If you want true loyalty, buy a dog, was the wry observation of Santiago Ontañon, general manager of Mexicana Loyalty, speaking at the Airline Business/Global Flight Loyalty conference in mid-February.
Along with the 250 other experts in airline frequent flier programmes that gathered at the Vienna event, Ontañon is left wondering what the relevance of these marketing arms really is during a downturn. In such an acutely stressed market, does loyalty exist anymore? Or does it come down to only one thing - who has the lowest price?
The problem is few carriers can be profitable by just charging rock bottom fares. Even low-price leaders like Ryanair increasingly rely on juicy ancillary revenues to widen the gap between breakeven and actual load factors. For virtually every network carrier some form of loyalty scheme is a must. And while some low-fare players don't have a loyalty programme in name, they are in the same game with co-branded credit cards or paid-for cards that allow priority boarding.
Measuring loyalty has never been an exact science, and probably never will be, but few seem to doubt its invaluable role in a marketplace where it is increasingly hard to stand out from the crowd. For a select few, loyalty schemes are huge cash cows. In 2009, for example, the combined Delta Air Lines/Northwest Airlines SkyMiles programme will make an anticipated $2 billion in revenue. The main return comes from co-branded credit cards and by selling miles to partners like hotels or car hire firms.
But whether it is the free Delta scheme with 74 million members or the new pay-to-enter germanwings one with its 200,000 sign-ups, all agree one thing is absolutely critical - customer data. It is perhaps the single most powerful currency that an airline has, but cannot often tap. As Ontañon noted in Vienna the industry has fallen behind in managing the customer relationship: "Airlines know only marginally more about their passengers than they did 10 years ago." His message: it is time to wise up.
But how? Part of the story will be to invest in loyalty systems that can mine data and use it smartly. An emerging chapter is the use of the web. And this will require a leap of faith because any plea to get involved in so-called social marketing via online gimmicks like YouTube, Twitter or blogs will not be a return-on-investment business case your CFO will understand. It doesn't exist, yet.
No, the case is all about getting into conversation with the customer. Customer Relationship Management Lite if you like. David Canty, director loyalty & marketing partnerships at JetBlue Airways, puts it like this: "By definition loyalty is about you knowing who your customers are and having a closer relationship with them. So talking to them man-to-man, if you like, is just fundamental." This comes a lot easier to younger carriers like JetBlue or AirAsia. Knowing where to start at a more mature, legacy carrier is tougher, but not impossible. Delta is having a go. Air France-KLM is going social. It's time to experiment with a medium that remains mysterious in its impact.
It's true that we simply do not know how far the methods of social marketing reach and how deeply they connect. What we do know, and this was confirmed by the survey of marketing experts performed for this issue, is that the use of the internet in its varied forms is at the top of everyone's marketing agenda.
Nobody knows where social marketing is going, or whether it will make us any money. But that's not the point at the moment. The point is to take part in the chatter and, critically, to listen. And yes, some of the comments will be bad and some of them will hurt. But you will be talked about anyway out there on the web.
The point is to take part in the chatter. Some will be hurtful, but you'll be talked about anyway
Strategy Awards 2009
As the nominations open for this year's Airline Strategy Awards, we are pleased to announce that former AirTran Airways chairman and chief executive Joe Leonard (right) has joined the judging panel.
The Awards ceremony will take place on 12 July in London: strategyawards2009.com