Loyalty programs used to have a different meaning once upon a time when the new travellers were always the target of all discounts and offers. However, as time has shifted, businesses have understood that the customers who shell out more for the products are more likely to be loyal to the brand and hence, rather than volatile newcomers, the attention has been shifted to constant customers. Having said that, the world takes a minute to pose upside down in the business universe.
Hence, understanding the shifting customer sentiment with such trimming of loyalty rewards have played a major role in deciding how and what the royalty program should be. In the age of big data, even happiness and unhappiness can be quantified. This is hardly far from truth as a recent study reveals that aggregation of data across channels to measure the unhappiness of loyalty programs can help you understand where you are going wrong.
An example through an airlines
The study focused on the Marco Polo program introduced by Cathay Pacific airlines. This loyalty program underwent a significant change during 2015 and a study of its effectiveness was required. Hence, the study took upon the analysis of 13000 members, that too of elite band. The study, quite obviously, sought to understand the reasons of unhappiness and departure from the program.
However, the understanding was not straight forward and probably, it is here big data has intervened in the most important manner to provide insight that cannot simply be derived from intuition. Big data helped locate what are the kinds of shifts that may result in the loss of a loyal customer. So, if you could see any of the following utterances, you may need to act fast or you will be one customer less.
The finds of the study
The study showed that whenever a particular airlines is frequently mentioned all of sudden, it is likely to have a negative impact on the existing company. Similarly, if a customer starts enquiring about another airline, the individual is likely to switch programs. In fact, only 10 percent of the total number of elite members had defected from the program after the changes. Surely, it goes without saying that while the study is limited to a particular airlines, such study may well be conducted across various other careers.
In fact, there has been clear cases of customer disillusionment with this sudden change in policy as the loyal but not-so-elite customers immediately shifted to new airlines. Often, customers complain regarding the elitist nature of rewards and the few award positions handed out to the customers. Merged airlines, for example, often lessen award positions and often, the quality of service shifts drastically.
Changing times in airlines
Drop of standards, accompanied by increased passenger discomfort are some of the key factors in turning the loyal customer against you. Hence, once passengers understand that the benefit is reserved for the elite and the basic economy fares come with almost no facilities, there can be a mass exodus. Hence, targeting the elites only may well be a dangerous ploy, unless your customer base is dominated by this class. Hence, expenditure-based programs can lead to shrinking customer base and the lack of customer care in general.
Unless that is your strategy, you should understand that loyalty programs are not an either-or scenario where you either favour the budget traveller or the elite member. Rather, providing the right benefits to the particular section of people can help you keep both sections happy and let your business grow. Follow the insights of big data and your airlines will no longer face the wrath of customers.