Best Practise Profile: TAM’s Programa Fidelidade
Launched in 1993, Brazilian carrier TAM’s Fidelidade Program, was nothing but company founder Captain Rolim Amaro´s wish to know customers better. Then a regional airline connecting passengers from São Paulo´s central airport to many central smaller airports in the main business towns in Brazil, TAM was already making itself notorious, precisely due to his presence on the boarding gate shaking hands, greeting and exchanging his business cards with passengers. Pretty soon his rollodex was loaded with rich information about his customers. Also, because he was at the boarding gate every day, he had a fairly good idea of how often this or that customer took this or that flight.
It didn´t take him much to realize that he had all the ingredients to bake his own FFP. He just had to add his special touch: do it better, be creative and do it before his competitors. So the program was born with points instead of miles as currency. For each segment flown the customer earned 1 point. Every 10 points earned could be exchanged for a free segment- any segment the customer chose, a very simple rule. How did they know they were entitled to a free segment? An “invitation”, in the format of a voucher, was mailed to each customer as the 10 points were earned. All vouchers were signed by Captain Amaro as a way of saying “thank you” and of showing appreciation for that customer’s business.
About 12 years and 3 million award tickets later, TAM´s Fidelidade Program has reached a mature state. The initial fly-ten-legs-get-one-leg-free engine is still in place, as is the no-award-seat-limitation-within-South-America policy. However it now accommodates differential accrual and redemption rules for classes of service, transcontinental flights. Not to mention upgrade perks, access to exclusive and co-op VIP lounges and dedicated check-in counters in all airports. It has over 2,750,000 members, 1/3 of which flew with the company in the last 12 months. The program’s co-branded credit card is also booming, with 140,000 new accounts in the last 18 months - an excellent number for the Brazilian market, especially if you consider the fact that 65% of the cards are in the gold or platinum categories.
The whole company is also in a mature state. In 2004, TAM had a best-ever profit of around US$ 120 millions and, last June, made its second public offer of shares in the Brazilian market to improve investments in the renewal and growth of its fleet. Also for the first time ever there was a company wide performance-based bonus.
The company also grew wiser. Without losing the focus on customer service, TAM decided to re-engineer its relationship with travel agents, responsible for 80% of its sales. For 3 years a dedicated team studied all details of how to use customer information on its most important distribution channel. The company also met with major distributors and listened to their suggestions on how they could use that information. The result was a bold move to develop and implement its own web-based system for travel agents, a successful strategy that decreased booking costs by US$ 20 millions in the last 8 months alone. About 95% of the travel agent bookings are already done on the company´s e-TAM Portal (the “e” standing for enchantment, not for electronic) with GDSs being used mostly for bookings outside Brazil.
But most important of all is that TAM is now ready to start operating its customer relationship strategy, which is being called in the company “TRM” (TAM´s version of a CRM). If the numbers are confirmed for what the company envisions, TAM will once again demonstrate its ability to stay one step ahead of the market. Only this time, it is not going to be as easy for competitors to match what TAM is offering.
TAM Fidelidade Program Facts
- Launched in 1993 – pioneer in Brazil
- Uses points as currency instead of miles
- Simple-to-understand rules for accrual and redemption
- No award seat limitation within South America
- Partnerships with major hotels, car rentals, financial services
- Co-branded Credit Card in Brazil
- Agreements with other FFPs
- Air France/KLM
- American Airlines
- Entry-level (basic benefits)
- Priority at the call center
- Access to specific deals and promotions
- Invitations to events, concerts, theater and movies
- Status reached with 12,000-48,000 flown points in 12 months
- 25% bonus points on flown segments
- Extra 10 kg baggage allowance
- Status reached with over 48,000 flown points in 12 months
- 50% bonus points on flown segments
- Extra 20 kg baggage allowance
- Dedicated check-in counter in all airports
- Preferred boarding
- Access to VIP lounges
- Developed, implemented and operated by TAM’s IT and FFP teams
- Based on Oracle Databank and Java