Analytical Models of Travel Loyalty Programs

Analytical Models of Travel Loyalty Programs

Loyalty programs traditionally use tiers to segment customers. Each tier is intended to represent a group of customers with similar behavior and value. Tiers, though effective as a recognition and marketing tool, are however created based on only a few aspects such as points earned or amount spent during a finite period like the last one year. This makes them short term and reflective only of the transactional characteristics of customer behavior. The value of a customer to the loyalty program needs to be looked at from multiple perspectives and short term transactional behavior is just one of these views. There are existing frameworks like the RFM model which attempts to attach a value score to customers based on various aspects of their behavior. But these models are generic and hence there is a need to define models that take into consideration the specific characteristics of the travel loyalty domain. This paper discusses two such models that are attuned to the travel loyalty business – Customer Engagement Index model and Customer Value model.

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Gamification in Loyalty

Gamification in Loyalty

The term gamification refers to an approach where techniques of game design are employed in a non-game context to drive engagement and promote positive behaviour. It has been used in various fields such as employee performance management, training, and customer engagement to varying levels of success. Gamification became popular around 2011 when Gartner projected it at the peak of the hype cycle of emerging technologies. Since then, we have seen it climb the crest of expectations and slide down into the trough of disillusionment. Come 2015, gamification is no longer on the chart of the Gartner hype cycle. Does that mean gamification is another of those hypes that never delivered on its promise? Or did it just lose its prominence with the arrival of a much broader digital strategy? This paper examines the aspects that made gamification a hype and its much debated pitfalls in the context of loyalty and customer engagement. It aims to explain how gamification can still be a viable strategy.

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Revenue based Frequent Flyer Programs

Revenue based Frequent Flyer Programs

Mr Liu Yiqian, a Chinese businessman and art collector, paid a whopping $ 170.4 million through his American Express Centurion Credit Card to buy an artwork at a Christies' auction. The transaction earned him 2 billion American Express points (approx. 32 million FFP Miles) enough to do 733 LON – NYC roundtrips in First Class. For a moment, let us assume that AmEx awards loyalty points on the basis of the number of credit card transactions, Mr Yiqian would have earned the same number of points as any one could get for buying grocery at Walmart. Such a strange parity in awarding points based on number of transactions rather than the value of transaction may appear strange, though not unfamiliar. Since inception, airline frequent flyer programs have followed a similar approach where in the number of points are awarded based on distance travelled rather than amount spent. The airline paradox strangely worked well for the given macro and micro conditions of the time.

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The Power of Airline Corporate Loyalty

The Power of Airline Corporate Loyalty

Airline industry being very vibrant and with Airlines trying to standout from their counter parts to attract/retain customers, paradigm has shifted more towards Airline Loyalty initiatives. Loyalty programs are considered to be the differentiating factor that attributes to the success of an airline, leading to huge investments in the field.

Furthermore, Loyalty Programs have proven to be one of the major profit centers for most of the Airline companies, resulting in the emergence of Loyalty as a separate operational division. Same has led to the advent of more loyalty initiatives in the industry – exploring more turfs to play on.

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