Why Your Customer Loyalty Program Isn’t Working
Harvard Business Review | March 10, 2015
Aggressive moves by airlines to migrate frequent flyer metrics from miles flown to dollars spent have caused bargain-hunting road warriors worldwide to whine about “disloyalty programs.” A PriceWaterhouseCoopers review suggests roughly 45% of flyers would lose under the new schemes. Conversely, about 40% would benefit.
Flyers taking shorter, more expensive trips, in other words, will reap more benefits than passengers purchasing long-distance discounts. This shouldn’t surprise. Airlines have clearly calculated that customers who spend more are more valuable to them than customers who fly more. The economics are simple and straightforward.
This latest frequent flyer reboot is an example of how the meaning, measure, and management of “customer loyalty” are changing. Nurturing customer loyalty requires a better understanding of its nature, and the nature of loyalty depends on the economics of the business: loyalty to automobiles and mobile phones is qualitatively and quantitatively different than loyalty to hotels and airlines. So serious customer-centric organizations and innovative marketers are decreasingly asking, “How do we make our customers more loyal?” and instead asking themselves, “What kind of loyalty do we want our customers to have, and do we want to have for our customers?”