Create an Ineffective Loyalty Program in Two Easy Steps

  |  May 27, 2004   |  Comments

Good loyalty programs are based on encouragement and rewards, not enforcement.

Loyalty programs are one of those marketing ideas that work extremely well or not at all. I've conducted a lot of research on loyalty programs and reward schedules in the past few years. No doubt, when properly designed these programs can set your company apart from its competitors.

Today we'll examine a loyalty program that sets itself apart due to poor multichannel integration. Plus, it's a chance to skewer another airline (regular readers of this column must wonder if any carriers still actually let me fly with them).

I write this week from sunny (not) Minneapolis, where I'm working on an exciting project with a new client. I flew here on ATA Airlines, an airline I've never flown before. When I checked in and got my ticket, an advertising insert announced its "Honestly Easy Travel Awards" loyalty program.

Admittedly, the reward schedule is simple enough. It starts after you make three ATA roundtrips. Never one to lose miles, or a potential free trip, I called ATA's toll-free number while waiting to board my flight.

So begins the two easy steps to an ineffective loyalty program, courtesy of ATA Airlines.

Step 1: Don't Allow Users to Sign Up

The marketing folks at ATA took a lesson from Henry Ford. Ford was famous for saying customers could have any color Model T, so long as it was black. Similarly, ATA believes customers should be able to sign up for its loyalty program via any channel, so long as it's the Web site.

The stumbling block to following in Ford's footsteps is forgetting Ford had no competition at the time. ATA has a lot of competition. Other major airlines allow customers to declare themselves online, at the airport, through the mail, or by calling a toll-free number.

In ATA's defense, other low-budget airlines maintain this online-only policy as well. In researching this column, I called JetBlue and asked how users can sign up for its awards program. As with ATA, you can only sign up online.

Step 2: Create Loyalty by Forcing Users Away From Other (Better) Sites

Both ATA and JetBlue require you to book flights via their Web sites (and no one else's) to qualify for their awards programs. Loyalty programs shouldn't require users to jump extra hurdles to prove their loyalty. Though both ATA and JetBlue have this problem, ATA's case is more notable for a few reasons.

The first is outside this column's scope and has to do with brand: JetBlue has a fun brand, and I love its Web site. I love its registration process and its messaging. For instance, when registering and being asked to enter email address and password, the user is prompted with: "Don't worry, if you forget your password, we'll help you find it. If you forget your email address, we're both out of luck." A full discussion of how a unique brand can outweigh poor implementation decisions isn't what this column is about (even if it's true).

The second and more relevant problem ATA faces is new customers are often introduced to ATA via other travel Web sites. I learned about it through Travelocity.com. JetBlue doesn't sell its seats on other Web sites. That's too bad, but it also means users must be at JetBue.com to book a flight, which mitigates this problem.

I booked my ATA flight via Travelocity. When I called ATA at the airport to register, I was told in addition to being unable to register over the phone, the flight I was traveling on wasn't eligible for the reward program as it wasn't booked through ATA.com. If you're going to allow customers to buy seats via a third-party channel, you're implicitly telling them you understand their travel Web site loyalty lies with another company (in my case, Travelocity). You can't possibly expect I'm going to give up Travelocity for the privilege of earning ATA miles.

Here, ATA makes two crucial errors. First, it expects in the future, I'll abandon Travelocity in favor of its less-than-optimal Web site. Second, it tells me I already made a mistake as a consumer. My current flight, which I spent money on, will never be eligible for its reward program simply because I didn't buy it at ATA.com.

I'm left feeling upset and like I wasted money. ATA hasn't figured out customer loyalty is something you earn, not something requiring enforcement.

Competing for Customer Loyalty

Ford had it easy in the early years of auto manufacturing. Without competition, loyalty is a no-brainer. Catering to existing user habits wasn't necessary. The transportation industry has changed plenty since those Model Ts rolled off the assembly line in any color that was black.

Low-budget airlines cut internal costs by reducing customer interaction to a Web-only interface. The smarter ones leverage partnerships with larger brands, such as Travelocity, to introduce users to their services and reward programs. ATA made a first right step, while competitors such as JetBlue have not. But if your company opens a partnership door, it needs to open it wide.

By offering its flights on Travelocity, ATA opens the partnership door only slightly, leaving the customer on the other side. I'd book more flights with ATA. I found its service very good. But I book travel through Travelocity. To ATA's way of thinking, that doesn't make me a very loyal customer.

Until next time...

Jack

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ABOUT THE AUTHOR

Jack Aaronson

Jack Aaronson, CEO of The Aaronson Group and corporate lecturer, is a sought-after expert on enhanced user experiences, customer conversion, retention, and loyalty. If only a small percentage of people who arrive at your home page transact with your company (and even fewer return to transact again), Jack and his company can help. He also publishes a newsletter about multichannel marketing, personalization, user experience, and other related issues. He has keynoted most major marketing conferences around the world and regularly speaks at Shop.org and other major industry shows. You can learn more about Jack through his LinkedIn profile.

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