In late February, I spoke at the Loyalty11 conference, where a majority of the leading airline loyalty executives gather annually. This year, it was held in Dallas, and I managed to round up some key experts in airline loyalty business – from the stalwart AAdvantage program, to the soon-to-be started AirAsia’s loyalty program. And asked them just one question – what will have an impact on the future of airline loyalty. Here’s what they had to say:

Click here to view the embedded video.

What does the future of airline loyalty programs hold?

Looking through my notes from the conference, here are five indications towards the future (including some quotable quotes from the conference):

1. “Loyalty is no longer defined by the repeat customer” – Tom Klein – President, Sabre
2. There are three customer segments: the satisfied customer, the dis-satisfied customer and the loyalty customer. It’s the first airlines should try to convert to the last
3. Airlines will only get a share of wallet if they have a share of heart
4. The feedback airline loyalty programs get from social media channels than traditional feedback forms – Ryan Green, Southwest Airlines
5. It will be interesting to sort loyalty members by their Klout scores (twitter influence) – Gabi Kool, Voila Rewards

• [Infographic] The future of loyalty programs will be powered by social media
• Five lessons from the most innovative loyalty programs in the world – Inspired from Loyalty 2010
• Three keys to making loyalty programs work for the airline brand of the future
• Is social loyalty the next phase of development for frequent flyer programs?
• The future of airline loyalty – here is what it looks like

I just encountered such a person. His name is Tim Feyer, and just by looking at his last 15 tweets, I’m able to tell a log about him.

1. He’s an Executive Platinum on American Airlines’ AAdvantage
2. He’s flown 100,000 miles in the last two months, almost all on AA and over 3 Mn lifetime miles!
3. He almost always only travels First or Business Class
4. He always uses the Admirals Club
5. He’s engaging with other fliers on Twitter, and actively sharing his own experiences and helping them out

Now, I’m sure American Airlines has a ton of information about Tim in their AAdvantage database – but do they know how active he’s been on Twitter? Probably not. In fact, after speaking at the Loyalty11 Conference and the Social Media in Travel Conference in February/March, I don’t think most airlines are yet able to differentiate their frequent fliers amongst the hundreds of thousands of social media fans and followers they’re acquiring. And that’s where the goldmine is.

Imagine, if American Airlines is able to identify Tim and more like him…here are some of the things they can do:

1. Create a Twitter list of all frequent fliers who do more than X amount of miles per year  -  Tim would probably top that list!
2. Treat this segment differently than other fans – all of their @mentions or comments should be replied to within an hour or two, their praises re-tweeted etc
3. Make special gestures – EG, Tim seems to feel ripped off by parking in Miami – send him some free parking coupons for next time! (learn from KLM Surprises
4. Clear any misunderstandings right away – in his latest tweet, Tim seems to suggest that Admirals Club agent misguided him – why not reach out to him and rectify it?
5. It seems that in case of some fliers like Tim, Twitter or Facebook may be the preferred means of interaction – so, why not complement that with emails? Conversion rate may be higher!

These are just some ideas into the future of airline CRM? What do you think? Take a look at Tim’s tweets, and decide for yourself

• American Airlines’ AAdvantage Facebook Fans grow 84 fold in 54 hours. The most successful campaign ever by an airline?
• Virgin Atlantic’s Vtravelled gets into social gaming – Interview with Lysette Gauna
• Is social loyalty the next phase of development for frequent flyer programs?
• Airlines on Twitter Monthly Report for July 2011 reveals that more airlines have Twitter accounts than loyalty programs
• Randy Petersen of Flyertalk on airline branding – Part 1 of 2

If the smart folks at AAdvantage had run this campaign a week earlier, they’d have surely made it to the Top 10 Facebook Contests by Airlines, which we put out last week. Because the results they’ve achieved in just three days seem phenomenal!

The most successful Facebook contest by an airline, till date?

The loyalty group at American Airlines, AAdvantage, set up the Facebook fanpage on Feb 1. And in the first couple of weeks, they managed to garner 2000+ fans, organically. Then they decided to launch the Mystery Miles campaign to drive membership, and the numbers hit through the roof.

In 24 hours, they went from 2,558 fans to 163,000 and had reached a staggering 210,000 fans at the time of this post, just 54 hours after the campaign was launched. Moreover, the interactions and engagements on the fanpage increased dramatically too, from just 41 likes for one of the initial posts, to over 1,200 likes for one just sent out!

They sure achieved their aim of “increasing their fans”!

“The opportunities to reward our customers through these new dedicated social media channels are endless and we’re delighted to find fresh and innovative ways to connect with our loyal members,” said Maya Leibman, President – AAdvantage Loyalty Program. “Just the click of a mouse lets our members earn miles towards their next getaway or dream vacation. Everyone’s a winner – and what’s not to ‘like’ about that?”

Having studied the industry in-depth in this area, we haven’t come across such a successful, planned campaign by an airline loyalty program yet.

Is airline loyalty the holy grail for airline engagement?

Given the success of this campaign, and having spent the last two days speaking at and interacting with airline loyalty professionals at Loyalty2011 in Dallas, it makes me wonder – is loyalty the area where social media will work best for airlines? The answer is probably yes.

Frequent flyers are already part of traditional airline “communities” – the FFP program databases. They already know the brand. And when airlines engage them using a medium they’re familiar with, the FFP members adopt quickly. This has been the case with jetBlue’s TrueBlue Community, KLM’s Bluenity and now AAdvantage’s facebook fanpage.

For airlines, they’re also able to drive better results through people they know who fly them, rather than trying to distinguish between “ranters” and “real-customers” on Twitter/Facebook. And that’s what makes this combination very promising – loyalty + social media.

What next for AAdvantage Facebook Fanpage?

I’m sure the team managing this campaign at American Airlines did not envision such a tremendous response to their efforts. But now that they’re on course to reach half a million fans in a week or so, what do they do? How do they manage this? Here are some questions that need to be answered:

1. How to distinguish between the one-time “likers” and the “real-fans”?
2. How to set the right expectations for future campaigns, given the first campaign was so generous?
3. How to start driving business from these fans – how many offers is too many?
4. How to scale up the team internally and use the right tools to manage this?

I think this is going to be interesting. I’ll be watching keenly! What do you think? Let’s hear it in the comments and on Twitter (@simpliFlying)

Great job, AA!

• Lufthansa shares love with their 100,000 Facebook fans by giving miles
• American Airlines – do you know TimF10? Re-thinking social media engagement for frequent fliers
• Is social loyalty the next phase of development for frequent flyer programs?
• The future of airline loyalty – lessons from Loyalty11 Conference
• How COPA Airlines drove 50X return on investment from a Facebook app

So then, what should an ideal frequent flyer program look like to make it truly work for the airline brand? Taking inspiration from the best loyalty programs in the world, as well as my own observations from the two conferences in Miami I spoke at last week, here are some thoughts.

What would make me a loyal traveler with an airline?

1. Simplicity – How often do you know exactly what you can redeem from the points earned from your next flight? What if it was as simple as for every $1 spent, you will be able to redeem $0.01 off your next ticket or a partner purchase? I think keeping the earning-burning process as simple as possible would attract many more customers for the airline’s loyalty programs, than currently possible. I think Westjet’s new loyalty program s doing a good job at this.
2. Comparability – Most travelers these days are part of multiple loyalty programs. When I choose to be “loyal” to an airline, I would love it if at the time of booking, I’m shown how many miles I’d earn on that specific flight, as compared to the competing airlines (which I can choose), and what can I redeem those for? This would boost retention, because more customers would “stick” to your loyalty program, than others’. I’m yet to see an airline that does this well.
   



3. Extensibility of benefits to beyond the airport and the plane – Currently, benefits are concentrated in priority security lines at airports, airline lounges and optional upgrades in-flight. How about cultivating new touch-points in the travel life cycle where the elite travelers are pampered online and offline before even traveling. How about allowing them to earn points if they “check-in” on Foursquare at the airline office, or building a travel app like Lufthansa’s MySkyStatus that offer true value to the customer? Airlines like Qantas (screenshot above) and Etihad are venturing in this space.

So, what’s your favorite FFP and why? What would your ideal FFP would look like? One that can be offered by LCCs as well?  Let’s discuss in the comments or over on Twitter (@simpliflying)

• [Infographic] The future of loyalty programs will be powered by social media
• Top 10 branding insights from the best airline loyalty programs at the Freddies 2008
• Five lessons from the most innovative loyalty programs in the world – Inspired from Loyalty 2010
• Is social loyalty the next phase of development for frequent flyer programs?
• Randy Petersen of Flyertalk on social media and frequent flyers – Part 2 of 2

Also part of the event was the Loyalty 2010 Awards for the Most Innovative Loyalty program. The judges had shortlisted the Top 3, and the audience voted for the best. Air Berlin came out tops, though I think each program was very unique. And I share with you here, what makes them so good!

1. Air Berlin’s MyRoute customers earn double miles on their frequently flown routes

Try to solve this problem. You need to get price sensitive customers to fly you on their most-flown routes, which are also the most competitive due to many airlines offering an undifferentiated product on those routes. You know you got to think out of the box when solving this one. And Air Berlin’s Johannes Ganser and Sophie Wennekers, along with their Loyalty Marketing team, did just that.

In April 2009, the airline launched MyRoute where members select their favorite or most frequently traveled route within Europe. On this route, they earn double miles. Simple. And gets the job done.

Not only did this offering help Air Berlin clearly differentiate itself in the market place, which has other credible carriers like Lufthansa, it also increased loyalty for business travellers and commuters – traditionally a Lufthansa stronghold. Not to say, it minimized churn rate too. The side effects have been that Air Berlin can now forecast high-density routes better and there are more return journeys performed. Very innovative indeed.

2. SAS Scandinavian – visualizing rewards to boost redemption

How many times have you logged in to your Frequent Flier Program (FFP) and didn’t know what to do with your points? Frankly, I’ve had that situation many times. SAS solved this for their loyal customers by visualizing the rewards they can get. And it was all personalized too, with each roll-over showing you how many points you needed to redeem an award.

The results? As Thomas Bruhn, EuroBonus Manager shared, 18,000 redemptions were generated from 80,000 visits – that’s a much higher conversion rate than the industry standard. Personalization matters indeed.

3. Swedish Rail – loyalty program from scratch, for a train service

Imagine you’re a senior executive at a government-owned monopoly that runs trains and this is your situation:

• The industry is deregulated and new competition grabs your customers
• Even though you’re the incumbent, you have no customer date, because no efforts were ever required
• There’s no concept of loyalty in the industry, which was more of a public utility previously

How do you deal with this? Frankly, I was very impressed with what Claes Lindholtz of Swedish Rail shared with me, on how he and his team built a loyalty program from the ground up in a very short period of time. It included totally revamping the customer experience, with on-board wifi and iPhone apps that you can point to a landmark outside the train to retrieve its info from Wikipedia (!!). Swedish Rail is now also the top corporate Twitter account in Sweden!

4. Milan Airport – building loyalty at an airport city

Milan Airport’s Vittorino Capobianco opened my eyes to a new category of loyalty programs – those at an airport! At Italy’s largest airport, you earn points for parking, for eating at restaurants, for buying from Duty Free shops and even by using the speed-check-in service!

And you can redeem these for lounges, phone check-in and even free wireless internet. The best part is that you can earn and burn points at both the airports run by SEA in Italy. Certainly something I’d sign up for when I start shuttling to Lake Como once a month =p

5. Payback – the most personalized loyalty program in the world?

Everyone at the conference was stunned by the presentation made by the folks from Payback – the European retail loyalty program. Yes, the basics are earn and burn, but it was the personalization that everyone was impressed by. Not only offers that were sent out highly customized to each individual’s purchase history, the trending data for each individual is also used for market research and developing more products.

Though airlines are still far from such in-depth business intelligence and personlization, I think it’s important to see what’s being done at the cutting edge and how they can adapt that to drive loyalty for their brands as well.

Air Berlin and SAS are setting the standards for airline loyalty program. I must say that I really liked Etihad Airways’ as well, in which I can redeem even my first 3000 miles, for items like USB drives and iPods! Swedish Rail offers lessons to any government owned legacy airline on how to beat the competition. Airports around the world can learn from Milan Airport’s efforts. An Payback seems a decade ahead of its equivalents in airlines. Maybe Aeroplan or The Mileage Company can acquire Payback and we’ll all have a happy life

What do you think about this programs? Is there an airline FFP that you’re very impressed by? Share your thoughts with us here in comments, or over on Twitter (@simpliFlying)

• Three keys to making loyalty programs work for the airline brand of the future
• [Infographic] The future of loyalty programs will be powered by social media
• Top 10 branding insights from the best airline loyalty programs at the Freddies 2008
• Is social loyalty the next phase of development for frequent flyer programs?
• American Airlines’ AAdvantage Facebook Fans grow 84 fold in 54 hours. The most successful campaign ever by an airline?

Popular Location Based Services

If you’re unfamiliar with LBS, here are a few that are popular, including a couple of travel specific ones:

Foursquare - Foursquare is a location based game/application, where users “check-in” at places around the city.  They get points for check-ins, adding new locations, and extra points for multiple check-ins in one day.  Check-ins can be automatically shared on Twitter and Facebook.  They can also become “Mayor” of a location if they have been there the most out of all Foursquare users.  Friends have access to see where you are, and where you’ve been, which can facilitate social gatherings that might have not otherwise happened.

Some companies are starting to use this application to target users by location.  For example, something like this may pop up on your screen: “Since you’re right around the corner from CVS, stop by and get 10% off”.  It’s  a great way for companies to get a relevant message out.  In general, it’s also a great way to increase awareness… the  more people check-in to the location, the more other people see it. Other similar sites include GoWalla and MyTown.

TripIt - TripIt gives users a way to track their travel itineraries  — including hotels, airlines, and more — and share them with their friends.  The application allows you to check-in online, and share detail on social networking sites, such as LinkedIn.  Users also see a history of their activity and statistics about their travel.  You can also add a trip that you are planning, but you haven’t booked yet.

Dopplr - Dopplr is similar to TripIt, in that it allows you to share your travel plans with other people. You can also find travel tips and advice from other travelers.

Leverage LBS as an Airline or Airport

Encourage Check-Ins

One way for airlines and airports to be “active” with services such as Foursquare, is to encourage travelers to check-in at their airline, airport, or even gate.  The benefit of this is that travelers can connect with each other, and you stay more top of mind, and get a free awareness boost, when they post their check-ins using social networking sites.  Or, if a flight is delayed, it will go much faster, if they find a friend to meet up with at the airport.

You could also tie this in with your frequent flyer program. If they check-in and publicize on Twitter or Facebook, they get 5,000 additional frequent flyer miles.

Reward Travelers

You could also run promotions to encourage check ins, with a giveaway for those who have checked in or for the first to check in.  Mayors are also a great source of loyal customers.  Why not make these people feel special by upgrading them to first class, giving them priority boarding, or announcing their name on the flight? For example, “We are proud to have with us today, the mayor of American Airlines.  That means he has checking-in using Foursquare more than any other traveler.  He was upgraded to first class for being such a special customer.”

Unmet Need

When travelers add trips to TripIt and Dopplr without flight information, what a great way to target them at their point of need, and offer them a flight that may fit what they are looking for.  In addition, if they have a flight booked, but no hotel or rental car, you can suggest your travel partners to them.  You can form a partnership with TripIt or Doppler, to be able to communicate with customers, so you can say something like “We see you are planning a trip from Paris to Istanbul.  We have many flights between those two cities.  Click here to search for a flight.”

Leverage  Frequent Flyer Program

A month ago, Tasti D-Lite began a program that tied their frequent buyer car in with social networking.  Whenever points are earned or redeemed, their system automatically sends out an update to social networking sites, including Twitter and Foursquare.  Why not add this to your frequent flyer program, including their frequent flyer balance?  Imagine, if every time someone uses his SAS Eurobonus card, a tweet or a Facebook status update goes out to his friends that “I just earned 5,000 miles flying from Oslo to Bangkok” or “I just got free petrol for 3,000 miles through EuroBonus”. This action will drive awareness, keep you top of mind, and get people talking.

Advertising

Some of these LBS applications, also allow advertising. It could be a very targeted ad, on TripIt or Dopplr.

What do you think?  Can  you see yourself implementing any of these ideas?  Do you have any other ideas? Let’s hear it in comments and over on Twitter (@simpliflying)

• Top 10 Location-Based-Service Initiatives by Airlines (Foursquare, Gowalla, Loopt and more..)
• Randy Petersen of Flyertalk on social media and frequent flyers – Part 2 of 2
• Three keys to making loyalty programs work for the airline brand of the future
• 5 Ways to Incorporate Social Media Into the Flying Experience, and leverage on your “followers”
• [Infographic] The future of loyalty programs will be powered by social media

Frequent Flyers + Web 2.0

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Traditionally, travelers have picked frequent flyer programs for convenience, not always because they are the best program.

But today, they choose a program because of its merits, because the Internet is open and it breaks down boundaries. “Self-selecting… is the biggest testimony of a good program”, Randy claims.

Randy believes that most of the current business travelers are going to retire soon and will be replaced by the next generation that lives and breathes social media. These customers are going to be totally immersed into it, and airlines need to adopt it sooner than later. Exactly the same point I’ve been trying to make in my recent articles on airline branding and social media.

Flyertalk as the next Web 2.0 powerhouse?

Flyertalk, a community for frequent flyers Randy started 11 years ago is one of the most popular of its kind out there. Though Flyertalk wasn’t started as a social media site, it has actually become that, though in a slightly different way. People go to leading social travel websites like Tripadvisor for choosing where to stay for a couple of days. But people go to Flyertalk to decide who to be loyal to. And that is a much more critical business decision in the long term.

Randy goes on to explain how frequent flyer models will evolve in 2009, given the new economic realities.

He also claims that has the best job in the world, and agrees that Mine is the second best (he said it!).

Randy Petersen of Flyertalk on social media and frequent flyer programs

So, do you think Randy have more followers than Aston Kutcher on Twitter? He probably will come close, given how popular he was at the Freddies! Let’s discuss your thoughts in the comments section, or on Twitter.

• Randy Petersen of Flyertalk on airline branding – Part 1 of 2
• [Infographic] The future of loyalty programs will be powered by social media
• [Presentation] Why the future of loyalty programs will be social-media based
• Are location-based services a blessing for the airline brand?
• Three keys to making loyalty programs work for the airline brand of the future