, the more the FFP affects the decision regarding which airline to use.
- Engagement in the FFP drives relationships and better results
Frequent flyer programme members who had engaged with their primary airline's programme in any way during the previous 12 months gave significantly higher ratings for the programme's quality, and exhibited a much higher relationship commitment, a greater willingness to forego offers from other airlines, and a higher likelihood of increasing travel with their primary airline during the next 12 months. In addition, those redeeming miles for at least one domestic ticket in the previous 12 months showed a 20% higher willingness to forego offers from other airlines because of their frequent flyer programme membership.
- People matter in members' perception of the FFP
Strong correlations were found between customers' opinions of the friendliness and competence of airline personnel and their ratings of not only the quality of the frequent flyer programme (r=0.45) but also of the overall performance of the airline (r=0.77) and their intention to increase travel with the primary airline in the coming 12 months (r=0.16).
- FFP elite status fosters greater commitment
Greater commitment, however, does not necessarily mean greater trust or greater alignment, the report warns. Customers who had elite status within their primary airline's frequent flyer programme showed significantly greater levels of commitment to that airline than those in the base tier and those who were not FFP members at all. Paradoxically, the non-elite and non-programme members showed significantly higher levels of both trust and commitment to their preferred airline than did the elite members.
- No factor in isolation will drive stronger relationships
No one factor alone is responsible for building the stronger customer relationships required to deliver the business results that airlines need today. Airlines must not only design and deliver a high quality frequent flyer programme, but must also ensure that the customer communications are relevant and timely, that customer interactions with airline staff are friendly, and that the brand is seen as having fair prices and to be supporting charitable and environmental causes.
Some airlines are doing better than others. However, the ultimate prize of customer loyalty will go to those airlines that succeed in putting all the pieces together.
The full research report, which is part of the 'Relationship Builder' series of sector-by-sector loyalty studies, has been made available for free download from the Carlson Loyalty web site - click here (free registration required).