Time to rethink those airport loyalty strategies
Customer programmes are evolving at a very fast pace, and the era and impact of the Frequent Flyer programme (FFP) model - as well as an inexorable shift toward personalised, location-based and real-time marketing - will leave few revenue opportunities for airports that aren't in tune with changing consumer demands, according to a white paper by global loyalty experts Peter Wray and Robert Cook.
The majority of consumers now demand a more transparent business environment in order to justify their spending in airports, which are now widely perceived as over-priced, captive environments. It has been well established that there is a strong link between the way consumers describe their loyalty habits and the way they subsequently buy products and services, so Wray and Cook argue that it is time for airports to adapt to today's consumer. Airports could continue with 'more of the same' tactics or they could make the most of the new opportunities inherent in well designed and implemented customer marketing and loyalty programmes.
Loyalty programmes have long been used in many industry sectors (such as airlines, retail and petroleum to name a few), and they have resulted in more business for the successful, and more problems for the unsuccessful. But, as with any product, the loyalty programme as it stands today has reached the end of its current lifecycle. It is often asked, "if you keep doing the same things over and over, why do you expect different results?" - and this is the problem with loyalty programmes, which are now having little effect or impact on sales.
Of course, many loyalty programme operators may argue that point, but one needs only to examine the airline industry and its FFPs to see not only their initial successes but also their subsequent failures. After years of creating customer loyalty through rewards such as free flights, the airlines knew that there was no way they could allow their customers to redeem all of the frequent flyer miles they had earned; the rewards were simply greater than the available capacity for free flights. To the dismay of their customers, most airlines either de-valued their miles, or impose expiry dates - both of which had a seriously negative impact on previously loyal customers. Many airlines are happy, it seems, for their customers to see promised rewards evaporate without warning. As a result, airline loyalty programmes tend to have a very high level of inactive memberships compared to retail loyalty programmes, along with very high breakage rates (unredeemed reward points).
So if airports are to successfully implement effective customer loyalty programmes, designed to engage and encourage the customer to spend more, their current programmes are in need of drastic overhauls - and this has less to do with innovation, and more to do with customers and how they have changed over time.
Customers have changed - especially those who travel. Forrester Research coined a phrase, "the mobile, always-connected customer", which aptly describes the key change seen in travellers in the past few years. This presents an opportunity for airports to implement their own programmes based on a mobile-based engagement strategy.
In setting up their new or reinvigorated loyalty programmes, airports must recognise that the customer has their own conceptual understanding of the "brand, value, loyalty" equation. And this means that the customer is the sole determinant of what each of these mean to them personally. Loyalty, for example, must be earned. Only if there is value, as determined by the customer, is there a real possibility of loyalty being demonstrated.
The full white paper, which goes on to map out effective airport loyalty strategies, can be obtained by emailing Peter Wray at email@example.com.