14th January, 2020
Exclusive rewards, personalized access, a distinguished experience... such initiatives, as indicated by studies, are driving customer loyalty.
It is vital for airlines to focus on the human and digital moments that matter most along the customer journey, rather than just the transactional aspect in order to sustain loyalty.
Scott Robinson, VP of Loyalty Design and Strategy, Bond Brand Loyalty spoke about the same.
By Ritesh Gupta
Ai’s new 2020 conference dates:
23rd December, 2019
Airlines have embraced a number of models over the years to run their respective FFPs - right from being in control internally to forming a subsidiary to opting for a spin-off.
A number of internal and external factors are assessed before finalizing the model and the structure.
It is time for airlines to look beyond a binary discussion around a model for their respective FFPs - one that is generally centred around whether to go for a carve-out option or not.
Ai’s new 2020 conference dates:
17th December, 2019
Ai Editorial: Superapps are now extremely popular in various markets of Asia. Be it for refining their own apps in order to thrive in the data economy or being part of a 3rd party superapp, airlines need to dig deeper to capitalize on the flourishing trend, writes Ai’s Ritesh Gupta
The frequency with which Meituan, a Chinese superapp, or Southeast Asia's highly-used daily services app, Grab, are used for transactions makes them stand out.
In case of Meituan, the total number of annual transacting users on its platform grew to over 435 million by September this year. Companies like Meituan are already eliciting over 25 transactions per user annually on an average basis. Grab has had over 150 million downloads. These apps have already garnered the attention of established travel e-commerce players, including Booking and even airlines such as Lufthansa Group. Such companies have been exploring the superapp model. By being more utilitarian, the likes of Meituan, Paytm, WeChat , Grab, Gojek and others are now described as everyday superapps, with most of them operating at the intersection of hyper-local delivery, commerce, payments etc. And being in the business for five years or so, these apps have also found their way into a relatively low-frequency buy like hotel accommodation or flights.
In its Online Travel 2020 Report, Travelport has accentuated on the fact that OTAs need to deliver immersive experiences by being where the customer is at every point in the journey. It states that a key threat for OTAs comes from the risk of disintermediation from their customers, as the experience with super apps will likely be better.
Learning from superapps
"Our understanding of travel and mobility is no longer linear and transactional," Gleb Tritus, Managing Director, Lufthansa Innovation Hub (LIH) told me in an interaction in August this year. Other than shaping the product, LIH is also evaluating how customers are getting into superapps/ ecosystems and how they end up using it. It is important for airlines to learn from such companies as rolling out omnichannel capabilities into legacy systems isn’t a straightforward task. Learning from superapps would help considering that the fact airlines are evaluating possibilities within the mobility space. They are looking at offering a truly interconnected experience via their own digital assets covering all of the transportation requirements. A key lies in comprehending how a superapp typically tends to improve the traffic for low frequency products, be it for working on entry points for them on the app interface or via cross-selling.
Another critical aspect is constantly learning about users and evaluating the quality of recommendations and at the same time ensuring all of such experimentation isn’t a complicated and expensive process. How to set up a viable recommendation engine that not only entail preferences of different users but also trending recommendations or habitual behaviour? At the same time, how to run high-performance, low-latency operations. For its part, Grab has worked out a microservices architecture set up on data streaming with Apache Kafka. This powers the business as well as paves way for a critical source of intelligence.
Travelport underlines that superapps “are well positioned to continuously engage those who are already part of its ecosystem by introducing new features and functions that make the app stickier”. Also, such apps are leveraging “their data to better target products to customers, at the exact time they need them, and OTAs need to combat this”.
For airlines from their distribution perspective, too, the superapps are a welcome development considering that fact they need to support fragmented distribution, rather than continuously drifting and ending up with a precarious situation where one player in Google ends up controlling the whole travel value chain.
It also remains to be seen how the trend of superapps shapes up outside Asia and lends a new dimension to customer acquisition in the travel e-commerce sector in 2020. A player to watch out for is Airbnb. It is definitely one of those brands that the entire fraternity believes can provide a better answer to the fragmented travel shopping experience. The way Airbnb goes about uniting its staff/ teams across product disciplines, making the most of “creative hacks” or managing complexities associated with product designing, it can provide an answer to when to travel, where to go, and what to do on trips.
Keen on exploring topics related to digital commerce? Ai has planned #AncillaryRevenue Conferences in Berlin, Bangkok and San Antonio in 2020:
12th December, 2019
Airlines are looking at ways to curb illegitimate access to a member's loyalty account and resulting imbalance in a member’s spending or reward activity owing to hacking.
Considering the fact that demand for stolen loyalty currency among the fraudsters or in marketplaces on the dark web is on the rise, the role of machine learning in monitoring high-risk behaviour at account access, purchase and redemption of points/ miles is coming to the fore.
Important aspects that are being explored:
• How to leverage data from the entire loyalty platform ecosystem?
• How to define an apt fraud score limit that points out unusual behaviour?
• How to prepare to identify unrecognised anomalies in transactions?
• How to cut down on the rate of false-positive cases that require manual reviews?
Binay Warrier, Head of Business Development, Loyalty and CRM at IBS Software, spoke about the role of machine learning in keeping a vigil on loyalty fraud.
6th December, 2019
Airlines are evaluating ways to sharpen their respective loyalty cycles, i. e. letting a member earn and burn faster. What makes the game interesting today is how airlines are looking at including members with relatively lower spend or loyalty currency in this cycle.
As airlines dig deeper, they are evaluating a couple of areas for redemption -
27th November, 2019
How are U. S. carriers looking at making their respective loyalty programs more attractive?
Full-service airlines are not only looking at strengthening their ties with their most frequent traveller base, but they are also evaluating ways to make the entire earn and burn cycle luring for the rest of the members, too.
20th November, 2019
Various companies in the travel sector, including airlines, are looking at a subscription-based offering.
Be it for the idea to the development process to managing a subscription product, its technical complexity and above all, the passenger experience, airlines are working on every aspect to excel in this arena. It is heartening to hear that airlines, too, intend to let passenger finalise their own subscription service in the future.
A critical aspect is to not only interact and recommend products for a personalized experience, but consider the delivery of unexpected and unadvertised rewards to look at loyalty in a new way. Experienced loyalty executive Dave Canty shared his viewpoint about the same.
Ai’s new 2020 conference dates: http://www.airlineinformation.org/upcoming-events2/370-2020-conference-dates.html
11th October, 2019
A recent podcast on loyalty, featuring Joanne Ward, David Canty, David Feldman, Alan Lias and Iain Pringle, discussed the significance of less frequent flyers, and how can they propel a loyalty progam even further.
Airlines are trying to dig deep to ascertain what a loyal member looks like beyond their own purchasing funnel. As highlighted in a recent interview with airline loyalty and big data expert, Mark Ross-Smith, if there is not much activity in the air, then why not be a part of an infrequent or a price-conscious traveller's life via activity on the ground? This consideration is starting to stand out in a striking manner in the case of low-cost carriers (LCCs) and how they are going about managing their loyalty programs.
A lot depends upon the business model, destinations covered etc., but typically looking at any loyalty program 80% of the members, if not more, tend to be infrequent flyers or guests. “Obviously they aren’t bringing in the same average revenue per member when compared with other top members they are still a huge group. It is imperative to assess what’s there in a loyalty program, other than price, that can add value, be it for any benefit or contributes in differentiation of the program. They are mainly leisure traveller in most cases,” mentioned Joanne Ward in the podcast.
Podcast link - https://lnkd.in/e5NE7vd
Alan Lias mentioned that it is important to assess what sort of “other” behaviour is relevant to a travel business. It needs to be assessed - are the travellers genuinely infrequent in terms of what any airline has to offer and if they are how does one create relevance for them. By looking at other things they are doing in their lives and by focusing on partnerships how can airlines end up being more relevant in such flyers’ day-to-day lives and potentially help them in achieving their goals.
It was also highlighted that those who fly infrequently with one airline might be flying with other airlines too. Also, a top member of one FFP possibly can have a similar status with another airline. Also, those who are part of a lesser number of programs offer an opportunity to be engaged. Are infrequent flyers more loyal?
A leisure carrier flying to leisure destinations, featuring infrequent travellers, has the opportunity to foster loyalty.
“Infrequent travellers may be most loyal (in the sense they are giving you a sizable chunk of their wallet). They may be flying infrequently, but they may be flying exclusively with an airline,” mentioned David Canty, from his own professional experience in the loyalty arena. Delving into it, he mentioned that by bringing redemption earlier in the cycle in a program and allowing them to redeem a lot quicker, the audience did look out for travelling again with the airline.
As for those travel brands that are focusing on infrequent customers, David Feldman highlighted Hilton’s approach towards opening up their loyalty program. It was referred to as an example (offering members the ability to pay for purchases at Amazon.com using Hilton Honors Points). Southwest was also picked for their penchant to offer value and serve infrequent travellers.
The attractiveness of a subscription-oriented progam was also discussed. One example is Mexican low-cost carrier Volaris’ decision to embrace the subscription model, v.pass.
“(It is seemingly) starting to make a re-entry into a new generation and something that’s resonating,” said Canty.
Agreeing with the same, Joanne said that Amazon has played a vital role in the same with Prime. A lot of retailers are also looking at that. “If you charge something to be a part of a programme, members can be given certain benefits that means more to them. Also as a member for spending $100 on annual membership you want to make sure that you are also getting something back,” she said.
Iain Pringle referred to two set of loyal customers - spenders and savers - one set is all for instant gratification (spenders), and the other tends to save for long-term rewards (savers). A balance has to be attained in a program to appeal to both the set of customers.
Some of the key points that were highlighted:
By Ritesh Gupta
Join David Canty, David Feldman and a host of other specialists from airlines and in the loyalty arena at the upcoming #MegaEvent, to be held in St Petersburg, Florida (29th–31st October) this month.
8th October, 2019
From a travel retailer's perspective, having the right type of friction, with the right action, at the right time is imperative, writes Ai’s Ritesh Gupta
Planning a trip and travelling can’t be termed as one experience. There are multiple sessions and in all probability multiple devices that encompass the planning, buying and consumption of the travel product.
Travel e-commerce players need to find ways to curb friction, especially in cases where one is returning to access an app/ or an account, or where a traveller isn’t able to enjoy an integral feature (like being able to select a seat and pay for it only via a PC and not via a mobile app/ site!).
One of the areas that e-commerce players have been focusing on is trust data from early on, and counting on the same to mitigate risk for future interactions. If travel companies aren’t prepared for the same then they won’t be able to accelerate transactions from returning customers or being in a position to block fraudsters using spoofed or stolen identities,
Before delving into the same, let’s understand why friction shouldn’t be looked upon as a dreadful word.
What is friction?
As LexisNexis Risk Solutions highlights, a frictionless customer journey “doesn’t equate to an absolutely friction-free experience. It’s about having the right type of friction, with the right action, at the right time. You have to figure out where and what that is”. From a shopper’s perspective, friction could be any feature or requirement that hinders their path through the sales funnel. It could be a compulsory registration, wearing form-filling and time-consuming authentication processes.
Some recommendations include:
For example, the trend of subscriptions. It today goes beyond Netflix and Spotify. Mexican low-cost carrier Volaris’ decision to embrace the subscription model, v.pass, exemplifies the same. Be it for the idea to the development process to managing a subscription product, its technical complexity and above all, ensuring the passenger experience isn’t diluted, the airline asserts it is making progress. It is counting on possible benefits – thriving on data of members, stepping up the ancillary revenue generation etc. Just like retailers, travel brands are curating offers or offering incentives to travel shoppers to return and complete their transactions in a frictionless environment.
Interested in loyalty-relatd topics? Join Ai at the upcoming edition of MegaEvent, to be held in St Petersburg, Florida (29th – 31st October)
2nd October, 2019
All airline loyalty programs aren’t the same. Working out an apt program structure, encompassing accrual (mileage-based, revenue-based or a hybrid model), tiers, earn-burn ratios etc., and managing the financial liability is vital.
The business model of a traditional carrier vs. a low-cost carrier differs, so does the aspiration of flying in the first class on a long-haul vs. simply being price conscious when it comes to LCCs, and accordingly economics of loyalty also varies, points out airline loyalty and big data expert, Mark Ross-Smith.
If an airline believes that running a classic FFP that tends to rely mainly on frequent flyers and can be actively engaged via flying benefits, rewards etc., then they might not open up to be a completely digital currency. For their part, LCCs are increasing the utility of their loyalty currency. The focus on letting loyal customers gather and spend their miles as freely as cash is standing out. Certain airlines are also trying to expand their reach, and by doing so, offering their loyalty program members the convenience of shopping on 3rd party travel sites. When it comes to redemption, some carriers in Asia are allowing shopper to redeem their currency on 3rd party marketplaces.
As the mobile-savvy generation gets accustomed to using one app or a superapp for ordering food, commuting, digital payments etc., how are airline looking at fostering loyalty via linking the on-demand services with the earn-burn cycle?