Tim Freyer was upset with American Airlines over a misguided agent. As an active Twitter user, he voiced his complaint online instead of calling the airline's hotline. American Airlines was unaware of Freyer's complaint as they did not actively engage with customers on social media and had little customer information beyond basic details. The document argues that airlines need to develop social loyalty programs to better engage frequent flyers who are highly active on social media and more likely to share complaints and reviews online rather than contact airline call centers.

1. THE FUTURE OF
LOYALTY IS SOCIAL
Today’s loyal passenger with a problem will not call your hotline to tell you, says Shashank Nigam
Tim Freyer was upset. An Executive earned and redeemed, and the address to which that the frequent flyer of today will call or write
Platinum member of American to send his frequent-flyer promotions. to them when he has a problem, is living in the
Airlines’ AAdvantage programme, Ironic, considering that anyone with an dinosaur age.
he had just touched down from internet connection could trip across Freyer’s There’s an age-old loyalty-marketing maxim
New York. While usually happy with the Twitter profile and learn that not only is he an that states, “It is much harder to acquire a
airline’s service, he felt that an agent at the Executive Platinum American Airlines flyer but new customer than it is to retain one.” As
Admirals Club had misguided him regarding that he reached 100,000 miles for the year in just we celebrate the 30th anniversary of loyalty
availability on an earlier flight. This was the seven weeks; that he almost always travels in programmes – American Airlines launched
second time it had happened in just a few first or business class and uses the Admirals Club AAdvantage in 1981 – this is just as relevant
weeks and as an active tweeter, he broadcast lounge; that he frequents Miami, Los Angeles as ever. The irony is that today there are more
his annoyance. and New York; and, most importantly, that he is airlines on Twitter (185 as of August 2011)
American Airlines had no idea that Freyer quick to share his travel experiences – good and than there are running loyalty programmes
was upset because he had not called to tell bad – with the connected world via Twitter. (approximately 179). So not only are travellers
54 them about it. In fact, the airline had hardly any Had Freyer called the AAdvantage hotline, taking to social media rapidly, airlines are
information about Freyer at all, other than his he would surely have been catered to in a jiffy. responding by proactively engaging them
personal particulars, his sectors flown, miles But any airline loyalty executive who believes through this medium. What does this mean
for loyalty programmes, since airlines have
traditionally been only good at driving buzz
through social media?
A recent study conducted by SimpliFlying
and Cranfield University, of social-media use
by people who fly at least five times a year,
concluded that frequent flyers are twice as likely
to post comments and critiques on social media
than regular American adults. Moreover, over
80 per cent of frequent flyers are on Facebook
and over 60 per cent regularly share photos and
videos online, often of their travels.
These are trends that airline loyalty
programmes need to tap into in order to be of
value to today’s socially connected frequent flyer.
DRIVING LOYALTY THROUGH SOCIAL MEDIA
Even before Virgin America cut the ribbon of its
gleaming new Terminal 2 (T2) at San Francisco
International Airport, days before it began
operating flights from it, there was plenty of
“checking-in” going on during the Terminal’s
grand opening celebration.
That’s because Virgin cleverly set up a social
scavenger hunt for guests to discover T2’s
innovative features, guided by Foursquare
“check-ins”. By virtually “checking in” at
different locations set up throughout the
Terminal, and announcing their presence
on social networking sites like Facebook
and Twitter, participants earned badges
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2. SOCIAL MEDIA
A LARGE MINORITY OF FREQUENT FLYERS FOLLOW A MAJORITY OF FREQUENT FLYERS LIKE
SEVERAL OF THEIR FAVOURITE AIRLINES ON TWITTER AT LEAST ONE AIRLINE ON FACEBOOK
6.3% + 11 4% + 11
3.7% 6 to 10 5% 6 to 10
24% 1 to 5
53% 1 to 5
66% None
38% None
redeemable for prizes. Grown women and men
were literally running around the terminal
Frequent flyers
hoping to see their names on the leader board
set up in the main hall.
THE FREQUENT FLYER
Around the same time, low-cost UK-based
carrier bmibaby announced a partnership with
PARTICIPATION LADDER* Creators
27%
Gowalla, a location-based network similar to (publish content)
Foursquare, that introduced gold, silver and
bronze “pins”, not for actually logging miles on
55
bmibaby, but for checking in virtually at any of Critics 38%
the carrier’s 39 airports. Check-ins earned entry
US adult (comment and post)
into a lucky draw to win free tickets on the airline.
online consumers
JetBlue began awarding actual TrueBlue points
13%
(good for free flights) and partner discounts Collectors
(use RSS or feed readers)
18%
19%
for virtual check-ins at its airports via its “Go
Places” application on Facebook. Meanwhile,
Air New Zealand started granting Foursquare Joiners 28%
“mayors” (those who have checked in more 15% (publish, comment, share)
than any others) free access to its Koru Lounge,
regardless of the cabin class they were flying.
However, to achieve major goals for the loyalty 19% Spectators
(read, watch
programmes, social initiatives cannot be ad hoc, but don’t interact)
as has been the case with most of the airlines 54%
mentioned above. There needs to be a clearly
defined social loyalty strategy that is profit-
33%
oriented, not just buzz-focussed.
CAN SOCIAL LOYALTY DRIVE PROFITS? * Figures for 2007, ladder and descriptions adapted from Forrester’s NACTAS Q4 2006 Devices and Access Online Survey
One of the readers at SimpliFlying.com asked
recently, “How can airlines monetise social
media? Things like brand advocates are all well
and nice but how do they add to the bottom line?” is likely to increase. Ultimately, these social will become more loyal based on two things:
There is a strong potential for monetisation. On actions might also earn him real-world rewards rewards or recognition (or both).
average, 85 per cent of frequent-flyer programme such as free lounge access. Eventually, airlines can be creating a
(FFP) members have fewer than 25,000 miles in These are just initial steps in what might whole new tier of frequent flyers, who need
their accounts. That means they can hardly ever signal a new evolution in loyalty programmes. not earn or burn miles by flying, but through
use them for redeeming flights. That also means The ultimate goal is to drive loyalty, which virtual incentives. This would attract new
they see no value in FFPs. Giving even 100 miles requires reciprocation from the customers. partners for the airlines, which then drives
for sharing trip photos on Facebook can activate The good news is that there are potentially revenue. Having such an incentive system
a “sleeping frequent flyer”. infinite ways (if you’re imaginative enough) of creates a differentiating factor for the FFP with
Not only will the person’s activity go up creating a successful initiative. What airlines regard to other programmes, which is revenue
without even flying, but his earn-burn ratio need to keep in mind is that most customers driving in itself.
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3. SOCIAL MEDIA
THREE STEPS TO GET STARTED WITH A SOCIAL LOYALTY PROGRAMME
In the SimpliFlying-Cranfield survey, 72 per cent of frequent flyers said that they would join a FREQUENT FLYERS WHO
social loyalty programme given the chance. If airlines do this right, there are substantial benefits to
WOULD JOIN A SOCIAL
1
be derived for both parties.
LOYALTY PROGRAMME
Yes
THE FIRST STEP is a paradigm Fifty-three per cent of the SimpliFlying-
shift in which airlines reward Cranfield survey participants said that they
actions taken online – just preferred to check in at locations where they
like Virgin America rewarding get virtual rewards from airlines. In fact, 61
72%
check-ins at Terminal 2 with per cent are willing to share their positive
virtual badges. Such virtual experience with an airline online in return for
rewards come at hardly any cost virtual goodies. This ties in well with the fact
to the airline, and can be used to that a majority of travellers would pay more to
incentivise the frequent traveller to take actions fly an airline based on a positive review by a
favourable to the airline. friend, rather than picking the cheapest fare.
2
THE SECOND STEP is to there should be the option to convert virtual
give real-world rewards for points into real frequent-flyer miles.
No
virtual actions. Fans can Pluna Airlines of Uruguay has put in
redeem points earned from place a system, called Flip.to, which allows
virtual actions, like sharing passengers to share their booking details with
photos and videos from friends on Facebook, Twitter or LinkedIn,
their trips, with Amazon while they are still in the booking path, after
gift cards, priority check-in
on the next flight or even lounge access for the
they have made the payment, in return for
100 frequent-flyer points. That’s a good way to
28%
“most liked” photos. At a point of development, reward virtual actions.
3
THE THIRD STEP to between the real value of a frequent-flyer
56 creating a successful social benefit, and the perceived value of a benefit.
loyalty programme is A social loyalty tier would make a lot
social breakage. Loyalty- more business sense, once the concept of
programme managers breakage applies. Very simply, this would
have long obsessed about mean a benefit like a virtual badge costs the
breakage, which in simple airline much less than its perceived value by
terms is the difference the traveller.
FREQUENT FLYERS SEEK MULTIPLE BENEFITS BY FOLLOWING AIRLINES ON SOCIAL NETWORKS
50%
43.8%
37%
22.2%
14.2%
To get the latest info To stay updated with To get real-time To contact the airline To affirm loyalty
about deals and latest news from flight updates and to the airline
competitions the airline announcements
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4. FACTORS THAT ENCOURAGE FACTORS THAT MAKE FREQUENT FLYERS LOYAL
FREQUENT FLYERS TO FLY A TO A PARTICULAR AIRLINE
PARTICULAR AIRLINE 26.5%
6%
10. 26
. 23% 23%
3%
%
15.6
Reading about
friends’
experiences
.9%
5.6
2
21 %
15%
.6% 27
12 .
11%
7%
14.5%
Deals and
promotions on
Facebook and
Twitter
4%
3.9
2
.
21 %
2%
8.8%
15%
38.
58 The ability to sit
1%
next to a friend
or someone with
similar interests
.1%
Good customer service
Cheapest fare
Good safety record
Onboard experience
Other
Earn frequent flyer points
18
20%
6%
10.
34
16.1%
.2%
Ability to earn
points/vouchers
through social
media sites
%
6.8
1 22.
4%
%
% 4
1.2
1
ASSESSING THE FUTURE OF LOYALTY
34.
Airline’s social
2%
media presence
21.1%
(viral, videos,
games, etc.)
29.2%
4 years old 30 years old
DEGREE OF INFLUENCE
Very strong
191 179
Moderately strong
Somewhat strong
Airlines with
Not much
Airlines on Twitter loyalty programmes
Not at all
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5. SOCIAL MEDIA
A successfully executed social
loyalty tier would have a number
of benefits, which may be hard to
envision with traditional loyalty
programmes:
1. A brand advocate with a strong
social network could act as a huge
multiplier for the airline’s loyalty
efforts by getting members from his
network involved with the brand.
2. There is very little lag between
implementation and measurement.
The results can be seen very
quickly indeed.
3. There is a sizable opportunity to
move away from traditional loyalty
programmes and offer something
disruptive and innovative.
4. Low-cost and regional airlines
that often do not have a loyalty
59
programme to begin with would
find a social loyalty programme a
good one to start with.
GET IT OFF YOUR CHEST.
Frequent flyer – and even more frequent tweeter – Tim Freyer’s comments on his experience with American
are an example of the potential wealth of passenger feedback airlines can engage with via social media
CULT RELATIONSHIP
MANAGEMENT
The biggest paradigm shift airlines will need
to come to terms with while building a social
loyalty programme is to reward non-customers
as well as those who fly often. A person who
flies only once a year and then with a cheaper
competitor, but jumps to the airline’s rescue
during a snowstorm to answer questions on EVERYONE’S A WINNER.
bmibaby used social media to offer points for checking in virtually at the carrier’s airports.
Facebook may just turn out to be as valuable as a Check-ins earned entry into a lucky draw to win free tickets on the airline
top-tier frequent flyer.
But the former may not even be in the
airline’s customer relationship management information – more than any gurus or expensive create a social media presence, whether
(CRM) system. Hence, in order to reward non- studies can provide. It is simply a matter of they will use social tools to engage with
customers as well as keep track of them, CRM unlocking it, and with the resources with which customers effectively or merely as another
needs to be redefined as “cult relationship social media has armed airlines, there is simply channel to push the same behaviour
management”. no longer an excuse for failing to deliver the right becomes a question of culture.
The passengers actually flying, along with marketing messages to the right customers all the Talking may create sales, but listening
those voluntarily engaging with airlines, contain time, every time. creates relationships, which sustain an
within them the most valuable marketing While hundreds of airlines have scrambled to airline in the long run. A one-way email
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6. SOCIAL MEDIA
BOOKING BEHAVIOURS
“The social era may be
frightening for an industry that
has traditionally held firm control
Where do you go BEFORE you book a flight?
over marketing and operations,
Facebook 0% but it has also given airlines
Twitter 1%
the unique opportunity to
understand what drives customer
45%
Airline’s web
actions better than ever before”
Travel web 43%
60 Travel agent 2.5% list is not a CRM solution, since it doesn’t engage
customers, speaking at rather than corresponding with
them. But neither is simply having a Twitter account,
if the proper communications infrastructure is not
established to enable pertinent and useful information
to be exchanged in a timely fashion.
Where do you actually book a flight? The social era may be frightening for an industry that
has traditionally held firm control over marketing and
Facebook 0% operations, but it has also given airlines the unique
opportunity to understand what drives customer
actions better than ever before. This requires airlines
Airline’s web 81% to prioritise social media engagement as a strategic
marketing priority, rather than the tactical afterthought
Travel web 14% it often is today.
The next time Tim Freyer is unhappy, and expresses
1%
himself on Twitter, AAdvantage should be able to
Phone address his concerns just as if he had called them up
on his priority line. All check-in agents, as well as the
Travel agent 2.5% Admirals Club receptionist would be aware of these
interactions, and be able to make up for any misgivings.
That is the future of loyalty.
PREFERRED WAYS OF EARNING LOYALTY POINTS VIA SOCIAL MEDIA
10% 8%
15
% 2 7% 9% 13%
% %
5%
10
Provide Become the
12
33
15%
Contribute
17%
13%
36%
40%
%
positive Recommend airline’s brand
38%
40%
Check in to ideas on the Tweet about
17%
feedback the airline ambassador
17%
to locations airline’s social the airline
about an on social
19%
media page to a friend
airline media sites
%
%
17
%
16
5%
2
22.4 28% 18% 17 19% 18%
% 27%
Strongly preferred Moderately preferred Somewhat preferred Slightly preferred Not at all
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