In the inaugural survey ("Rising above the Clouds: Charting a course for renewed airline consumer loyalty,") from Deloitte LLP. it was revealed that 72 percent of high-frequency business travelers participate in multiple programs, and over one-third participate in four or more programs. There continues to be a lack of customer centricity, relevancy and engagement in the airline industry; as their programs and focus on the experiences are lacking for the individuals.
"Our survey findings demonstrate that airlines should consider taking a hard look at how they are engaging with their loyalty program members if they want to cultivate genuine brand loyalty," said Adam Weissenberg, vice chairman, Deloitte LLP and U.S. travel, hospitality and leisure leader. "With increasing competition and heightened consumer pragmatism, airlines may need to focus on personalizing the customer experience in a way that makes individual travelers feel special." There continues to be a perception that airlines are challenged to listen to their customers and create a mutually beneficial dialogue with their consumers.
The Impact on behavior – Loyalty programs should be focused on creating a mutually beneficial relationship with their customers. Traditionally airlines have had a perceived incongruous relationship with all but their top customers. Airlines should use reward programs to drive brand loyalty exclusively, yet a remarkable 50 percent of overall respondents are enrolled in two or more airline loyalty programs, with one-third of overall respondents participating in two or more programs. Participation in multiple programs among business travelers increased to nearly 44 percent.
The share of wallet challenge – the opportunity that airlines are missing is to convert or influence in the behavior of the individuals to attain a greater share of wallet from their consumer. Airlines should be creating services and tailoring their loyalty program offerings to consumers in the manner that drives a behavioral change, so when more than one-third participate in four or more programs in the face of recent and potential further airline consolidation questions if true brand loyalty is important?
Are “loyalty programs” relevant - the survey shows two-thirds of overall respondents are receptive to the idea of switching to a competing loyalty program -- even after achieving the highest status level with their current program. So if the highest levels of program participants are considering changing, what about the casual traveler?
The survey indicates the share of wallet for a "preferred" airline is significantly low. Only 44 percent of all travelers and 40 percent of business travelers fly at least three-quarters of their air miles on their "preferred" airline, while nearly one-third of business travelers fly fewer than half of their air miles on their "preferred" airline.
The value of a “relevant program” - the survey reveals that the importance of loyalty programs appears to be surprisingly low and this should be the concern for the airlines. Travelers overall – and business travelers specifically – ranked loyalty programs as only the 19th and 18th most important attribute when selecting an airline (out of 26 attributes), respectively. However, despite their low nominal rankings among overall respondents, loyalty programs remain valuable to high-frequency business travelers, ranking as the second most important attribute – even higher than safety. As such, loyalty programs still remain a viable way for airlines to drive customer loyalty particularly if those airlines can differentiate their programs to stand out from the rest. Yet there needs to be a focus on making the programs more relevant to all of their fliers and attaining a higher share of their share of wallet.
Making them relevant again - The survey details the need for relevancy; according to the survey, characteristics one type of traveler views as being important in a loyalty program, another may view as less important. The value of soft and hard benefits is different between various groups. For example, 76 percent of high-frequency business travelers view more opportunities to earn and redeem points as vital, as opposed to just 64 percent of all respondents. Meanwhile, only 40 percent of all respondents believe access to airport lounges to be important whereas 68 percent of high-frequency business travelers value such access.
Because the survey's overall findings reveal unique and therefore hard to understand (rational and potentially irrational) differences in the behaviors and expectations of the disparate groups of the flying consumer. This underscores a need for differentiated, more targeted approaches to building loyalty; ones that focus on behavior.
What to do - "Bottom line: airlines should consider making their loyalty program rewards personally meaningful," Weissenberg advised. "For example, our research showed that only 38 percent of respondents had a positive reaction when asked whether they would serve as an airline brand ambassador. Airlines need to keep in mind that a flying passenger has the potential to serve as an airline's most effective marketing tool. They should consider providing customized experiences for individual travelers, and encourage loyalty with unexpected and in-the-moment, accessible rewards, to help them not only redefine and reshape the customer experience, but also ultimately build lasting relationships with their customers."
The complete survey can be found here: www.deloitte.com/us/airline-customer-loyalty.