Comments on: Loyalty and Lifetime Value

By: Case Study: PETA Drives Subscriber Engagement via Integrated SMS Email Campaign

Case Study: PETA Drives Subscriber Engagement via Integrated SMS Email Campaign — Thu, 28 Apr 2011 21:31:51 +0000

[...] mentality that has crippled many marketing campaigns in the past. Mobile marketing plays in the customer lifetime value arena, making the follow-up options to get involved so crucial for the campaign’s [...]

By: Leigh duncan-durst

Leigh duncan-durst — Thu, 11 Dec 2008 06:42:58 +0000

Here's a great WSJ article on Airlines and Frequent Flyer Programs, which is a great supplement/follow up to this article and highlights other aspects of program value/shortcomings. http://online.wsj.com/article/SB122877921525689525.html

By: leigh duncan-durst

leigh duncan-durst — Thu, 11 Dec 2008 06:00:19 +0000

Colin,
Thanks for posting. Everything you have said is insightful and has merit.
I do think that the action of rewarding points as THE reward for lifetime value is a bit lame, as the practice has become commoditized and is now a feature of every program.
I agree with you on these points:
= Loyalty programs are expensive, and as money becomes more scarce, there will be less available to reward loyalty.
- As programs are commoditized, they lose distinction/differentiation.
I’m intrigued by the title of the “great unknown.” I have trouble swallowing the argument that companies cannot measure the results of their loyalty programs… The tools are available for better customer and programmatic mesurement today.
Really, the airlines need a better infrastructure for managing and measuring customer experience that is proactive, not reactive. Unfortunately, they are frought with internal, operational challenges and investing in this when they may be going bankrupt is the equivilent of rearranging chairs on the Titanic.
If you know anything about the SABRE system, you know that while it’s very functional for base operations (ticketing, billing, getting flights scheduled), it suffers from “legacy system” syndrome for anything like “single view of the customer” programs.
While these systems may be the reason for what yoy have labled, “the great unknown,” I’d argue that the airlines that begin to “get it” with regard to customer experience and CLV are the ones that will win customer loyalty in the future.
In the short-term, it’s going to be a fare and schedule game… and those who travel like mad will be the ones that enjoy the perks that follow.
Thanks, Colin!

By: Colin Hatch

Colin Hatch — Tue, 09 Dec 2008 06:25:49 +0000

Leigh ….
I’ve never posted on a blog before but I thought this was an interesting topic and I enjoyed your write-up and perspective regarding airline loyalty programs.
I believe that airlines consider long-term customer behavior, patterns, and brand interaction when designing their loyalty programs, but several strategic factors dissuade them from acting upon their considerations:
1.) Cost. Loyalty programs are very expensive to manage and maintain which can minimize their effectiveness …. particularly now with the state of our economy and the general business environment.
2.) Lack of differentiating power. Due to the visibility of loyalty programs, they cannot be a truly differentiating factor within the airline industry because competitors cannot easily prevent other airlines from simply matching offerings. In other words, when one makes a change, they all make a change and the essence of strategic positioning is to choose activities that are different from rivals.
3.) The great unknown. Airlines which deploy loyalty programs don’t actually know if the program encourages spending or, alternatively, whether frequent flyers are simply more inclined to participate in programs to get rewards for their spending.
Do you think that any of these factors could influence their decisions regarding airline loyalty programs?
Thanks again for the interesting topic and thoughtful responses.

By: Leigh Duncan-Durst

Leigh Duncan-Durst — Wed, 19 Nov 2008 15:19:17 +0000

Paul -
I think what you’ve said is VERY true. What gets me is that the behavior of “limited backup” is a legacy of a day and age where memory was expensive… Today, it’s cheap, and the technology is at our disposal to leverage historical customer data. This is especially true if companies extract the RIGHT data… It would seem that this type of business intelligence within the organization would empower companies with a totally new level of understanding of customer behavior and patterns.
Alas, especially with the airline industry, their ability to access this through main systems (e.g. Sabre) is very limited…The strategy would have to be well thought out.
Thanks for that insight!
Leigh

By: Paul Barsch

Paul Barsch — Wed, 19 Nov 2008 14:42:27 +0000

Leigh, thanks for tackling a non-social media post! Let me provide some color commentary and see if you agree.
1) Many companies don’t have the proper analytics (infrastructure and applications) to gauge and actively measure things like customer profitability, CLV
2) Companies that do have such an infrastructure are often hard pressed to find reasons to keep long term historical data available for analysis. Oftentimes, data after a certain period (say 24 mo for example) are shuttled to tape and never seen again. Of course this policy is different for every company and industry, but you have laid out a great business case as to why such historical data needs to be kept available for marketing analysis.
3) Companies would be well served to consider situations like yours among myriad others, as to why they should keep an active and historical “corporate memory” of customer transactions and profiles. Think of all the questions that can be asked–and answered with a long term historical record of transactions!
Sometimes companies give up “mining” just before they hit the motherlode.

By: Nick Stamoulis

Nick Stamoulis — Wed, 19 Nov 2008 14:20:02 +0000

I think it is a deterioration across the board. Majority of companies I deal with on a daily basis seem to care less and less about everything.