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SimpliFlying Featured - The Future of Loyalty is Social
THE FUTURE OF LOYALTY IS SOCIAL Today’s loyal passenger with a problem will not call your hotline to tell you, says Shashank Nigam Tim Freyer was upset. An Executive earned and redeemed, and the address to which that the frequent ﬂyer of today will call or write Platinum member of American to send his frequent-ﬂyer promotions. to them when he has a problem, is living in the Airlines’ AAdvantage programme, Ironic, considering that anyone with an dinosaur age. he had just touched down from internet connection could trip across Freyer’s There’s an age-old loyalty-marketing maxim New York. While usually happy with the Twitter proﬁle and learn that not only is he an that states, “It is much harder to acquire a airline’s service, he felt that an agent at the Executive Platinum American Airlines ﬂyer but new customer than it is to retain one.” As Admirals Club had misguided him regarding that he reached 100,000 miles for the year in just we celebrate the 30th anniversary of loyalty availability on an earlier ﬂight. This was the seven weeks; that he almost always travels in programmes – American Airlines launched second time it had happened in just a few ﬁrst or business class and uses the Admirals Club AAdvantage in 1981 – this is just as relevant weeks and as an active tweeter, he broadcast lounge; that he frequents Miami, Los Angeles as ever. The irony is that today there are more his annoyance. and New York; and, most importantly, that he is airlines on Twitter (185 as of August 2011) American Airlines had no idea that Freyer quick to share his travel experiences – good and than there are running loyalty programmes was upset because he had not called to tell bad – with the connected world via Twitter. (approximately 179). So not only are travellers54 them about it. In fact, the airline had hardly any Had Freyer called the AAdvantage hotline, taking to social media rapidly, airlines are information about Freyer at all, other than his he would surely have been catered to in a jiﬀy. responding by proactively engaging them personal particulars, his sectors ﬂown, miles But any airline loyalty executive who believes through this medium. What does this mean for loyalty programmes, since airlines have traditionally been only good at driving buzz through social media? A recent study conducted by SimpliFlying and Cranﬁeld University, of social-media use by people who ﬂy at least ﬁve times a year, concluded that frequent ﬂyers are twice as likely to post comments and critiques on social media than regular American adults. Moreover, over 80 per cent of frequent ﬂyers are on Facebook and over 60 per cent regularly share photos and videos online, often of their travels. These are trends that airline loyalty programmes need to tap into in order to be of value to today’s socially connected frequent ﬂyer. DRIVING LOYALTY THROUGH SOCIAL MEDIA Even before Virgin America cut the ribbon of its gleaming new Terminal 2 (T2) at San Francisco International Airport, days before it began operating ﬂights from it, there was plenty of “checking-in” going on during the Terminal’s grand opening celebration. That’s because Virgin cleverly set up a social scavenger hunt for guests to discover T2’s innovative features, guided by Foursquare “check-ins”. By virtually “checking in” at diﬀerent locations set up throughout the Terminal, and announcing their presence on social networking sites like Facebook and Twitter, participants earned badges QUARTER 4 / 2011APEX4_54_60_SocialLoyalty_FINAL.indd 54 18/10/2011 13:03
SOCIAL MEDIA A LARGE MINORITY OF FREQUENT FLYERS FOLLOW A MAJORITY OF FREQUENT FLYERS LIKE SEVERAL OF THEIR FAVOURITE AIRLINES ON TWITTER AT LEAST ONE AIRLINE ON FACEBOOK 6.3% + 11 4% + 11 3.7% 6 to 10 5% 6 to 10 24% 1 to 5 53% 1 to 5 66% None 38% None redeemable for prizes. Grown women and men were literally running around the terminal Frequent ﬂyers hoping to see their names on the leader board set up in the main hall. THE FREQUENT FLYER Around the same time, low-cost UK-based carrier bmibaby announced a partnership with PARTICIPATION LADDER* Creators 27% Gowalla, a location-based network similar to (publish content) Foursquare, that introduced gold, silver and bronze “pins”, not for actually logging miles on 55 bmibaby, but for checking in virtually at any of Critics 38% the carrier’s 39 airports. Check-ins earned entry US adult (comment and post) into a lucky draw to win free tickets on the airline. online consumers JetBlue began awarding actual TrueBlue points 13% (good for free ﬂights) and partner discounts Collectors (use RSS or feed readers) 18% 19% for virtual check-ins at its airports via its “Go Places” application on Facebook. Meanwhile, Air New Zealand started granting Foursquare Joiners 28% “mayors” (those who have checked in more 15% (publish, comment, share) than any others) free access to its Koru Lounge, regardless of the cabin class they were ﬂying. However, to achieve major goals for the loyalty 19% Spectators (read, watch programmes, social initiatives cannot be ad hoc, but don’t interact) as has been the case with most of the airlines 54% mentioned above. There needs to be a clearly deﬁned social loyalty strategy that is proﬁt- 33% oriented, not just buzz-focussed. CAN SOCIAL LOYALTY DRIVE PROFITS? * Figures for 2007, ladder and descriptions adapted from Forrester’s NACTAS Q4 2006 Devices and Access Online Survey One of the readers at SimpliFlying.com asked recently, “How can airlines monetise social media? Things like brand advocates are all well and nice but how do they add to the bottom line?” is likely to increase. Ultimately, these social will become more loyal based on two things: There is a strong potential for monetisation. On actions might also earn him real-world rewards rewards or recognition (or both). average, 85 per cent of frequent-ﬂyer programme such as free lounge access. Eventually, airlines can be creating a (FFP) members have fewer than 25,000 miles in These are just initial steps in what might whole new tier of frequent ﬂyers, who need their accounts. That means they can hardly ever signal a new evolution in loyalty programmes. not earn or burn miles by ﬂying, but through use them for redeeming ﬂights. That also means The ultimate goal is to drive loyalty, which virtual incentives. This would attract new they see no value in FFPs. Giving even 100 miles requires reciprocation from the customers. partners for the airlines, which then drives for sharing trip photos on Facebook can activate The good news is that there are potentially revenue. Having such an incentive system a “sleeping frequent ﬂyer”. inﬁnite ways (if you’re imaginative enough) of creates a diﬀerentiating factor for the FFP with Not only will the person’s activity go up creating a successful initiative. What airlines regard to other programmes, which is revenue without even ﬂying, but his earn-burn ratio need to keep in mind is that most customers driving in itself. APEX | AIRLINE PASSENGER EXPERIENCEAPEX4_54_60_SocialLoyalty_FINAL.indd 55 18/10/2011 13:03
SOCIAL MEDIA THREE STEPS TO GET STARTED WITH A SOCIAL LOYALTY PROGRAMME In the SimpliFlying-Cranﬁeld survey, 72 per cent of frequent ﬂyers said that they would join a FREQUENT FLYERS WHO social loyalty programme given the chance. If airlines do this right, there are substantial beneﬁts to WOULD JOIN A SOCIAL 1 be derived for both parties. LOYALTY PROGRAMME Yes THE FIRST STEP is a paradigm Fifty-three per cent of the SimpliFlying- shift in which airlines reward Cranﬁeld survey participants said that they actions taken online – just preferred to check in at locations where they like Virgin America rewarding get virtual rewards from airlines. In fact, 61 72% check-ins at Terminal 2 with per cent are willing to share their positive virtual badges. Such virtual experience with an airline online in return for rewards come at hardly any cost virtual goodies. This ties in well with the fact to the airline, and can be used to that a majority of travellers would pay more to incentivise the frequent traveller to take actions ﬂy an airline based on a positive review by a favourable to the airline. friend, rather than picking the cheapest fare. 2 THE SECOND STEP is to there should be the option to convert virtual give real-world rewards for points into real frequent-ﬂyer miles. No virtual actions. Fans can Pluna Airlines of Uruguay has put in redeem points earned from place a system, called Flip.to, which allows virtual actions, like sharing passengers to share their booking details with photos and videos from friends on Facebook, Twitter or LinkedIn, their trips, with Amazon while they are still in the booking path, after gift cards, priority check-in on the next ﬂight or even lounge access for the they have made the payment, in return for 100 frequent-ﬂyer points. That’s a good way to 28% “most liked” photos. At a point of development, reward virtual actions. 3 THE THIRD STEP to between the real value of a frequent-flyer56 creating a successful social benefit, and the perceived value of a benefit. loyalty programme is A social loyalty tier would make a lot social breakage. Loyalty- more business sense, once the concept of programme managers breakage applies. Very simply, this would have long obsessed about mean a benefit like a virtual badge costs the breakage, which in simple airline much less than its perceived value by terms is the difference the traveller. FREQUENT FLYERS SEEK MULTIPLE BENEFITS BY FOLLOWING AIRLINES ON SOCIAL NETWORKS 50% 43.8% 37% 22.2% 14.2% To get the latest info To stay updated with To get real-time To contact the airline To afﬁrm loyalty about deals and latest news from ﬂight updates and to the airline competitions the airline announcements QUARTER 4 / 2011APEX4_54_60_SocialLoyalty_FINAL.indd 56 18/10/2011 13:03
FACTORS THAT ENCOURAGE FACTORS THAT MAKE FREQUENT FLYERS LOYAL FREQUENT FLYERS TO FLY A TO A PARTICULAR AIRLINE PARTICULAR AIRLINE 26.5% 6% 10. 26 . 23% 23% 3% % 15.6 Reading about friends’ experiences .9% 5.6 2 21 % 15% .6% 27 12 . 11% 7% 14.5% Deals and promotions on Facebook and Twitter 4% 3.9 2 . 21 % 2% 8.8% 15% 38.58 The ability to sit 1% next to a friend or someone with similar interests .1% Good customer service Cheapest fare Good safety record Onboard experience Other Earn frequent ﬂyer points 18 20% 6% 10. 34 16.1% .2% Ability to earn points/vouchers through social media sites % 6.8 1 22. 4% % % 4 1.2 1 ASSESSING THE FUTURE OF LOYALTY 34. Airline’s social 2% media presence 21.1% (viral, videos, games, etc.) 29.2% 4 years old 30 years old DEGREE OF INFLUENCE Very strong 191 179 Moderately strong Somewhat strong Airlines with Not much Airlines on Twitter loyalty programmes Not at all QUARTER 4 / 2011APEX4_54_60_SocialLoyalty_FINAL.indd 58 18/10/2011 13:03
SOCIAL MEDIA A successfully executed social loyalty tier would have a number of beneﬁts, which may be hard to envision with traditional loyalty programmes: 1. A brand advocate with a strong social network could act as a huge multiplier for the airline’s loyalty eﬀorts by getting members from his network involved with the brand. 2. There is very little lag between implementation and measurement. The results can be seen very quickly indeed. 3. There is a sizable opportunity to move away from traditional loyalty programmes and oﬀer something disruptive and innovative. 4. Low-cost and regional airlines that often do not have a loyalty 59 programme to begin with would ﬁnd a social loyalty programme a good one to start with. GET IT OFF YOUR CHEST. Frequent ﬂyer – and even more frequent tweeter – Tim Freyer’s comments on his experience with American are an example of the potential wealth of passenger feedback airlines can engage with via social media CULT RELATIONSHIP MANAGEMENT The biggest paradigm shift airlines will need to come to terms with while building a social loyalty programme is to reward non-customers as well as those who ﬂy often. A person who ﬂies only once a year and then with a cheaper competitor, but jumps to the airline’s rescue during a snowstorm to answer questions on EVERYONE’S A WINNER. bmibaby used social media to offer points for checking in virtually at the carrier’s airports. Facebook may just turn out to be as valuable as a Check-ins earned entry into a lucky draw to win free tickets on the airline top-tier frequent ﬂyer. But the former may not even be in the airline’s customer relationship management information – more than any gurus or expensive create a social media presence, whether (CRM) system. Hence, in order to reward non- studies can provide. It is simply a matter of they will use social tools to engage with customers as well as keep track of them, CRM unlocking it, and with the resources with which customers eﬀectively or merely as another needs to be redeﬁned as “cult relationship social media has armed airlines, there is simply channel to push the same behaviour management”. no longer an excuse for failing to deliver the right becomes a question of culture. The passengers actually ﬂying, along with marketing messages to the right customers all the Talking may create sales, but listening those voluntarily engaging with airlines, contain time, every time. creates relationships, which sustain an within them the most valuable marketing While hundreds of airlines have scrambled to airline in the long run. A one-way email APEX | AIRLINE PASSENGER EXPERIENCEAPEX4_54_60_SocialLoyalty_FINAL_JO.indd 59 19/10/2011 11:48
SOCIAL MEDIA BOOKING BEHAVIOURS “The social era may be frightening for an industry that has traditionally held firm control Where do you go BEFORE you book a ﬂight? over marketing and operations, Facebook 0% but it has also given airlines Twitter 1% the unique opportunity to understand what drives customer 45% Airline’s web actions better than ever before” Travel web 43%60 Travel agent 2.5% list is not a CRM solution, since it doesn’t engage customers, speaking at rather than corresponding with them. But neither is simply having a Twitter account, if the proper communications infrastructure is not established to enable pertinent and useful information to be exchanged in a timely fashion. Where do you actually book a ﬂight? The social era may be frightening for an industry that has traditionally held ﬁrm control over marketing and Facebook 0% operations, but it has also given airlines the unique opportunity to understand what drives customer actions better than ever before. This requires airlines Airline’s web 81% to prioritise social media engagement as a strategic marketing priority, rather than the tactical afterthought Travel web 14% it often is today. The next time Tim Freyer is unhappy, and expresses 1% himself on Twitter, AAdvantage should be able to Phone address his concerns just as if he had called them up on his priority line. All check-in agents, as well as the Travel agent 2.5% Admirals Club receptionist would be aware of these interactions, and be able to make up for any misgivings. That is the future of loyalty. PREFERRED WAYS OF EARNING LOYALTY POINTS VIA SOCIAL MEDIA 10% 8% 15 % 2 7% 9% 13% % % 5% 10 Provide Become the 12 33 15% Contribute 17% 13% 36% 40% % positive Recommend airline’s brand 38% 40% Check in to ideas on the Tweet about 17% feedback the airline ambassador 17% to locations airline’s social the airline about an on social 19% media page to a friend airline media sites % % 17 % 16 5% 2 22.4 28% 18% 17 19% 18% % 27% Strongly preferred Moderately preferred Somewhat preferred Slightly preferred Not at all QUARTER 4 / 2011APEX4_54_60_SocialLoyalty_FINAL.indd 60 18/10/2011 13:04