How Airlines Are Using Flexible Redemption Options To Supercharge Their Loyalty Programs
As airline loyalty programs have become more sophisticated, and travelers’ expectations have evolved, many airlines are experiencing significant revenue increases and improved customer satisfaction – thanks to these loyalty programs.
It’s no secret that an airline’s best customers are among the top tier of their loyalty program. However, less frequent travelers and lower point balance members are also vital components to their growth.
The challenge for many airlines is creating more meaningful engagement among all customer segments and finding profitable ways to offer non-traditional redemption options to both high and low point balance members.
Changing loyalty program needs presented a challenge for one of our customers – a successful full-service carrier with an 80-year track-record of providing passengers with excellent customer service.
Their loyalty program wasn’t growing. Lack of loyalty innovation combined with an outdated traditional miles-only redemption model had created a plateau. The airline employed Switchfly’s loyalty solution that included miles-plus-cash options, and the results were rapid and very positive.
A boost in bookings Bookings made by loyalty members using miles-plus-cash involved 50% more miles and a 27% increase in the value of each booking.
Engaging lower mileage members earlier in the process The average starting miles balance for bookings decreased by 60%, indicating a much lower threshold for engagement.
Redemption options improve customer satisfaction The average number of miles redeemed per booking for loyalty members increased by 24%.
Flexible redemption options encourage more bookings
The three-month pilot program examined the financial benefits of offering a miles-plus-cash redemption option to customers, enabling them to redeem their miles, and combine them with cash. This increased the value to loyalty members, as well as the net profitability to the airline.
The result yielded revenue gains across several key metrics. Loyalty program members who used the miles-plus-cash option spent significantly more on each transaction. The airline increased bookings – and the package value was substantially higher.
The business of point value
After the deployment of Switchfly’s loyalty solution, the airline was able to set a retail point value for its currency. The airline can change the redemption value, or miles value, at any time. This allows the airline to control purchase costs and ensures that margins are respected.
Download our case study for more information and contact us to learn how your airline can increase conversions and bookings by offering different customer segments the option of using miles-plus-cash.