Is your airline's loyalty platform holding you back?
Airline loyalty programs are a prime asset for developing deeper engagement with members and packaging personalized offers. Yet, in too many customer conversations, including my former experience at AAdvantage, the topic of inflexible loyalty platforms comes up.
Airline loyalty teams have fantastic ideas but often can't launch them to market either because their technology doesn´t support their ideas or the time and cost it would take to develop and adapt systems is prohibitive. Just as bad – launching watered-down versions of potentially great products or services because of technological limitations. And this is how too many initiatives end up in the graveyard of great ideas.
Continuous innovation in products and services is a prerequisite to providing value to your members. The ability to easily integrate new loyalty partners to your ecosystem that will facilitate every day earn opportunities for your members is equally as important. But it doesn´t stop there. You also need to be able to deliver and service your offers effectively. Otherwise, the rest means nothing. Ongoing investment in your loyalty platform, whether in-house or from a provider, and a healthy development roadmap are critical to ensuring continued innovation in rich business features and capabilities.
Loyalty leaders must demand cutting-edge functionalities out of a loyalty platform in the quest to unleashing program innovation, member engagement, revenue-generation, and cost-saving potential. Following, are critical aspects that can only be found in modern platforms, as opposed to the legacy systems that have been holding back so many airline loyalty programs for years.
Configurable vs. customized
Launching new ideas to market usually requires systems adaptations. The questions here are: How long will it take? Will that be too late? How much will it cost? How many people need to get involved? Can our existing systems even adapt to our new needs? Anyone that has been through a customization project knows the answers to these questions. And they´re not pretty. Configurable platforms sidestep these customization challenges. Modern platforms that utilize micro-services are quick to configure, giving you more flexibility and agility to align your business with innovative ideas.
Time to market
The time it takes to launch a new offer has a direct impact on monetization. But so does launching the right offer. And this is where configurable platforms again have the upper hand. Agility to quickly realize incremental program design changes and launch, test, and adapt new offers in the marketplace is critical to success. Airlines on modern loyalty platforms no longer wait months to complete systems and product development cycles.
Modern, cloud-native platform architectures that use containerization and micro-services allow cost-efficient, real-time, and highly automated scaling. This allows for the instant launch of new campaigns while offering the flexibility for parallel system adjustments and enhancements with no disruptive impacts on ongoing activities.
Lower operating costs
Modern systems deployed through a SaaS model and a microservices architectures are much cheaper to operate. Legacy systems with monolithic architectures take an army of IT people to operate. Their infrastructures are also expensive to purchase and maintain. Version updates typically require huge hardware expenditures and cannot scale up when needed for promotional campaigns. Meanwhile, the modern platforms available today benefit from the scalability that the cloud provides. Furthermore, SaaS software users benefit from continuous improvement and investment by the software provider, shared across the community of users.
Modern loyalty platforms provide the functionality to quickly integrate program designs that you've always talked about, but historically couldn't act on due to platform limitations and IT costs. Some of those features include:
Multi-segment loyalty programs
You can´t be all things to all people, which is why segmentation is so important. Airlines must differentiate how they reward members across different tiers. They may even have bespoke B2B programs or need to integrate different currencies used by their partner network. Single instance platforms are a game-changer for efficiently deploying and managing the different layers that multiple program and currency loyalty strategies comprise.
Miles, points, and the almighty cash
Miles and points are standard reward mechanisms in all loyalty programs. The ability to easily redeem these rewards directly impacts the value perception members have of your loyalty program. Providing your members with the ability to search and pay for flights or partner network offers using a mix of rewards and cash is unquestionably a major value add.
Rewards pooling and transfer
Member pooling and transfer of points and miles offer airline loyalty programs an extra edge. By providing members with the ability to share their rewards, you´re adding to the value your program offers them. Doing this can also incentivize increased spend and new member acquisition. A platform that allows you to do all this out-of-the-box, including the ability to purchase miles as gifts and freely configure business rules, can only add to your member engagement and revenue-generation opportunity.
Because there´s always going to be somebody out there trying to beat the system… As you unlock more value in your loyalty program, the temptation will be there to exploit those benefits. This is where a highly secure platform by design, with machine learning capabilities, will protect your members and your business´s value delivery and profitability.
Agile partner integration
Partnerships are the revenue driving engine for airline loyalty programs. A partnership ecosystem is key to adding value to your loyalty program´s members through increased everyday earn and redeem opportunities. All too often, the partnership team in airline loyalty departments chooses not to add more partners because the platform work involved is too onerous. Furthermore, loyalty leaders find that new and innovative partnership constructs outside of the normal earn model just can't be supported without a big IT customization. Modern platforms support agile partner integration so you can act on the partnership strategy you want, not just the strategy a legacy platform can support.
Stop saying no, start saying yes
It´s time to stop saying no to innovation, new member engagement opportunities, and new revenue-generation potential. I have personally had to do this in the past, and I know that many industry colleagues continue to do so today. It´s time to start saying yes. Technology exists that will help your airline´s loyalty team unleash their imagination and innovation to take your business to the next level. And they will also save some hefty costs and headaches along the way…
Scott Hinshaw is an airline industry veteran and a loyalty expert. Scott's 20 year career at American Airlines included leadership roles in Revenue Management, Cargo, Digital Marketing, and culminated as a member of the leadership team for AAdvantage, the world's largest and oldest loyalty program. Scott also led a startup in the loyalty space, creating the first loyalty program for colleges. Scott joined IBS in January as the leader of the loyalty product for the Americas. In his free time, Scott is a father to his three college-age children and his two dogs. Scott and his wife Julie have been married for 26+ years. They love to travel and have Israel and Australia next on their list of destinations.