For years, being a triple fudge diamond MVP executive elite was a part of a persons existence, fiber, Twitter bio and maybe even Linkedin profile, like the way people write “proud New York Islanders supporter.” Maybe that’s just me. Go Isles!
When life is constantly, literally, up in the air or crashing onto a hotel mattress, an elite status is a part of you, with the program acting as a blanket of comfort and familiarity while you travel to new or uncertain places.
It’s a belief that you’ve invested in yourself by being savvy with your travel decisions and that as a result, you have a travel brand which cares as much about you, as you’d like someone to. You go out of your way to stay loyal, and hope that they, in turn, treat you accordingly.
For many, it seems those days are over — and programs have only themselves to blame. It’s not necessarily bad either — maybe it’s just calling a spade a spade. Money talks and this whole emotional roller coaster of “loyalty” is more transactional than anyone wants to admit.
Loyalty Programs Are Under Threat
From the jump, let’s remember that loyalty programs are extremely sound and logical concepts designed to extract extremely unsound and illogical behavior from people, as a result of stickiness created. The faster the hamster wheel spins, the harder it is to get off. The faster it spins, the more “extra” people spend.
Historically that was taking the flights with more connections and terrible departure times, just to get priority boarding, or picking the hotel on the wrong side of town, just because they do a great elite breakfast.
They’re designed to extract money from you which you did not intend to spend, or to get you to forgo easier options with competitors, to unlock some kind of benefit. Each “extra” purchase is another win in loyalty world.
After a couple years now when most people weren’t able to keep up pre-pandemic travel levels, when too many brands held onto their money; and familiarity at the local pizza place trumped familiarity at the boarding gate or hotel lobby, many people now feel detached from their elite status, and questioning whether they’ll ever “dive in” again.
With many airlines and hotels more overtly tying money and 360° engagement to loyalty rather than the wink and nod of “you mean so much to us, even though you are a low margin, high maintenance traveler”, that’s all being exacerbated. It’s kinda fair.
The hamster wheel stopped, and a lot of people realized that they were in fact on a hamster wheel, and not in logical control of their travel, after all. That’s actually sound and logical thinking, for a change.
Making things more complicated, once restrictive hotel benefit programs became more publicly available to people, and a la carte services which allow you to add perks as you wish, rather than earn them, have become more mainstream with airlines.
GSTP Premium members have access to hotel booking benefits which trump most mid tier elite status perks, without having to pledge any loyalty or jump through hoops at all. The benefits are similar to those which a mid to even top tier guest would receive, just for booking the right way. Forget going out of your way to earn enough nights!
Marketing Is No Longer Good Enough For People
“But this status comes with 8 suite nights”. An elite status is only as good as the value you extract from it. If the main elite benefit is a free checked bag, but you never check a bag, that’s a problem. If a main benefit is suite upgrades, but they’re never available when you want them, that’s a problem.
In an increasingly metric and data driven world, delivering real, quantifiable results is the future of loyalty. Unfortunately for airlines and hotels, that’s going to mean less of the marketing mumbo jumbo, and more of the nuts and bolts “wins” customers can unlock. Yes, just like video games, people love to ‘unlock’ things.
Unfortunately for “loyal” customers, it means that there’s going to be some fat cut out of the elite ranks to make way for people who drive enough revenue and engagement into the program to justify being able to use suite nights any night, rather than every once in a blue moon.
An upgrade shouldn’t be wrapped and dragged in red tape. Hoops should be set sufficiently so that anyone who earns one, is free to use it with as little resistance as humanly possible.
They unlocked it and they want to have fun with it right away.
When times were good, loyalty programs did little to make benefits more accessible. Instead, the focus was put on safeguarding benefits, so that they “sounded” great, but weren’t often as useful in practice, to help protect revenue.
Now, even with the floodgates on perks and points opened to the tilt, people aren’t bothering en masse. Airlines and hotels have tried just about everything to get people back into their loyalty program wheels, but performance metrics continue to lag.
It’s why airlines and hotels continue to begrudgingly roll out elite status extensions. Without these people even remotely engaged, feeling like there’s something to ‘unlock’ it’ll be even more of a bloodbath than it currently is.
To be clear – I still care about status. I hold top tier elite status with two major competing airlines and top tier with a global hotel group. At least one, if not two of those will go away this year though, if not automatically extended.
If they’re not, I’m not jumping through hoops to regain them. I’m focusing more on easy wins, and only one is creating them for me at present. The things I’d lose from others, I can pretty much just buy a la carte.
There’s A Way Out For Everyone
I love the “game” of loyalty, in part because I feel that I approach it from a logical perspective. I rarely go out of my way to achieve something, and only do, if I know that it will create an “unlock” or “win” for me, that exceeds the value of the effort I put in.
Even in those scenarios, both parties typically win.
They got me to spend more, or ignore a competitor, and the thing I value as a win worth achieving, is mostly a sunk cost for them anyway. The value I perceive to get is far more than what it actually costs them. If I spend extra money to unlock an upgrade, it’s not like they need to build a new hotel or airline seat to accommodate it.
If loyalty programs go back to simple, easy to understand benefits, but present them in a fun, personalized an gamified way, it’s going to be a lot harder to resist than a boring email saying “hey you, earn double points”. Woopdie effin’ do, i’m at home chillin’ with my wine.
That’s where we are today, and it’s not good enough. To do better, loyalty programs need to hit members, like you, in places you already are, and make it painless in every way to benefit. One touch signups, which last forever.
They need to integrate better with daily consumer brands beyond simple credit card rewards and they need responsive and fun apps, with visual call outs and games to make loyalty creative.
Ironically, this was how loyalty started, but the bean counters took too much control, once they realized the power. I’d argue they made loyalty less effective in the process. If you’re feeling disenfranchised from loyalty, you’re not alone. The game isn’t as fun as it once was, as any frequent traveler from the glory days will tell you.
Actually, that’s a fairly straightforward and simple approach! Spent far too long trying to retain a card in order to queue up at the crack of sparrows for a free coffee when there is a perfectly decent and good coffee shop empty next door…
Most of all, loyalty programs need to offer “choice” again.
What good is a free welcome to drink to someone who doesn’t drink?
What good is lounge access for the member, plus one, when traveling as a family of four? Guess what: no good. It either causes fights, abandonment of the perk or the need to beg outside of a lounge for someone to guest the other two in, during what’s supposed to be a relaxing vacation. What fun is that?
Why not retain lounge access for the member and a plus one, but create a game within a game for a set number of buddy passes, or being able to trade away perks you don’t like, for extra ones you do. That way, the whole family sees the benefit of loyalty, which can then actually push people to lean in further!
This is just one of a million examples where one size fits all loyalty is dead.
Ultimately, technology holds the key to most of the great wins ahead, but airlines and hotels are slow to prioritize technology spend in loyalty, even though loyalty was the only thing keeping the lights on during the pandemic.
How good would it be if a hotel loyalty program app allowed you to pick from a series of perks on each stay, based on status, allowing a set number to be guaranteed, rather than “subject to availability”.
To put things in real terms, airlines and hotels are facing existential crises. Many loyalty programs were “mortgaged” during the pandemic to raise cash for the larger business, and in many cases the loyalty programs were valued at multiples of the business itself.
You can’t have one without another, but one has huge debts like planes, or hotels and huge staff numbers, and the other makes money by leading people on epic journeys in search of rewards, where the “money” the earn is points. Loyalty programs are the way out for airlines and hotels, but not the way they’ve been operating.
If those that bought the mortgages don’t want them to go underwater, they need to do more to get people like you (reading this) onboard again.
If the status quo remains, many travelers won’t hop back on the hamster wheel, and will instead become proverbial snipers. They’ll find solutions for each trip on a one off basis, based on price, convenience or location, and put all the other stuff to the side. No loyalty, no problem. I buy what I need a la carte, with the savvy of the internet.
Never Too Late To Make Things Right
Hotels added ridiculous destination fees and devalued points charts. Airlines made everything about price. Accordingly, whether they admit it or not, naturally, they can’t be too surprised when people ditch loyalty to take advantage of a better deal offering more comfort on another hotel or airline.
Who cares about lounge access as a status perk, when you get it “for free” by virtue of flying business class on a deal? The only way to win people back is to build more value for members, not just the businesses which lean on loyalty to survive.
How do you feel about loyalty programs, after the “great pause?”