Comments on: The declining value of loyalty plans

By: Improving New Account Opening

Improving New Account Opening — Mon, 31 Dec 2007 17:30:36 +0000

Loyalty for financial products

…The implication is that airline loyalty programs are failing to meet customer expectations and therefore may not lead to the repeat business that is built into the business model. The question is whether there are things that financial services in…

By: Dan Dickinson

Dan Dickinson — Mon, 31 Dec 2007 14:41:16 +0000

I think there are customers who want points so badly they’ll stay with you in spite of bad service (to a degree, I suppose), just as some people will go to the lowest price no matter how unpleasant the experience (see: 2 Buck Chuck).

Shar’s right to say that good customer experience is important for keeping customers like her, but that doesn’t mean loyalty programs aren’t the deciding factor for keeping a whole other segment of customers.

By: Colin

Colin — Sat, 29 Dec 2007 20:51:54 +0000

@Ron … of course you are right … I just wonder if the promise of widely based loyalty plans are feasible. If the plan contains a promise relative to service expectations, its hard for a Linda, under pressure, to switch on to plan A, B, or C at the drop of a hat. So maybe its the design of the plan that is faulty here.

By: rshevlin

rshevlin — Sat, 29 Dec 2007 16:27:59 +0000

With all due respect, Shar’s story is hardly an example of how the “whole loyalty model is broken”.

It’s an example of how the airline’s business model is screwed up, it’s an example of a really bad customer experience, an example of an employee who may or may not be representative of the airline’s employees, etc.

Don’t get me wrong — I’m not making excuses for AA. But the loyalty plan model isn’t what’s to blame here.

Airline loyalty plans (in particular) are “economic” contracts: The more you fly with us, the more points you get for future travel. (At least in theory). The most frequent flyers should gain some status in terms of other benefits. The fact that “Linda” didn’t bestow those benefits unto Shar is Linda’s fault — not the result of a faulty system.