Ten Insights about Airline Relationships March 27, 2008
The "secrets" of flyer loyalty now have been published in a research report by Carlson Marketing Worldwide and Peppers & Rogers Group: Building Stronger Relationships with Frequent Flyers, The Secret to Loyalty Program Success. Do you know the ten keys to maintaining air traveler loyalty?
1. Relationship Strength Varies Widely Among Airlines. The customers of the large, legacy carriers generally have lower levels of relationship strength to the airline as compared to customers of the smaller, younger carriers.
2. Airlines Have Different Mixes of "Champions" and "Critics." For most airlines, customers with high relationship strength (champions) outnumber those with lower relationship strength (critics). Compared to critics, champions indicated taking a greater percentage of both business and leisure trips on their primary airline. Nearly 29 percent of champions said they would likely increase the number of trips they take on their primary airline next year, compared to just over 8 percent of critics.
3. Stronger Relationships Fuel Word-of-Mouth Marketing. Customers with high levels of relationship strength are more likely (9.2) than those with low levels of relationship strength (4.5) to recommend their primary airline to a friend or colleague (on a scale ranging from 0="not at all likely" to 10="very likely").
4. Integrity Matters—Both for Stronger Relationships and for Better Business Results. Customers who intend to fly the same amount or more on any airline next year and who give their primary airline high marks for integrity (a key measure of the trust component of relationship strength) intend to increase travel on their primary airline at a rate 2.7 times higher than those who gave low marks for integrity.
5. Understanding Customers' Needs Leads to Better Business Results. Customers who agree that their primary airline understands their needs reported booking a significantly greater percentage of their flights with their primary airline than those who disagreed (64 percent of flights versus 57 percent). These individuals were also twice as willing to forego offers from other airlines because of the benefits and privileges they receive from their primary airline's frequent flyer program, and showed significantly higher intentions to increase their share-of-wallet with their primary airline in the next 12 months.
6. Frequent Flyer Programs Do Impact the Purchase Decision. The privileges of frequent flyer program membership were cited by customers as a significant factor—after price and schedule—when choosing among airlines for either leisure or business travel. The better the program, the higher the status (elite tier), and the greater the travel frequency—the more the frequent-flyer program weighs into the decision regarding which airline to fly.
7. Engagement in the Frequent Flyer Program Builds Stronger Relationships and Better Results. Frequent flyer program members who engaged in their primary airline's program in any way in the past 12 months reported significantly higher ratings of the program's quality, higher relationship commitment, a greater willingness to forego offers from other airlines, and a higher likelihood to increase travel on their primary airline in the next 12 months. In addition, travelers redeeming miles for at least one domestic ticket in the past 12 months reported a 20 percent increase in willingness to forego offers from other airlines because of the frequent-flyer program.
8. People Matter in the Perception of the Frequent Flyer Program. Strong correlations exist between customers' opinions of the friendliness and competence of airline personnel and their ratings of not only the quality of the frequent flyer program (r=0.45), but also of the overall performance of the airline (r=0.77) and the intention to increase travel on the primary airline in the next 12 months (r=0.16).
9. Frequent Flyer Program Elite Status Fosters Commitment (But Not Necessarily Trust or Alignment.) Customers having elite status within their primary airline's frequent flyer program show significantly greater levels of commitment to those airlines than those in the base tier or simply not in the frequent-flyer program. On the contrary, non-elite and non-program members showed significantly higher levels of trust and commitment to their primary airlines than elite members.
10. Airlines Must Put It All Together. No one factor alone is responsible for building the stronger customer relationships required to deliver the business results that airlines need today. Airlines must not only design and deliver a hig-quality frequent flyer program, but must also ensure that the customer communications are relevant and timely; that customer interactions with airline personnel are friendly; and that the brand is seen positively by customers as having fair prices and supporting charitable and environmental causes. Some airlines are doing better than others. However, the ultimate prize of customer loyalty will go to those airlines that succeed in putting all the pieces together.
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