Monday, October 3, 2011

Loyalty Programs


Marketing is a business practice that figures out what consumers are interested in and then develops strategies for influencing consumers to become customers. Marketing has grown exponentially from the good old days of print advertising and billboards to robocalls, sidebar and banner ads on social networking sites and commercials preceding the news story you’ve clicked on.

Loyalty programs started out as a good thing that have become, in the instance of airline reward programs, promises that aren’t kept. United Airlines is in the process of merging with Continental Airlines, which means merging their frequent flier programs as well. Just do the math, and you’ll see that the downgrades affecting the lower echelon of loyal elite fliers were inevitable.

Nearly twice as many frequent flier members means that even among the elite, everyone doesn’t get to benefit. It makes sense, from the airline’s perspective, to give preferential treatment to the first class and business class fliers who pay more for tickets and fly more miles compared to economy class fliers. But, the downgrades – from no longer being able to reserve a premium seat at time of booking and only being allowed one free checked bag instead of two – represent promises stretched to the point of being broken no matter how you look at it.

The fact that the fine print says the airlines could change or cancel the programs at any time is no excuse. Depending on technicalities to change the rules while using marketing to raise and nurture loyalty based on promises of rewards is part of what’s wrong with the way that American companies do business. There is something inherently immoral about the scheme. In another context it might be called "bait and switch."

The airlines have a history of breaking promises. We haven’t forgotten the defaulted or vastly reduced pension plans for airline employees and how employees were led to believe during their working years that their pensions were promises of future financial security. The government's Pension Benefit Guaranty Corporation also failed to live up to its promises. Guaranty doesn't mean guaranteed. Words can be manipulated through marketing to mean anything at all.

There are a number of local businesses to which my family is very loyal, even when their prices are slightly or even significantly higher than elsewhere. Why? Because these businesses give great customer service. We can rely on their word; they stand behind what they sell and the services they provide. Their employees are unfailingly polite, competent and honest. These businesses don’t need a separate loyalty program, because by being good at what they do, they keep loyal customers coming back.

1 comment:

Nick Jacobs said...

I think airlines should give more free flights to passengers. They have so many empty seats sometimes and it's a great way to give a reward loyal customers, especially when passengers are disgruntled.