Edition 6: September - November 2006
Managing customers throughout the membership lifecycle I have always been somewhat surprised when people within airlines and indeed other industries measure the success of their loyalty programme on the number of members within the base and the number of new members acquired during the previous month or year. Since re-launching the Gulf Air Frequent flyer programme some three years ago, we have adopted a different approach to the measurement and management of the programme. Our approach is based on managing key moments of truth within the member lifecycle. This is a more effective means of measurement as it gives a more accurate picture of what the base is contributing to the airline. Acquisition Of course the acquisition of new members is important to any programme, but simply filling a database with a never ending list of records really defeats the point of having a “loyalty” programme in the first place. In order to ensure that the majority of new members reflect our core audience – i.e. premium class passengers, much of our acquisition efforts are focused on board. Seat back application forms allow passengers to enrol onboard and earn miles for the flight they are enjoying. Activation A member on the database, who has never flown with Gulf Air, represents nothing but a cost to the airline. It is therefore imperative that we activate them. The activation of new members is clearly helped by our on board focus towards acquisition, and all new members do of course receive a generous bonus on their first flight. But what about those members who have joined, yet never flown with Gulf Air? We thought it was vital to target members who had joined the programme but not flown within nine months of their enrolment. Surely, you don’t just join a programme for fun. Our targeted mailings have generated pleasing response rates of between 9% and 15%. More importantly once we’ve activated these members we can then continue to enjoy an ongoing dialogue with them. Reactivation Sometimes circumstances do change and a members travel behaviour does alter. However, ensuring that we keep Gulf Air top of mind with our members is important, particularly as 60% of frequent flyers are members of three or more programmes. To ensure members remain active, we target them after a period of inactivity inconsistent with their tier status. Gold members for example are targeted after three months without a flight activity, whilst Blue tier members receive their communication after nine months. Again these mailings have generated extremely positive response rates of up to 85% amongst our top tier – perhaps this should not come as a surprise however the ongoing dialogue is vital in building the bonds of loyalty. Share of wallet So we have acquired a new member, we have activated them and we have ensured that they remain active through targeted mailings. We are beginning to build a picture of these members and their travel patterns. The goal of any loyalty programme is to encourage increased business, not simply reward existing business. The key to this is data. A frequent flyer database is a gold mine of information that can be analysed and segmented to help us target and incentivise customers. We know that members are enrolled in other programmes, so it’s not about getting people to fly more often, it’s about making sure members choose our airline rather than the competition. In 2004, we ran a campaign that simply asked members to fly twice as often in Business or First Class compared to 2003 – in return they were offered 30,000 bonus miles. The 17.8% response rate and the 11,000+ additional sectors generated illustrated two things – firstly the value in running some very simple data driven campaigns, and secondly the potential that exists in securing additional share of wallet. Retention Ensuring members continue to value their membership is one of the key tasks for any programme manager. Keeping the programme fresh and innovative is important, as are timely and relevant communications. Most important however is that we deliver on the promises we make. We have developed two simple communications that ensure members make the most of their membership, so that they can enjoy the benefits and rewards they have earned. The first of these is a simple communication sent to members on the cusp of achieving an upgrade to a higher tier, or within striking distance of retaining their elite tier status. Nothing can be as frustrating as striving to achieve the goal of elite tier membership only to fall at the last hurdle and members who do fail to achieve their goal are more likely to switch to another programme. Our communication, sent 2 months prior to the end of the members’ year, simply advises them that they are within 200 loyalty points of achieving their goal. 85% of them do achieve their upgrade or retain their tier status and their continued loyalty is secured. The second communication focuses on the other end benefit of frequent flyer membership – free flights. Our reward threshold mailings are sent to members whose mileage balance has reached a level by where a new reward option is available to them. The mailings are segmented by region so the messages and mileage quoted is relevant to the individual members. Highlighting to members that a reward is available to them clearly increases our redemption rates. But perhaps even more importantly it generates significant goodwill towards the programme. By focusing on the key moments within the customer lifecycle rather than just acquisition and membership figures we have been able to not only enhance the relationship we have with our members, we also have a far deeper understanding of the value of the programme. * * * Read similar FFP Online articles on customer management: Loyalty Manager Profile: Transforming Transactions into Relationships Featuring Brian Bartolo, Program Manager, Air Malta WHITE PAPER: Airline Customer Loyalty Management Oracle Corporation
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