Posted by Seth on May 5, 2012 under frequent flyer, points | 
The analogies of points as a currency are not new. There are a few programs out there today that already have "pay with points" types of functionality available, but there are still a number of limits on those systems.In most cases they can be used only for specific purchases, mostly travel related, or via certain merchants. American Express Membership Rewards are one of the most easily spent on non-travel events, though the point valuation of that channel is not very attractive.
Listening to representatives from the loyalty programs and the companies who help them make the programs work at the Randy Petersen Executive Travel Summit a few days ago, however, it seems that the idea of defining a specific cash value to points and allowing full fungability of them is not too far away. Loylogic has partnered with Etihad to put their PointsPay product in the market, allowing points to be easily redeemed for value on a credit card, making points instantly spendable anywhere that credit card is accepted, for example.
Other companies at the event spoke of the shift from points to real currency with different levels of optimism and excitement. Some were lobbying for full transparency on the points, noting that many customers have already figured out what the values are anyways. Others suggested that the opacity of the specific value actually increased the perceived value, making the customers feel that they were getting a better deal and allowing the programs to remove the liabilities more quickly.
Still other companies suggested that the best way to increase the perceived value of the points is to offer up redemptions that are less utilitarian and more creative. Whether it is allowing customers to use points to redeem for space travel, a week on a private island or cashing in 386,000,000 points for a yacht, the options are, at least in theory, endless. That those awards generally are never redeemed makes it easier to offer them and the perceived high valuation since they are still too far out of reach for most to attain.
One concern voiced (by me, among others) regarding this apparent shift is the potential that it will erode or displace the travel award segment of the programs, effectively taking away some of the variable value of the programs and making them truly fixed rebate opportunities. Most present in the room and in the private conversations in the halls seem to think that this point hasn’t arrived. At least not yet. The cynic in me still sees great potential for that time to come, sooner than not. A few carriers are already very close; JetBlue, Southwest and Virgin America come to mind, though they are all still essentially only travel for the redemptions. Switching from that closed redemption network to an open, fixed-rate system actually wouldn’t be too huge a leap, at least on the conceptual side of things. The actual work to make it happen isn’t so trivial.
I’m not throwing in the towel quite yet; there are definitely still opportunities to play the game and come out ahead as a customer. But they are getting harder and harder to find. The market seems to be shifting in that direction, both on the supply and demand side of the programs. This is definitely an area to keep an eye on in the coming months.
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Posted by Seth on April 30, 2012 under frequent flyer, Mileage Run, points, Trip Reports |
Lots of folks have dinner in Portland, Oregon on any given night. Or course, most of them actually live in Portland and aren’t visiting from New York City for 3 hours, but that’s just part of the entertainment value to me. A couple weeks ago I found myself flying out for dinner, thanks to the $120ish fares United Airlines offered back in January.
I took a whole bunch of photos and videos over the 20 or so hours I was on the road, from snacks to planes to trains, and then edited them together into a roughly two minute time-lapse of the trip. I think it came out pretty well; I hope you agree.
The trip was, by nearly every standard, textbook. Upgrades cleared, flights were on time and I even managed to get home an hour early, albeit in the very last row of coach rather than my original upgraded seat. I slept a little bit, ate a little bit and drank a little bit (probably more of this last category than the other two).
I’m looking forward to the two more of this fare I’ve got booked, as well as a few other similar trips over the coming weeks. Really a pleasant way to spend a day.
Posted by Seth on April 29, 2012 under frequent flyer, News |
A last minute change to the schedule of an event is rarely a good thing; swapping out speakers and shuffling slots is a pain for everyone. But when given the opportunity to have an official from the United Airlines Customer Experience group come in and talk with 200+ frequent fliers about the changes over the past 6 weeks, including the challenges they faced and the troubles they’re still facing with the merger and the PSS integration progress, you accept the pains and make the changes. At this weekend’s Frequent Traveler University event a representative from United’s Customer Experience group stood up in front of the group with pretty much no restrictions on what could be asked. A potentially risky move.
Much of the discussion focused on upgrades and the policies and processes around upgrades. Not particularly surprising given that the upgrade processing has been probably the most visible and, for many passengers, the greatest pain point. Perhaps the best news is that the company knows the system still isn’t working correctly all the time. Among other useful things said:
Upgrades are clearing more reliably, but still not happening all the time
We’re really bad at transparency for upgrades right now.
We’re telling gate agents to "Please don’t police upgrades. If the person is on the list don’t worry about how they got there."
Some people love the companion upgrade policy and some hate it. Some like the Y/B/M-Up policy and some hate it. And, not surprisingly, many don’t understand how the policies are built and how they work. The issue of wait-listed upgrades not being cleared when the award inventory opens up was also brought up again. There are some theories on why it is happening but nothing solid yet. Overall, some hints were offered about how things in the future that are going to be better. But just hints. Nothing confirmed.
There was also a decent amount of discussion about the agents and the seemingly new party line of "we cannot do that in the new system." There are some things that actually cannot be done anymore, but many of the examples provided, such as protecting on a later flight without canceling the existing segments, turned out to actually not be true.
There was the usual (and well deserved) abuse of the Newark station. Nothing to report on anything potentially getting better there, but it was discussed.
There was also a ton of abuse piled on top of the social media strategy, namely the Twitter account. The UA rep was shocked when he asked how many folks in the room used Twitter and saw nearly everyone raise their hand. And based on my personal experience I agree that the approach has been quite passive and low-key, almost to the point of seemingly non-existent unless they’re hosting a chat or similar. Constantly referring customers to the "official" channels which are also horribly back-logged and unresponsive isn’t helping their case. This was, after upgrades, probably the most significant area the group felt the company was failing horribly in.
It wasn’t all questions from the crowd. In some cases it was just comments about how things have run the past 6 weeks and months. Particularly pointed and brutal was a simple line offered up from one attendee:
You’ve broken every rule of customer service since the merger
And all he could do was accept that one; not really much of a leg to stand on to dispute it.
Finally, a few minutes were devoted to discussion of things not entirely related to the post-integration issues. It was quite interesting to hear from someone focused on the Customer Experience part of the organization what about the carrier he thought was compelling for customers and where he actually wanted that experience to be. Things like the route network and the non-flying earning possibilities were big on his radar.
On the route network front, the 787 was a big focus. Among other telling comments,
The 787 is going to be unbelievable…going to be exciting what we’re doing with it and where we’re going with it.
That’s not new but knowing that he’s on the inside and can see more about the potential routes makes me excited, too.
To the point of loyalty and the future of the experience it was interesting to hear discussion of how they want loyalty to be not to the mileage program but actually to the carrier and the in-flight product. They want loyalty to be focused on actually doing right by customers rather than being focused on rules and policies. That came out explicitly in the discussion about the upgrades and not wanting agents to be policing why the upgrade should be processed or not, for example, and it came out explicitly in one of the closing comments offered up:
I want you to be loyal because you know United will use common sense to take care of me.
It is going to take a while to build that level of comfort with many customers. Whether due to issues with agent training on the new platform, inconsistent application of policies or just the typical variances in terms of in-flight crew experiences, it is never going to be perfect. But the company has quite an up-hill battle in front of them on the trust and common sense front. It will be interesting to see how that develops.
Posted by Seth on April 27, 2012 under frequent flyer, News, points |
Last night’s Freddies Awards ceremony was, as always, a lot of fun as an event. I’m not quite as focused on who won which awards as some of the other folks here on Boarding Area (read their reports here, here and here) but I was at the event and I did see a few interesting trends, at least with respect to how social media played in to the awards program.
Delta Airlines won an award at 9:42pm. Mere moments later they had a tweet out about the win:
Of all the programs which had a win, this was the only company at the event tweeting it live. Kudos to them for being involved at that level.
Next up was an entertaining response to a tweet I posted. I was (and remain) somewhat surprised that Hyatt didn’t see better popularity in the voting. I can certainly come up with theories as to why but that isn’t really my point. Within mere moment of sending a tweet mentioning Hyatt (no hash tag or @ mention) their main account was following me. Good, I suppose, in that they are staying on top of mentions of their brand, even at 9pm. Bad, I think, in that the value of that engagement isn’t particularly great.
Finally, I was quite impressed to see that Baltic Air won two awards in the night. I give them a lot of credit for getting out the vote, as a very small carrier based in a very small country, And I think that the bulk of the credit for those wins goes to their social media strategy. They have a strong recent history of being very involved in the social media sphere (read more here and here). This was clearly a case of the social media efforts working to bring in real rewards to the company through their vote drive efforts.
Posted by Seth on April 26, 2012 under frequent flyer, points |
I’m sitting in on the Airline Information Spring FFP event today and absorbing a tremendous amount of information from both the programs themselves and the consulting and services organizations which exist around them to help make the all the points actually have value. There have been panel discussions, keynotes and product pitches and synthesizing all the data will take some time but I was particularly intrigued by one comment I heard and thought it worth sharing.
The manager of loyalty for a pretty big airline was commenting about how their program has shifted the tone of their marketing to a number of members recently. After hearing through interviews and focus groups that many members described themselves as "only a silver" or such it became clear that, while it is important to have customers who strive to higher tiers, the programs need to do a better job of having some members embrace their status at lower tiers.
Much of the segmentation comes from looking at who is actually close to reaching that next status level or if the company can incent them to reasonably make that stretch versus customers who will never get there. In other words, tiers within the tiers. Marketing to a customer who barely reaches the 25K miles level every year will be very different from that focused on a customer who is at 40-45K annually. And the marketing also can shift based on the revenue model those customers present to the company.
This is hardly a ground-breaking revelation, but it is still interesting to hear how the airline programs are working to implement it. Even more interesting was hearing about the push-back from the sales side of the house when the loyalty folks tried to explain that they didn’t want to push on some customers so hard. At least for the airline relating the story, however, the results were quite positive.
Turns out that knowing your customer well is, in many cases, an even better marketing tool than dangling status level in front of them.
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Posted by Seth on April 25, 2012 under frequent flyer, points, Wandering Aramean Travel Tools |
It was a couple weeks ago, sitting at a restaurant with The Points Guy in Singapore and chatting about my travel tools that I said I wasn’t going to bother developing an award search tool for Star Alliance flights because there were already many others on the market and it wasn’t worth it. So it is something of a surprise even to myself that I’m announcing today the availability of Star Alliance award searches via the Wandering Aramean Travel Tools suite.
Fill in the appropriate information, click the magic button and then sit back and let the good news roll in:
With the "Saver Only" box checked it will only show itineraries that have availability in the discounted award levels. Those are also generally the same awards available to partner programs, though it may vary on United Airlines metal based on whether the MP number used in the query has status associated with it.
Alerts, too!
But what if the route doesn’t have awards available and you don’t want to keep checking back all the time to see if the award space opens up? Well, there’s a tool for that, too. Just click on the My Alerts link and you can configure the system to check for you and email you when it finds seats available. By default all members can have up to 10 active alerts which will be queried daily. First Class members can have up to 50 active award alerts and they will be queried at least 4x daily.
The Alert tool lets you specify specific cabins of service as part of the query. You can easily manage the alerts through the interface:
Should the award be available during the scheduled search time you’ll receive an email that looks something like this:
So come on over and find your Star Alliance award seats today. I’ve got a number of additional features I hope to add, including saved searches and search history online to make things even easier over time.
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Posted by Seth on April 24, 2012 under frequent flyer, points |
One of the biggest limitations of JetBlue‘s TrueBlue program has been the inability to redeem points for anything other than JetBlue flights. Not that their route map is awful, but being able to leverage partners is always a good thing and a place where the TrueBlue program has been limited. That appears poised to change, however, based on a recent email update about the program.
Yeah, it is just one line in a bullet list of various benefits and there is no hard timetable set other than some time during 2012, but it will definitely be a nice benefit to have around. Also, is says "partners" there, leaving one’s imagination to run wild about which other partners might have redemption reciprocity on the horizon. Thus far only American Airlines and Hawaiian Airlines have earning reciprocity announced, and only AA is actually in place. Still, there are a dozen or so other partners out there which can be seen as candidates for such an arrangement.
Which partners would be the most attractive for earning? For redemption? I know I have some that I’m keen to use my TrueBlue points with…hopefully soon.
Posted by Seth on April 23, 2012 under frequent flyer, News, points |
As the integration between Southwest and AirTran progresses the company is working to integrate their loyalty programs. Today’s milestone in that effort was the announcement that points and credits in the two programs are now fungible between the two systems via an online interface.
At first blush this is a good thing. Making it possible for members to combine their points and take advantage of the redemption opportunities available via the partner is a good thing. It also provides an idea of how the company will value the points as the programs are combined in the future as the AirTran brand is retired. All good news, to be sure. That said, there are some bits about the conversion that are, well, interesting.
First up, it appears that Southwest will not permit AirTran credits to be converted to RapidRewards points; they can only be converted to RapidRewards credits. Given the move towards points rather than credits with the new RapidRewards program this doesn’t make a ton of sense given that they have an established ratio, but I suppose it is what it is.
Next, converting points doesn’t extend the expiry of them. They certainly didn’t have to do that but it would have been customer-friendly and useful. Not necessarily surprising, but a bit disappointing.
There is also the conversion factors in place. Under the plan 1200 points will convert to 1 A+ credit. That can be converted back to a RapidRewards only as 1 credit, not as points, but the rough math there seems to be a losing proposition. To get to 8 credits, enough for a one-way trip, would require 9,600 points. That same number of points is worth $160 at the Wanna Get Away fare levels if redeeming as points. Then again, for last minute tickets where the fare is high redeeming 19,200 points to get to 16 credits for a one-way unrestricted award seems to be a better value than getting only $160 worth of Business Select fare value for the same number of points.
Finally, I don’t understand why they chose to display graphics showing one set of numbers and descriptions showing a different set, albeit at the same ratio:
Definitely a bit strange, even if accurate.
Overall, nothing incredibly surprising or revealing in the system set up to handle these transactions. Good for customers in general as it opens up more options.
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Posted by Seth on April 19, 2012 under frequent flyer |
As part of the changes to their MileagePlus program United Airlines announced that top-tier elites would receive compensation to cover the cost of the Global Entry enrollment fee. Alas, like many bits of the new program details the announcement was not followed by any details and, eventually, it was announced that the benefit would be delayed from the launch of the new program in March 2012 while the company continued to work on details. With a new target date of "Q2 2012" there was plenty of wiggle room on the delivery time for the benefit, but some grumbling was also apparent from the elites looking forward to what is a great service for travelers.
The benefit now has a target date of June 2012 ascribed to it. Specifically they intend to offer an enrollment code that can be used to pay the fee to the feds without and expense on the part of the customer. That’s both good (no cash) and bad (not until June) news on the benefit, but there is also an interim solution available for folks who have the status and don’t want to wait, so long as they also don’t mind fronting the cash and not getting reimbursed in cash.
The process is defined on the company website:
All in all, not so bad, really, and a pretty reasonable stop-gap to get the benefit out there while they’re still working on the other details.
Posted by Seth on April 18, 2012 under frequent flyer, points |
I came across an interesting analysis of the airline loyalty market this week, interesting because it is looking at the market from a company perspective and it segments the customers in a rather blunt and direct way. Even more interesting is that the analysis suggests there are segments of the market that the airlines should disincent rather than incent towards repeat business. Are you one of the customers the airlines should be shunning?
The analysis splits customers on two axes, based on average yield (how profitable they are) and NPS (how much they actually enjoy the product). Among other things, this is notable because it recognizes many airlines carry FFers on their books who actually would rather be flying elsewhere, a nod to the drive of corporate contracts, schedule and pricing in booking patterns. Obviously the article suggests that the high yield passengers be taken care of as best as possible. But it also suggests that points have nearly nothing to do with that experience. Giving them a discount (points) isn’t what drives their business so it is better to invest in rewarding them in other ways.
At the same time, the article identifies two ways to deal with the bottom of the yield curve. For the complainers it suggests ignoring them. Certainly a bold move to shun customers but taking the view that some customers simply aren’t worth the costs to provide the service they demand is a step every company must take as it matures and grows. Growth comes with the higher yields, not just by carrying more passengers. For the lower yield passengers who aren’t a complete pain in the ass, the suggestion is that rewarding them via bonus promotions and such is the best approach. In fact, the article suggests that offering bonus points rather than discounting fares is the better way to drive loyalty and revenue for the airline. Hard to argue that point, especially considering how few folks pay attention to all the promos and bonus opportunities out there.
I certainly know where I stand in the matrix when it comes to pretty much all the carriers I fly on: somewhere on the bottom half, veering to the left or right, depending on the program. Where are you with your program of choice? Do you think the designations make sense?
Read the whole report here: http://ourpax.com/uncategorized/ffps-stop-rewarding-the-wrong-customer-get-the-experience-right/.
