Is social loyalty the next phase of development for frequent flyer programs?

“It is much harder to acquire a new customer, than it is to retain one.” That’s an age-old loyalty marketing fact that is just as applicable to airlines as it is to other industries.

This becomes even more relevant on the 30th anniversary of loyalty programs – since American Airlines launched AAdvantage in1981. The irony is that today there are more airlines on Twitter, 191 in July 2011, than the number of airlines that have loyalty programs – approximately 179.

This reflects that not only are travelers taking to social media rapidly, airlines are responding by proactively engaging them through this medium. So what does this mean for loyalty programs, since airlines have traditionally been only good at driving buzz through social media.

Monetizing social media through loyalty

One of the readers at SimpliFlying wrote to me, “How can airlines monetise social media? Things like brand advocates are all well and nice but how do they add to the bottom line?”

I see a clear monetization. On average, 85% of frequent fliers program (FFP) members have less than 25,000 miles in their accounts. That means they can hardly ever use them for flights. That also means there’s hardly any value they see in FFPs. Giving even 100 miles for sharing trip photos on Facebook can activate a “sleeping frequent flier”.

Not only will the activity for that person go up, without even flying, his earn-burn ratio is likely to increase too. Ultimately, these social actions might earn them real-world rewards too – like free lounge access.

Airlines jumping on the bandwagon – a sign of times to come?

UK-based budget carrier, bmiBaby recently announced a partnership with Gowalla, a location-based network similar to Foursquare, that introduced gold, silver and bronze “pins” not for actually logging miles on bmiBaby, but for “checking-in” virtually to any of the carrier’s 39 airports.

And Air New Zealand started now grants Foursquare “mayors” (those who have checked in more than any others) at each of its airports free access to its Koru Lounge.

These are just starting steps to what might signal a new evolution in loyalty programs. The ultimate goal is to drive loyalty, which requires reciprocation from the customers. The good news is that there are potentially infinite ways (if you’re imaginative enough) of creating a successful initiative. What you need to keep in mind is that most customers will become more loyal based on two things: rewards or recognition (or both).

The benefits of creating a successful social loyalty initiatives are manifold:

  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 a huge opportunity to move away from traditional loyalty programs and offer something disruptive and innovative.
  3. Loyal customers are worth more than new customers (this is true for traditional loyalty program as well).
  4. The biggest benefit: there is very little lag between implementation and measurement. The results can be seen very quickly indeed.

Eventually, airlines can be creating a whole new tier of frequent fliers, who need not earn or burn miles by flying, but through virtual incentives. And this would attract new partners for the airlines, which then drives revenue. Having such an incentive system creates a differentiating factor for the FFP with regard to other programs, which is revenue driving in itself.

Exciting times ahead, on the 30th anniversary of airline loyalty programs.

This article was first published on APEX Editor’s Blog (Airline Passenger Experience Association).

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