MediaPost: Factory 360’s Michael Fernandez on Delta’s Travel Rewards

Delta Airlines made a dramatic move to revamp its loyalty program and is now rewarding customers based on how much they spend. Smart move. The legacy carrier is, not surprisingly, experiencing some backlash, but kudos to Delta for deviating from a broken model to once again give status to the VIP.

It’s high time businesses recalibrate their loyalty programs and invest in customers who invest in them. Three decades into the existence of airline frequent flier programs, we’ve reached a saturation point where everyone is a VIP. Considering today the average household belongs to 23 loyalty programs, according to McKinsey Research, this is a dangerous mentality.

Customers who drive profitability should be recognized. Delta realized this and is rectifying it by getting back to a program that is truly a win-win.

People will pay more for a good experience

Delta’s move goes beyond rewarding customers on the front end. It gets to the heart of why airline customers will pay more in the first place: for a good travel experience. Loyalty programs and the customer experience go hand in hand.

While airline loyalty programs have been wildly successful, Delta and other airlines will only continue to reap the benefits if they focus less on doling out points and more on creating a positive flying experience. Herein lies the sweet spot.

Create the best experience. Lock in customers who are thereby willing to pay a premium for travel. Reward them and drive profitability. Repeat.

Drive loyalty every step of the way

Airlines who make bold choices, such as turning loyalty programs on their heads, will win in the long run. By catering to customers who vote with their dollars, Delta is better positioned to focus on the back end, the experience.

Traveling is stressful and the industry competitive. Mediocrity is not an option. Airlines need to step up and provide premier service and a positive customer experience from door to door. Take notice of companies like American Express, which is opening world-class Centurion Lounges to reward its most valuable customers.

Airlines need to ask, “What more can we do – especially for our best customers?” They should explore the possibility of building relationships with companies like American Express that are doing it right. Why not consider pairing up with Uber to pick up loyal customers at their doorsteps or Hilton to have an upgrade arranged?

The opportunities are endless. I’ll be watching to see if Delta or other airlines fall in line and leverage these possibilities.

Article appeared in MediaPost