The Death of Loyalty
Two months ago, Delta Airlines announced the most sweeping changes to their Frequent Flier Program in 41 years. The changes included more challenging targets for air travelers to achieve the much-desired status. What used to require $15,000 in annual spending now costs $35,000. These changes also included reduced benefits and additional, more complicated rules and regulations. The reaction to these changes has been nothing short of Outrage. And just who is outraged? Delta’s most loyal customers: Their highest tier Medallions. Like most loyalty programs, the more you spend, the more “loyal” you are. So, Delta rewards these spenders with increasingly expensive titles: Silver. Gold. Platinum. Diamond.
Just listen to what Don Barden (A Delta Diamond) had to say: “In an era where airlines continually evolve their loyalty programs to attract and retain customers, Delta Airlines; new frequent flyer program has sparked significant controversy by turning its back on its most loyal flyers. While loyalty programs are typically designed to reward repeat customers, Delta's new program has taken a different approach. Frequent flyers of Delta will now begin to shop for other airlines, especially internationally. The bottom line is: If Delta doesn’t care about their passengers, why not try someone else?”
The rapid departure of customer loyalty was immediate. Former Delta Loyalists immediately pulled their business (the average cost of a first-class ticket in the US and Canada is $1299!) from Delta and began shopping around. Air travelers who have not flown any other airline in decades became enamored with the competitive service marketplace and better pricing.
Why, you may ask, would Delta make these changes? In short, to incentivize lucrative credit card spending.
The “big three” US carriers generate a large percentage of their profits from their loyalty programs, particularly their lucrative credit card partnerships. Earlier this year, Delta’s SVP of Loyalty said that Delta expects to earn $6.5 billion from its Amex credit card agreement in 2023 and hopes to grow that by roughly 50% to $10 billion per year, by 2028. (From “One Mile at a Time”)
Why do I bring this up? Consumers are already less loyal than ever. Check this:
“Loyalty is lucrative, after all. Consumers spend an average of $132 a month with retailers earning their fandom, compared with just $71 a month among non-fans. If people change where and what they buy due to location, convenience, or faster delivery, then the retailer they had routinely visited lost their loyalty or never had it. “(Forbes)
What should a retailer do? Focus. Here are your keywords.
- People. No matter your pricing strategy, brand promise, or sexy technology, customers still care deeply about friendly and knowledgeable staff. Your team needs to develop CREDIBILITY (that is, good at what they do) and RAPPORT (in other words, likable). Without both, they cannot develop trust, so loyalty is gone. I know, I know, hiring is double tough these days. Still, since this is a reality, you must be good at hiring (let us help you at Mann U).
- Listen. The absolute best way to build loyalty is to listen. We spend too much time assuming we know all about our customers. But when was the last time you heard them? What are they asking for? Where are they spending their money? What else is important to them? Are they engaging with your social media and newsletters?
- TikTok. What? Half of the app users are between 18 and 34. Embrace and engage a new customer—one with significant spending power. PS. The Mann Group is on TikTok! Check it out here.
- Authenticity. The most meaningful way to build trust and engender loyalty is to be true to who you are. Short-term efforts to chase a new promotion or fake your way into sales success will undoubtedly repel the loyalty you seek. Look to engage with your customers even more deeply.
Inc. Magazine put it well in a recent article. They said, “Your job is to be very clear about who your most valuable customer is, and then create an incentive by rewarding whatever behavior makes them valuable. That is, after all, the entire point of a loyalty program in the first place.”
Delta has made a choice affecting loyal customers. Only the future will tell if it pays off for them. My advice to you: don’t take any chances with your most loyal customers!
SUBSCRIBE FOR MONTHLY TIPS AND TRICKS!
Great Mann Group content, right to your inbox.
We hate SPAM. We will never sell your information, for any reason.