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For those who love miles and points, it’s almost second nature to get or chase status with an airline or a hotel. You have co-branded credit card and you want to make the most of all the perks it offers. You travel for business and attain airline status quite easily. However, is it really worth chasing loyalty programs and the status that they offer? Are there scenarios where it does make sense?
Loyalty Programs and Elite Status
If you look at consumer psychology 101, what status really means is exclusivity. The core idea here is that certain customers who pay more or visit more frequently deserve preferential treatment or additional perks because of their ‘status’.
On the financial side of the business, airlines are willing to spend X amount of dollars on a customer’s repeated business, because they think that the customer will stick around. If you look up the term customer lifetime value, you’ll get a pretty good understanding of why businesses invest a lot in keeping customers once they have them.
Top of Mind Awareness
When you have airline status, airlines know you’re a part of the ecosystem. They try to get you deeper into the ecosystem by activating what they call in marketing terminology as customer touch points. These touch points are basically defined as different ways in which the customer interacts with the airline.
May be you’ve signed up for the email newsletter, you follow them on Twitter or you’ve downloaded the airline app. All these points serve as engagement tools even when you’re not actually flying the airline. The more the touch points, the better the engagement levels, and hence the more the loyalty.
As much as I consider myself a savvy traveler, I feel I may be falling prey to the ultimate loyalty program trap. Every time I plan my travel and look for hotels, I always consider Hilton as top of mind, followed by Hyatt. I’ve been loyal to Hilton for over a decade and have stayed at their properties in 6 continents. I have the co-branded Hilton Amex card, I have diamond status and also keep earning points through the dining program. In short, I’m also a part of the Hilton ecosystem and it’s tough to break out of it.
A loyalty program sends you an email which goes like this: “Download our app and get 20% off on your next hotel booking.” Another promotional email from a restaurant chain may look like this: “Complete your profile and get 20% off on your next check.”
Loyalty programs are constantly in the process of collecting and crunching data. For the customer it may be a simple 20% discount, but for the business, it’s insight into how a customer thinks and behaves. Teams gather and analyze data with regards to these offers. How many of these offers were sent out? What percentage of sign-ups did we get? How many customers actually walked into the restaurant and redeemed the 20% off code?
Each campaign or promotion that you get has a business objective tied to it. Does the restaurant simply want to increase foot falls? Does the airline want to encourage people to fly on a particular route?
Social Media Campaigns
Ever wondered why restaurants offer you a free dessert for just simply liking their Facebook page and checking in? It has a very particular business objective. Firstly, the restaurant get data about who is redeeming these offers and any additional information about them.
Secondly, you the customer become the one who is running a promotion for the restaurant. Instead of spending marketing dollars on running a massive ad campaign, you the customer are recommending the business to friends in your network by checking in on your personal Facebook profile. A simple complimentary dessert is pennies for a business compared to spending on a massive campaign to raise brand awareness.
The Million Dollar Question
So should you really chase status? Well, I’d recommend that you consider just two factors before deciding whether you want to ‘chase’ it.
Firstly, consider your level of organic spend or purchase frequency. If that isn’t enough to get you close to attaining status, then it doesn’t make sense to chase it. Your organic spend or purchase frequency should get you close to attaining status. That’s when it would make sense to book that extra flight or book an extra night at an hotel to retain your status.
Secondly, consider other options that might get you there with less effort. Do you have co-branded cards that give you status for simply having the card? For example, you can have top tier Diamond status simply by having the Hilton Aspire Card. Conversely, it’s not as easy to earn status directly with airlines by having a co-branded credit card.
In short, you need to consider how easy it is to obtain status. Ask yourself if you’re going out of the way or spending extra in order to just attain status that you may not use that often. I always advocate that you must not alter your purchase behavior just because there is a deal. That’s where the business wins and you lose. Instead, focus on maximizing value from loyalty programs to meet you specific travel goals.
The Pundit’s Mantra
I’m very thankful that I’ve have had the opportunity to work on multiple advertising and marketing campaigns over the years. It has given me some great insight into the metrics and objectives that drive marketing campaigns. My love for travel has only helped me understand the miles and points world better from both the customer and business perspectives. I hope this post was able to shed some light on some of the common traps and pitfalls that businesses often set in order to get you to spend more via their loyalty programs and campaigns.
The goal in the miles and points game is pretty simple. It’s two fold. Firstly, earn miles and points as fast as you can with minimal effort. Secondly, redeem miles and points at the best value so that you cant travel farther. I call this the baseline rule that’s the foundation of my credit card application strategy.
What do you think about airline and hotel status? Do you find yourself in a position where you’re chasing status, sometimes for no reason? Let us know in the comments section.