It's Time To Ban Airline Loyalty Programs

Jeremy Webber of Ziba thinks it's time to ditch those convoluted rewards programs and get back to what truly matters: service.

Airlines pioneered the idea of loyalty programs in the early 1980s and variations on the theme have sprung up like mushrooms ever since. So many businesses are plying consumers with rewards, in fact, that gaming these systems has become a little industry unto itself.

I remember when I first started traveling for work and dreamed of reaching "Moon Rock Status"--of skipping the boarding line, upgrading every flight, getting free drinks. There would be smiling flight attendants who knew my name and who would protect the generously scaled front bathroom from the rabble in the back of the plane.

The truth is, airline loyalty programs have become a nightmare, and many can even drag down the overall experience of flying (just check out Tina Fey’s take on boarding calls from Saturday Night Live.) The increasing complexity of these programs has eroded what airlines should be focused on: earning my loyalty by doing a great job of getting me from Sea-Tac to O’Hare. Oh, and also rewarding me when I really deserve it.

Image: American Airlines Junior Stewardess Pin via Ebay

Travel time is interstitial time. Business travel, in particular, is always a means to an end--neither home or where you need to be--but that doesn’t mean it has to suck. Designers can help. Service design, in particular, has things to teach airlines about how to get back to truly rewarding their most loyal customers, and even inspiring genuine new loyalty.

How It All Began: Rewards that Mattered

Intentions were good when American Airlines touched off the rewards avalanche in 1981. The AAdvantage program began with a simple, effective premise: reward loyal customers with a better experience. Streamlining the travel experience for a handful of already-devoted customers cost AA next to nothing, and actually let them double down on the stellar service experience they were already known for. It was a “benefit lead” loyalty program that provided real, tangible value to the customers who chose to do business with AA most often.

That was then, and this in now: eight rounds of boarding calls, striated across different-colored carpets, all ending in a carry-on free-for-all. That’s the tail wagging the dog. The mechanics of loyalty programs have become overgrown to the point of interfering with what’s really best for airlines’ brands.

People Are Loyal to Brands, not Loyalty Programs.

Most loyalty programs do not produce loyal customers. The average American household belongs to more than 20 loyalty programs. Nowadays, byzantine rewards schemes are distanced from the flying experience and may even incentivize users to jump ship to whichever airline happens to be giving away the most free stuff at the moment they’re ready to buy. Is that the kind of loyalty your business is after?

At the airport, altogether too much attention is being paid to the boarding process, which really boils down to a straightforward systems-management problem. With a service design hat on, the solution might not be about making boarding more efficient, but in simply making it better. That could mean slower, but maybe more fun! Disney theme parks remain at the cutting edge on the fun-in-line front by working continuously to solve unsexy problems and acknowledging how people deal psychologically with peak experiences: if the flight is awesome in every way, you’ll forget all about how convoluted the boarding experience was.

Loyalty Programs Are a Business Risk

Loyalty is part of what it means to be human--everyone likes the idea--but loyalty only accrues to brands that offer products or experiences worth committing to. People are happy to invest emotionally in their favorite sneakers, the person "crafting" their latte every morning, a badass pickup truck, or even an airline, so long as the brand is doing right by them. You might be as sick as I am listening to testimonies of undying devotion to Virgin, but businesses who don’t understand what actually makes people feel strongly about their product are missing out.

Image via Shutterstock

Many loyalty programs are now doing more harm than good: Businesses shouldn’t aim to exceed anyone’s expectations until at least consistently meeting them. Yet fostering committed customers may take less effort and expense than one might currently believe. The payoffs don’t have to be huge--they just have to be relevant and timed right. Completely unexpected but well-deserved perks have the potential to pay off in spades. What about a lottery-style upgrade, which rewards one loyalty program member per flight with a first-class seat immediately before boarding? Even something that simple could make us look forward to going to the airport again. Chasing your customers’ loyalty is worth investment and effort, but only if the rewards have meaning within the context of a functioning, healthy transaction, just as in any relationship.

Remember the Bottom Line

Loyalty goes to brands that offer products or experiences that are worth it. If you truly want to inspire devoted customers, here’s a radical idea: why not ditch the “Loyalty Program” and spend all that energy and cash on directly rewarding your best customers?

Upstart independent programs like Belly and Pirq are allowing smaller businesses who excel at service already to do just that. For airlines, focus on designing ways to blow the minds of the one-flight-a-year-family that chooses AA every time, instead of sprinkling mediocre, watered-down rewards on every fickle traveler.

Consider how low-investment, big-payoff incentives could be added into air travel at every stage of the experience: pre-flight, in the air, and post-flight. Offer to bump someone from an overbooked flight to a later one with a $200 travel bribe/voucher BEFORE they get to the airport. Email the flier a 10,000 mile bonus voucher as a reward for keeping cool next to that jittery toddler for six hours, before he or she has even debarked. And keep airline rewards airline-related! Who decided frequent flyer miles should be redeemable for a discount on Microsoft Office, anyway? How about letting us use those points to buy a few extra inches of seat width on the next flight, which is what Seymourpowell’s Morph seating would allow for?

Another often overlooked yet amazing thing about loyalty is that it comes hand-in-hand with forgiveness, and so ends up functioning like a special kind of insurance policy for businesses. If (and when) you screw up, from time to time, some residual loyalty will only help your chances of making amends. It’s also really hard to let someone down if they weren’t expecting anything. Airline rewards programs today are genuinely messing with the experience of travel and it’s only a matter of time before the whole thing gets thrown overboard.

[Image via Shutterstock]

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7 Comments

  • Lloyd Lemons

    We don't need airline reward programs, just better service. And as a side note, we should NEVER allow cell phone use aboard a plane.

  • JJ.Acuna

    Great article. Cathay Pacific's Asia Miles / Marco Polo programme was what AADvantage miles used to be. Its simple, great, straightforward and we love it. They also do a great job of not rubbing it in if you arent an Asia Miles or Marco Polo Club member. However when I travel in the US, I couldnt agree more with US-based airlines mileage marketing nightmares. The color coding et al. is a great example of American Capitalist values gone rogue. Just because you're a paying customer... you're still not equal to everyone else.

  • Peter Mullen

    Loyalty programs? Meh. Don't need them when I've quit flying, mainly because of the absolutely miserable experience of flying and the abhorrent treatment we receive as airline customers. Don't miss it one bit.

  • Anthony Reardon

    Nah, this is an awesome article. The number one thing I have been consulting on over the years is how and why companies should be developing "superior market intimacy". In other words, I'm talking about pursuing the benefits of genuine loyalty.
    You have to respect the semantics. For instance, if you say "social loyalty" today, the term is dominated by tech developers creating reward points, like incentives, coupon promotions, etc. What they are talking about is getting more fans and followers through a smart perk system that attracts, retains, and encourages people to virally distribute. Really, has nothing to do with developing authentic "loyalty".

    Same goes for the airline rewards. So, I caught the news the other night about this huge airline merger, and the question was posed to some high up execs what we could expect as benefit to the consumers...and the one thing that was said was "they should be able to earn or burn their loyalty rewards across the carriers" essentially. What a huge let down and waste of an opportunity to reimagine a company, set a tone, and assert a new competitive position. However, the merging of airlines is more like the trading back and forth of stock anyway, so really has nothing to do with improving customer experiences, and most likely everything to do with leveraging costs.

    It wasn't that long ago though that the travel experience was a red carpet and white glove affair. I mean, you went from carriage to boat to rail car and there was a time when competing on the basis of service became a priority. Air travel history is a good example, because there was a curve it took from letting people commute with mail delivery, to the point it became a high supply industry with scarce demand. The formula was simple, create an experience out of the A to B that would attract increasing demand, and then win people over so they continued to choose you to fly with as more alternatives came up.

    So, that's pretty much gone by the wayside as a priority, but you do see Virgin and some others recognizing the unmet need and opportunity. After you've had the superior experience for essentially a relative price, could you see yourself going back to the inferior one wherever you had a choice? Probably not, that's loyalty.

    A footnote here is the loyalty rewards programs, despite better reasoning, do have a psychological value that should not be underestimated, and probably aren't going anywhere soon. Kind of along the same lines as JCP trying to offer discount prices every day instead of promoting %off sales. You're talking about a first foot forward better value all the time which is a beautiful strategy IMHO, but doesn't work if people don't get what you are doing. If they are conditioned to need to feel like they are looking for great deals when they can be missed and finding them when the window of opportunities could be closing, you cut that thrill out. JCP had the right idea, but they underestimated the dynamics of the system in place, and their execution was horrible.

    Disney BTW employs industrial engineers to design experiences that are both more cost-effective and delightful. I recently saw an industrial design experiment being done for the onboarding experience that pitted an even/odd truncated method against a self-seating method. The measure was time, but I think with a focus on service experience, time would be less the issue, and people would find themselves impressed- even if they didn't realize they were somewhat more inconvenienced by having to cooperate some way. Besides designing right, you can make minor adjustments by really understanding the inner workings of a system and user-experience. All things equal, a simple mint on a pillow could make all the difference.

    Best, Anthony

  • Kyle

    I don't know how much this would work…consistency can be key sometimes otherwise you end up with the "well last time I got…" and "how come he/she gets…"

  • Gwen

    No, no, no! The travel experience starts as soon as you enter the airport area and ends when you leave it. Nothing the writer tried to 'sell' addresses this and sounds like a cherry on a mud pie. One example; imagine my airline doing a stellar job at boarding like you described. It is still done in a truly ugly boarding area with a very unpleasant loud voice coming from the speaker about other flight.

  • railingk

    Fun ideas, many of which could be used without impacting loyalty programs either way. But in the end these are not profitable ideas, and loyalty programs make a lot of money for the airlines.