Quit That Loyalty Program Mindset Once and For All
T he term loyalty program is a misnomer in the year 2015, for all intents and purposes; and the time is long overdue to quit that loyalty program mindset once and for all.
Articles from all different kinds of media sources complaining about the present state of loyalty programs — removing benefits, changing their models from being based on distance to being based on revenue in terms of airlines, and introducing dynamic pricing of awards as three of many examples — are relentlessly flooding the Internet and bombarding you with verbiage resembling the end of the world as we know it.
The basic tenet of loyalty programs in their early years was simple when compared to today: patronize an airline or a lodging company; and in return, earn miles or points to be used towards what was then as close to truly free travel as possible — excluding the inherent opportunity costs, of course. Acquire a certain amount of miles and you can use them for a free trip within a defined region; and a certain amount of points will get you a free night in a hotel. Easy to do and simple to keep track.
Theoretically, the company administering the program would gain more business from its customers, which translated into more profits. Everyone wins — right?
Over the years, a major flaw of these so-called loyalty programs was exposed:
Greed: the greed of the customer; and the greed of the corporation.
Customers have devised ways over the years of exploiting the benefits of those programs — whether or not that exploitation was designed but not originally intended by the airline or lodging company — resulting in what could arguably be called the enjoyment of more than their share of benefits to which they were entitled.
Meanwhile, stakeholders have relentlessly held corporations accountable to increase and maximize profits — especially in the airline industry, where people who purchased airline stocks and did not heed the warnings of investors lost significant amounts of money as that industry hemorrhaged billions of dollars over the years. The pressure was on for airlines to simply placate their stakeholders — never mind fulfill the fiduciary responsibility of providing its investors what they want after suffering year after year: a return on their investment.
There was no way companies could survive under those impossible financial circumstances of bleeding cash while “giving away the store” to its customers in the hopes of charting the right course towards profitability…
…ah — but alas, as evident in many other areas of society such as politics, entertainment and religion — an overcorrection occurred. When the airlines started to profit from this formerly-untapped treasure trove of ancillary fees for products and services which used to be included in the price of an airfare, they went from begging for your help to what feels like trouncing all over you before leaving you behind. It did not matter how much or how well you supported them during their lean years. The mantra is “what have you done for me lately?”
One can argue that the customer had that same mantra to the airlines during those years of disappointing earnings reports financial quarter after financial quarter. Evidence of that varies amongst weblogs and Internet bulletin boards — with one glaring and blatant example being the ethics of taking advantage of mistake fares, over which there is still a heated debate after so many years.
Let’s face it: whether as a customer or as an employee in a corporation, there is an inherent trait of the personality of human beings to be selfish and maximize on an opportunity presented to them. That is not to say that human beings cannot also be thoughtful and generous — there are countless examples of that in all aspects of life — but thoughtfulness and generosity are not typically what governs the policies and procedures of both the loyalty program and the behavior of its members. When someone exploits the system — regardless of in which direction or who is the actual cause of that exploitation — it is usually the impetus for action upon the person or entity to counteract that exploitation as a form of protection…
…or perhaps as a basis for a form of exploitation as a response — the overcorrection to which I referred earlier in this article. Either way, it is not just the most greedy customer that suffers the consequences of his or her actions. When the policies of frequent travel loyalty programs are further restricted, usually all of the members suffer the consequences.
I have stated many times in past articles — such as this one as an example — that the current economic climate in which airlines are currently enjoying the earnings of record profits in consecutive financial quarters will not last forever. When the airlines are once again hurting — perhaps not like they did in the past — and once again offer incentives to take part in their loyalty programs and increase your patronage of them, will you accept? Will you remember the days where you felt like your support seemed to mean nothing?
I will be the first to admit that this article is an oversimplification of how loyalty programs and its members have evolved over the past 34 years since American Airlines introduced the first frequent flier loyalty program in 1981, as there are myriad factors and exceptions which one could “cherry-pick” to easily disprove what I wrote…
…but the bottom line is that loyalty programs in 2015 are typically missing just that — loyalty, on all sides of the equation — and the blame can be shared all around.
It is important to maintain perspective in life and adjust expectations to mitigate disappointment. Choose your battles wisely. Remember: loyalty programs are administered by for-profit entities; and you are a customer who is free to shop around. The best thing you can do is to quit that loyalty program mindset once and for all and do what is best for you in terms of travel — without being greedy, of course.
Photograph ©2014 by Brian Cohen.