How Great Airlines Treat VIP’s

Several months ago a friend asked me to create a framework for a major airline’s Entertainment Desk to service Los Angeles-based movie studios and television networks. I had a few ideas – but first the background:

Transcon: The JFK<>LAX market is the most important air market in North America. Five airlines carry >11,000 passengers between these cities each day and host celebrities, bankers, tourists and high net worth travelers on sixty-four non-stop departures (thirty-two per airport). American dominates the market with the largest aircraft and highest frequency. They operate ageing twin-aisle 767-200’s with a three-class configuration and International Flagship Service. United caters to the same crowd and operates with more efficient three-class 757’s, while Delta, Jetblue and Virgin America offer two cabins on a mix of 737’s/A320’s.

Historically movie studio’s and other entertainment customers selected American or United as their primary carrier in this market since creative talent and executives are allowed to fly in the forward cabin (why pick a two-class aircraft when three-class is offered?) These corporate customers routinely achieved >90% share in the transcon market. More recently, Delta enhanced their two-class product to include a lie-flat International business-class seat and increased to seven daily frequencies while United pulled back to six. This competitive action has re-ordered the Transcon marketplace and Studio travel managers tell me that travelers prefer Delta’s Premium cabin to AA’s out-dated 767’s and United 757’s.

Delta’s progress may slow soon. United is rolling out a new product now, while American announced new three-class A321’s will roll out in January 2014, to replace their current product. This upgrade includes lie-flat seats in first and business-class. JetBlue also jumped-in and plans to launch A321 service in 2Q ’14, that will include private pods in first-class. Before it’s even started, 2014 is shaping up to be a disruptive year for the Transcon market.

The Desk: Superior airlines also compete on the ground and offer services tailored to their best customers. The Entertainment Desk is dedicated to a very specific group of clients, and should make a market in first-class seats between New York, London, Miami, and Los Angeles or offer access to private jets where feasible. The desk exists to expedite difficult and unusual requests. The Entertainment Manager facilitates requests to seat Talent, their Agents, Studio or Network Management, Publicists and others with the Talent – or create a plausible denial when discretion requires it. This function is not a discount mechanism to clear waitlists and upgrades – Airlines must offer a high-touch, guaranteed service.

Winning airlines create hope during every crisis – airlines should move mountains to support their customers. Clients should believe their Airline’s Entertainment Team will do everything possible to fix the problem or propose alternatives that will improve it materially. This group is not motivated by money or cost – service matters. The George Lucas expression – “do or do not, there is no try” applies. An Entertainment Desk is an airline’s service ER. Employees must be able to reach into a PNR to grab a torn artery – when the Entertainment Desk calls premium services at LAX, JFK, MIA or LHR, the response should not be, “Who is this?” Rather, “What can I do for you RIGHT NOW?”

Examples: Airline’s will solve requests like this on a daily basis: NBC called since Alec Baldwin’s Assistant booked late and needs the seat right next to him for his publicist or agent. The Entertainment team will call Sony, or Paramount or Fox, or AMEX or the owner of that seat to get it done – or suggest moving both of them to a pair of seats that are available. Great airlines block First-class in the transcon market one week each May to allow studios to grab space to attend the “Upfronts.” They empower their team. No one should recite policies designed for 99% of the 250K travelers you handle every day. Accept that these are special customers and start from that assumption. The team should be “accessible” 24/7 via cell and have GDS access from home. They’ll only receive 10-15 emergency, after-hours, calls per year… but it’s a gesture that sets winning airlines apart from their peers.

The Entertainment Manager must have an exceptional relationship with the airline’s premium service managers in LA, New York, London, Miami and Nashville, and should be known across your system and alliance – and that means they need to be included in global premium service meetings and updates when you have them. This person must be available at all times and have a back-up who can assign seats or clear space. Overbooking capabilities are recommended.

Entertainment Managers must be quick to challenge requests and propose alternatives when operational hurdles prevent the studio request from being granted as requested. A “customer focused” attitude should be real; once a carrier earns a customer’s trust and loyalty they will choose that vendor every time. In those rare cases when the carrier “burns” their customer – the most senior executive available should issue a mea culpa, in-person, and a offer a range of options to fix whatever it is they didn’t solve three days earlier.

Additional examples to work through now: On one flight the President of a network was removed to accommodate a Federal Air Marshal, while two subordinates, both top-tier frequent flyers were left on the flight. Revenue Management based their decision on the customer’s lack of a frequent flyer number. The customer didn’t have one for two reasons: 1. Security – to maintain anonymity; 2. She was authorized to fly private and rarely flew commercial  (the plane was not available that day). In this case the General Manager intervened and found a seat, but you can see how an airline’s policies are not designed around premium travelers in marginal cases. Airlines service customers who fly to NY Commercially, then to Miami by private jet, before they will discover that their MIA->LAX segment was cancelled because they no-showed the LGA->MIA flight. Great airlines step-up to fix it when a VIP is standing at the ticket-counter and flights are oversold all day.

This desk also makes “meet and greets” happen (not ‘space available’, they make it happen) and they treat airport assistance companies as valued partners. Great airlines speak in guarantees. This is hard for commercial airline managers to do, but it’s necessary to win. Great airlines are discrete – they don’t tolerate employees who call TMZ or tip-off the paparrazi. This desk can call flight ops and ask the Chief Pilot to introduce himself to the guest in 3A and to ask the VIP passenger if there’s anything they need. This desk says, “Sure, I’ll approve your oversize, outrageous pet in first-class (at the window), as long as the handler is seated next to it” No discount…this isn’t a discount desk – service focused. This person will need LHR to clear a closet in First Class on a 777 to accommodate the CEO’s spouse’s Cello. And you will need authority to offer 150,000 miles for an apology without advance approval.

Finally, I recommend a $100,000 TAC budget to invite agents and managers to take one or two trips annually to London or New York (and a thorough understanding of the Foreign Corrupt Services Act to keep you out of trouble). When offered a chance to show off your product – do. This isn’t a discount crowd, so treat them accordingly.

There’s more, but airlines that empower their teams with “authority and resources” to do anything the FAA, TSA, DOJ, and the DOT allow, to take care of their best customers, will have unlimited success.

Aviation Sales & Marketing Travel Management

Trip Planning For India

Planning your next adventure? Consider these suggestions and best practices before you leave home, and let me know if you have other ideas I should add to this list.

  1. Negotiate all itineraries, fees and prices upfront.
  2. Demand no add-on’s while touring (you should have control over every place your guide will take you and your time-line; this includes planned restaurant stops).
  3. Always have a copy of every confirmation number, hotel address and phone number. You will need it at some point. Paper beats digital in most places, especially India.
  4. Insist that your tour company provide a bio and photo of your driver and every guide before you arrive. You will have a much better experience if you use mature, experienced local guides. Veteran guides are more likely to have a good relationship with the Army or Police guarding historical sites and may be able to get you access to areas and features that are off-limits to the general public or help you navigate through heavy crowds quickly via staff entrances or other secured areas.
  5. Always carry 2X more local currency than you think you will need.
  6. Always make change from big bills into useable denominations at your hotel – never change large bills at street vendors or other locations.
  7. Insist that your driver keep doors locked, and leaves separation from the cars ahead of you in traffic and at stops.
  8. Sit behind and opposite your driver. You must be able to make eye-contact with him while riding together. And always wear a seatbelt.
  9. Keep medicine (aspirin, visine, chapstick)/glasses/socks/earplugs/sunscreen/insect repellent/sunglasses/iphone charger/spare headphones/extra pens in your personal bag.
  10. Never take physical keys from a hotel off property – leave them with the hotel staff when you leave. Consider leaving a note for yourself that includes where you’re going, who you will meet and when you plan to return.
  11. Assume insects are harmful – don’t let them bite you. Use insecticide and wear long-sleeved shirts and long pants.
  12. Always ask hotel/restaurant staff to provide mosquito coils if you’re dining outside.
  13. Do not use deodorant and if you must, use a fragrant-free version. This will reduce your attractiveness to many insects.
  14. Stay dry.
  15. Cover open cuts.
  16. Do not drink anything that was not opened in front of you or boiled. Wipe or rinse bottle tops before opening.
  17. Arrange your room to make a clear path to your door in case of darkness/power loss.
  18. Stay hydrated/rested and avoid heavy alcohol consumption.
  19. Be polite, but firm.
  20. Do not accept drinks from strangers.
  21. Do not wear jewelry, fancy watches, etc.
  22. Never have both hands full.
  23. Be aware of your surroundings.
  24. Women should not travel alone.
  25. Women should never use public transportation.
  26. Always keep two extra water bottles with you for emergencies – buy more when you get down to the last two.
  27. If you’re approached by a stranger, expect them to have a partner. It’s not usually the person who approaches you first who is your greatest threat.
  28. Do not spread out your belongings in your hotel or vehicle. Keep your belongings organized and packed as much as possible in case you need to make a fast exit. Additionally – when you keep your room neat and organized, you’re making it easier on the hotel staff to make up your room. They’ll reciprocate – it’s especially helpful when you forget an item and leave it in your room – they’re much more likely to “find” it.
  29. Don’t fall in love with anything you own – be prepared to leave it behind.
  30. Keep immodium accessible (you’ll know when you need it, and when you do speed will make a difference).
  31. Share the same safe combination with your group – someone else may need you to collect your valuables for you.
  32. Carry several “chip clips” in your luggage to keep stubborn drapes closed in your hotel room, or to hang wet laundry.
  33. Never keep all your cash, ID’s, and Credit Cards in the same pocket. Use multiple pockets and spread things around.
  34. Never store your full data cards with your camera, put them somewhere else (but never in checked luggage).
  35. Pack using 1 gallon Ziploc bags. They’re great for all kinds of things, and water-proof.
  36. Carry a number 2 kit: Toilet paper (1 roll); wet wipes (1 pack); baby powder (1 10oz container) – keep it in a single 1 gallon Ziploc bag.
  37. Stow your overhead luggage across the aisle from your seat, where you can see it.
  38. Never set anything down at airports, taxi stands, train stations that isn’t between your legs.
Risk Management Travel Management

Travel Risk Management and Trip Safety

thumb_pauls passport

Originally published at Cornerstone Information Systems’ “In Your Corner” blog.

Duty of Care is the idea that Corporations are responsible for the security of their employees during travel and when engaged in activities that support the company’s interests. The European Union’s Duty of Care Act is the most prominent regulation in Europe to codify this requirement. The EU spells out how companies should behave regarding employee safety and security, but the United Kingdom took this a step further with the UK Manslaughter Act that allows companies to be held criminally liable for harm that come to their employees. The regulation applies to UK employees abroad, or the non-UK Company employees while they are in the UK to conduct business. These regulations jump-started the Duty of Care industry in Europe and North American Corporations are still playing catch-up.

Duty of Loyalty is the concept of employee compliance with their employers’ efforts on their behalf, while Duty of Care describes the set of behaviors, planning, and actions companies must take to safeguard their employees. When a company makes a car service available, or requires employees to meet minimum safety guidelines, Duty of Loyalty is the force that compels an employee to meet those standards. Companies that go out of their way to create a high quality of life during employee travel and are proactive about serving travelers on the road will generate much higher loyalty. Companies undermine their employees’ loyalty through cumbersome or overly-restrictive policies and should strive to strike a balance that rewards loyal behavior while not driving the employee to another company.

Personal security in the real world starts with your employees. It’s great to have Navy Seals and Special Forces consultants demonstrate the latest hand-to-hand combat techniques, and defensive driving in up-armored Suburbans with run-flat tires. But…security designed for the CEO does little to help the intrepid sales person walking through the commercial district in Buenos Aires or London with a Starbucks coffee in one hand and the latest smartphone in the other.

There are simple principals that, when followed diligently, can increase your employees’ safety hundreds of percent.

1. Pay attention to your surroundings. Make eye contact with people around you. Do not text, read email or walk down the sidewalk while participating in a conference call via a Bluetooth headset. You must appear alert.

2. Never read a map in public. Find a hotel lobby, retail store or restaurant to determine where you are and where you’re headed.

3. Do not wear jewelry or flashy watches. Men should avoid cufflinks. Your shoes, hairstyle, and clothing will already set you apart during international trips so reduce the other signs that mark you as an easy target.

4. Tell others where you are going and about your daily plans.

5. Before your trip, or as soon as you arrive, send a note to your corporate travel team to let them know which hotel you’re staying in (if you didn’t book it through your corporate booking tool).

6. If you walk, don’t walk alone, especially after dark. Leave a note to yourself at the front desk that contains information about where you are going or who you will meet. This will give investigators a head start if you don’t return.

7. Never leave a hotel with a metal room key. Leave it with the concierge or front desk to let them hold it for you while you’re out. Don’t let the staff give you a keycard sleeve with your room number printed on it to hold your keys.

8. Check in on foursquare periodically to give your friends & family location information (do not do this if you are at risk for a targeted crime).

9. Keep your passport, credit cards, and other ‘chipped’ items in a faraday cage (a special wallet or bag designed to remove their ‘electronic’ signature so they are invisible to card readers).

10. Know local customs and signs that will get you in trouble. Some well-known advice includes carrying a “mugging” wallet with at least $100 USD in Argentina and Brazil, but in China you should increase your cash to >$300 in case you need to pay for emergency medical care.

11. When you use cabs, always sit diagonally from the driver so you can see his eyes in the mirror. If he notices something behind you that doesn’t look right you’ll pick up on it immediately.

12. Never ride in a cab or car at night with the interior lights on, and always lock the doors.

13. For trips where you will use the same driver or in high-risk areas, you should insist that the driver leave ½ car length between you and the car in front of you at stoplights or stop-signs; on wider roads, the driver should stay in the outside or curbside lane, but never the middle (the driver should always have enough room to maneuver around other vehicles – in an emergency sidewalks and medians are fair game).

14. In high risk locations you should also insist your driver use a “box” maneuver instead of making turns in front of oncoming traffic. In countries with left-hand drive (US, Germany, France) when you want to turn left, the box method requires you to cross your intended road, then execute three right-hand turns around the next block. This will put you on course without exposing your side of the car to oncoming traffic while it increases the probability that you will identify anyone who is following you.

Steps for travel management teams:

1. Establish policies to protect travelers in high-risk locations or mission essential personnel anywhere. Distribute information about potential threats several days before travel.

2. Publish and disseminate information about after-hours service to support medical or travel emergencies and include phone numbers for international access. This could include a twitter account and hashtag travelers should use when they need help. Example (@YourCompany911, or #YourCompanytravelassist).

3. Publish your security team’s phone number and distribute it with every itinerary.

4. Develop an easy way for travelers to add passive segments (hotels booked outside your booking tool or agents). Use this as a KPI to measure Duty of Loyalty.

5. Every manager is responsible for employee safety, including trips between sites that don’t involve the travel management group. Travel Management and Corporate Security should work together to provide reports and business reviews that cover travel risk, employee health, on-duty accidents and ‘near’ misses to a steering committee that includes representation from HR and Legal and other operating divisions as necessary.

Call us if your program needs help to implement pre-trip approvals, reporting, notifications and agent and employee training.

Risk Management Travel Management

Duty of Care and Duty of Loyalty

Duty of Care is the idea that Corporations are responsible for the security of their employees during travel and when engaged in activities that support the company’s interests. The European Union’s Duty of Care Act is the most prominent regulation in Europe to codify this requirement. The EU spells out how companies should behave regarding employee safety and security, but the United Kingdom took this a step further with the UK Manslaughter Act that allows companies to be held criminally liable for harm that come to their employees. The regulation applies to UK employees abroad, or the non-UK Company employees while they are in the UK to conduct business. These regulations jump-started the Duty of Care industry in Europe and North American Corporations are still playing catch-up.

Duty of Care describes the set of behaviors, planning, and actions companies must take to safeguard their employees. Duty of Loyalty is the concept of employee compliance with their employers’ efforts on their behalf. If a company makes a car service available, or requires employees to meet minimum safety guidelines, Duty of Loyalty is the force that compels an employee to meet those standards. Companies that go out of their way to create a high quality of life for during employee travel and are proactive about serving travelers on the road will generate much higher loyalty. Companies undermine their employees loyalty through cumbersome or overly-restrictive policies and should strive to strike a balance that rewards loyal behavior while not driving the employee to another company.

Risk Management Travel Management

Do You Know How to Maximize Hotel Savings?

Lanyon does. They’re the de facto market leader for hotel program management, and the white-label tool behind several travel management companies’ hotel sourcing solutions. Mike Boult and his team just released a brief, information-rich, white paper to help you optimize savings from your hotel rates. Your 2012 room rates may sunset before 2013 pricing is available. The biggest gap in most hotel program is auditing rates after they’ve been approved. Trust but verify – and Lanyon’s tools can automate that for you. Check out their new paper here.

Travel Management

Loyalty Programs that Work

Background

Contemporary loyalty programs generate power by transforming dreams into action. The Marina Bay Sands hotel pictured above epitomizes the aspirational destinations customers enjoy through participation in a travel loyalty program. Great loyalty programs inspire customers to choose the host company even when less expensive alternatives exist. So when the search for profitable customers drives you to create a loyalty program, here is how to do it right.

There isn’t a single recipe, but certain ingredients are known to taste better and every compromise you make to the set of principles outlined here will reduce the number of people you can influence. When applied carefully these principles will improve customer engagement and lead to higher profits and lower costs. Exceptional loyalty programs offer meaningful value. That value is accrued seamlessly without obstacles. Great programs are transparent and customers understand them intuitively; they eliminate friction at every turn.

Loyalty is measured by the number of customers you inspire to select you over and over again. Loyal customers spend more than average customers, they do it more frequently, and they’re more likely to stick with you after a bad experience. Your Customer Relationship Management team has segmented your customers thoroughly and you know how much your best customers are worth, and numerous white-papers and empirical research conclude loyal customers are responsible for a disproportionate share of business profits. But how do you inspire customers to remain loyal? More importantly, how do you convert ‘good’ customers to behave more like your most profitable, loyal disciples?

To answer those questions and for a thorough understanding of the loyalty space its worth exploring consumer and business loyalty programs including American Airlines’ AAdvantage program, Delta’s Skymiles, the Citibank AAdvantage credit card, Capital One cards, Starwood Preferred Guest for Business, Starbucks Rewards, and a host of business-to-business programs designed to engineer loyalty or drive customer retention. I’ll focus on travel industry programs and a few non-travel schemes.

History

Loyalty programs have spread to include everything from hotels, rental cars, sandwiches, haircuts, oil changes, and home mortgages. Many of the largest programs allow customers to transact with partners on both sides – earn and burn. Before Capital One credit cards, AAdvantage Miles and AMEX Rewards Points, companies rewarded consumers with “green stamps” from Sperry and Hutchinson (S&H). Greenstamps were literally stamps awarded to customers at the point of sale for a variety of behaviors. They started in 1896 and continued through the mid 1980’s. Retailers, supermarkets and other retailers purchased “Greenstamps” from S&H to issue to their customers and once the customer accumulated enough stamps they would redeem them for products from an S&H catalog. At their peak in the 1960’s S&H’s reward catalogs were the most widely distributed publication in the United States, while they issued more than three times as many stamps as the US Postal Service.

SH-green-stamps

By 1978 competition following deregulation of the airline industry and the widespread use of more powerful computers supported expansions in airlines’ sales and marketing programs. In 1981 American Airlines launched the AAdvantage frequent flyer program (followed closely by United Airlines) and a few years later added a co-branded credit card product with Citibank. The frequent flyer program gave people a chance to accumulate credits quickly, while the Citibank AAdvantage card offered another way for less well-traveled consumers to enjoy the benefits of cheap flights. Throughout its history, American’s AAdvantage program had the highest enrollment and member participation rates among frequent flyer programs and loyalty credit cards. Over the past decade American’s partners have purchased more than $1 billion annually to distribute across 50 million members making AAdvantage one of the most influential contemporary consumer loyalty programs. Mergers have driven Delta’s Skymiles and United’s Mileage Plus programs ahead recently, while global alliances including Oneworld, Skyteam and the Star Alliance expand program reach to customers who may never step foot on a US or European owned aircraft.

Airlines operate ‘anchor’ programs that drive scale and reach that few retailers can match (McDonald’s and Starbucks are notable exceptions). The most successful travel programs have powerful, exclusive relationships with consumer banks. Those banking relationships are driving the next wave of business-to-business loyalty programs and the future looks bright.

Value Proposition

Loyalty programs must be meaningful – the accrued value must be worth managing. Customers must be able to calculate value intuitively. Earning behavior must be easy to describe, easily understood, and programs should give credit for wide-ranging transactions, not just a narrow band of profitable behavior. This is distilled to Simple, Seamless, and Comprehensive.

Global Airlines run the largest programs and typically offer a free domestic coach ticket for 25,000 flown miles. An average round trip is 2,500 miles, so travelers generate 10% of the award value from each trip. That’s a good value trade-off. Travelers who also spend $25,000 on an airline credit card have an easy way to earn two award tickets every year.

Effective loyalty programs drive customer behavior. They reward profitable behavior – they are structured to generate more frequent, higher value business from program participants. So why doesn’t everyone join your program? A look at the airlines reveals that about 50% of all passengers do not belong to the airline’s program. Customers participate in programs that are personally relevant. The public is inundated with offers to join various programs, but they will not participate unless they’re offered enough value to justify wallet-space. Marginal Airline offers end up in the trash while a favorite restaurant makes the cut by offering a free entrée every tenth trip.

Currency

Currency choice matters – it must be intuitive and the average customer should be able to calculate the currency’s value and identify the activity or behavior required to earn common awards. Consumers get it when their barber issues a card that requires ten visits to earn a free haircut. Simple, seamless, comprehensive.

The earliest airline programs called their currency ‘miles.’ Miles are intuitive – when a traveler flies between New York and Los Angeles – they’ll earn one mile of currency for each mile in the air. That’s 2,472 miles each direction in this example. Miles are the basic building block – they’re analogous to a penny. Once you ‘earn’ 25,000 mile you can redeem them for a free coach ticket (treating miles like pennies is equivalent to $250 value). Loyalty credit cards lean towards ‘Points’ and a typical value is one ‘point’ for every dollar spent. The pure credit card programs often offer travel awards as a redemption option so a currency that converts easily to ‘miles’ makes it simple for most consumers to adopt the ‘point’ system and it gives them confidence about an already well-understood earn and burn structure. In the largest programs points and miles are equivalent and fungible – it’s like a foreign exchange system, you can often trade airline miles for the same number of hotel points.

In recent years other airlines, particularly the low cost carriers adopted segment based currencies – Southwest Airlines Rapid Rewards famously offered a free round trip ticket every time a customer flew sixteen segments. It’s easy, but customers could earn a ticket after purchasing just three trips if the routing required double connections (three segments each way). The other end of that spectrum is the customer who bought eight round-trip tickets for non-stop flights before earning the free ticket.

Southwest’s program didn’t seem equitable, so Southwest updated Rapid Rewards to issue ‘points’ based on two variables – the type of ticket and the price. Now customers earn six points for every dollar spent on Southwest’s “wanna get away” leisure fares, while it takes 6,000 points to ‘buy’ the same type of ticket. A quick calculation reveals free tickets are available after spending just $1,000. It’s a good system, but it leaves program players shaking their heads to calculate earn and burn values quickly – members need to read their statements carefully.

Companies that offer separate programs for consumers and businesses should think twice before they create parallel currency and banking systems for each type of customer. Specifically, many domestic airlines offer consumers mileage-based currency through their frequent flyer program, while offering companies a spend-based, point currency in their business rewards program. A review of award menus at United and American reveals similar awards are offered through each program, but the redundant systems increase costs and management workload.

An example on the hotel side can be found in Starwood Preferred Business (SPB) program; SPB is integrated with Starwood’s Preferred Guest program and can be managed in parallel and through the same systems – this arrangement reduces the cost and eliminates currency confusion since both programs payout in similar fashion – the traveler accrues points in their individual program, while their employer accrues points in the Starwood business program. This co-mingling makes it easy on the front-desk staff too and the entire company is aligned with the program messaging.

Companies can manipulate value on both sides of the ‘earn and burn’ equation, so consumers need to be familiar with program rules on both sides – the less fine print the better. And don’t neglect cash controls – management often overlooks the cash value of their awards or loyalty currency. Robust controls must be implemented to ensure employees don’t have the ability to give points or awards away without comprehensive tracking and reporting.

Awards

Give ‘em what they want! If you sell widgets because people value them, it goes without saying that widgets should be on the award menu. In fact, your award menu should include ‘starter’ widgets, widget covers, widget ‘bonus-packs’ all the way to up ‘premium’ widgets. Airline awards begin with highly restricted, long advance purchase, mid-week, domestic, coach tickets, and move up to last-minute, international first-class, around-the-world fares. A collection of ancillary benefits are available too – including lounge passes, upgrades, cash plus program credit, reduced fees and other special awards. All priced in loyalty currency.

Hotel award menu’s include rooms, upgrades, all priced in ‘point-based’ currencies tied to spend and room-nights. Another popular option for larger hotel programs allows point transfers into airline miles.

“Earn and Burn”

Program participation must be simple, seamless, and comprehensive.  Loyalty program members should be able to attach their membership numbers or customer identification to their transactions easily. Their purchases should be tied to online profiles or a barcode or a RFID membership card. Companies should take action so members don’t need to remember their member numbers and, if they do need to remember them, companies should create as many opportunities as possible to add the number throughout the purchase or use process. Effective programs make it easy to claim credit long after the purchase.

Avoid obstacles that reduce participation. Awards must be meaningful to the customer – in its simplest form awards should have the following qualities:

  1. Meaningful
  2. Easy to earn
  3. Easy to burn
  4. Supported by seamless customer service
  5. Common currency
  6. Multiple award levels
  7. Bonus structure with point multipliers
  8. Relevant partners

Customer Service

Same rules – simple, seamless, comprehensive. Most common requests – 1. provide ‘earn’ credit; 2. Reset account access; 3. Merge accounts ; 4. Provide enrollment support; 5. Provide redemption support (complicated program rules will drive these requests up). Companies should acknowledge that customers want to communicate in different ways (phone, email, and text) and should offer customer service through common channels. If your program can’t support a live 24/7 operation, at least provide self-help online and find a way to show customers you appreciate their business.

Promotions and acquisition campaigns 

Collect the low-hanging fruit – that means a laser focus on your existing customers before you move on to new or potential customers. Advertise your unique value proposition, currency and program rules to your existing customers with your existing marketing and communication channels. As enrollments begin to climb study your data to determine characteristics your most profitable customers share and seek out non-customer populations that exhibit the same qualities or behaviors. Future campaigns should target those potential customers and develop creative A-B test groups to hone your marketing skills and test intuition about your customers. Enrollment offers should include ‘seed’ points or miles to jumpstart member participation. Follow-up campaigns should segment customers in meaningful ways including a group that have earned enough points for basic awards, but have never redeemed points or miles. The possibilities are endless, but a careful approach that combines your industry knowledge with insight about your most profitable customers will yield the best results.

Common sense and the desire to limit liability suggest acquisition offers should be richer in competitive markets, and lower  where the host has higher market share. Targeted offers and A-B tests may require you to use a promotion code system (one-time use codes are recommended to prevent wide distribution via the Web). Before you get too far down this path it’s instructive to educate yourself about ways promotions can go wrong so here’s a great Website you should spend some time on to avoid making similar mistakes.

Conclusion

This is just a glimpse into the loyalty cook book – these programs are important tools to manage the relationship between companies and their best customers. Done well,  thoughtful programs can give you an edge and drive bottom-line performance. Use this simple guide to create a solid framework as you invent your own program and embrace ideas from successful programs across multiple industries. Finally, ask yourself why programs and their components work and what conditions exist that drive customers to participate in them? Answer those questions and you’ll understand new ways to achieve better results.

Coaching Sales & Marketing Travel Management

Profit From Foreign Exchange Rates

The value of goods and services may remain steady, but the cost depends on the currency they are priced in. Specifically, a hotel room in Europe listed for €130 would cost an American buyer $165 today, while a European booking a hotel in Chicago for $130 would pay slightly more than €102 at current exchange rates.

Consider that the Euro was designed to lock or peg exchange rates between member countries when it launched on January 1, 1999. The single Euro-area currency eliminated more than a dozen local currencies and provided transparency across Europe as people in many countries were better able to compare the value of their Euro’s in any participating country (the British are noticeably absent and trade between the island nation and the continent must still be converted in or out of British Pounds). The new currency closed at 1.19 Euros to the USD on its launch, but within twelve months had fallen to 1:1. That triggered a crisis that only abated after the Euro reached a low of 82¢ in late 2000. In 21 months the Euro lost a third of its value, a striking decline. I had just started a new job and was tasked with designing exchange rate collars for consumer financial products offered in international markets. That experience replaced the history and theory I’d been taught with a ringside view of the real-world destruction foreign exchange rate fluctuations can have on a business. I’ve paid careful attention ever since and I’m never surprised by how few people understand what these fluctuations can do. Seven years later, in March 2008, the Euro reached a high 1.578USD – almost a 100% gain from the earlier low.

Forex isn’t just for quant’s in the corporate treasurer’s office. Foreign exchange rate observations should be on every international marketing professional’s list of things to pay attention to. Here’s the short version – businesses should promote their products in places where their currency is cheap and pull back where or when their currency is expensive. Specifically, the US airlines should have promoted travel to Europe from January 2000 through 2002 to residents in North America. Leading up to Euro peak in March 2008 and even after a modest decline US and foreign flag carriers should have promoted travel to the US to take advantage of the Euro’s high value against the USD.

So what happens to revenue and profits? Most companies report their earnings in their home country currency – so when the Euro was cheap in 2000-2002 US airlines and hotels would have lost money on sales made in Europe. Hotels offer a good example. Assume Hyatt, based in Chicago, offered rooms in Europe for €130 at the low. That room in Paris, or Frankfurt would have contributed $106 in revenue. Conversely, the same €130 room converted at the Euro high in 2008 would have contributed $205 to Hyatt’s revenue. Same room, same price, very different result – remember the Euro appreciated almost 100% over seven years.

Where are we today? The Euro traded last week at $1.28, an eight percent increase in a few months, but the longer term trend has been down. Pressure from insolvency in Greece, Spain, Ireland, and Italy is mounting. As the European Central Bank implements measures to solve the crisis, it will add downward pressure to the Euro currency value. Barring civil unrest to protest against local austerity measures, travel companies should advertise the relative values in Europe to travelers from the Western Hemisphere. A quick look at the sources of financial tension in many countries, especially youth unemployment rates, leads me to conclude that trip insurance for business or leisure travel is a good idea too. The key takeaway is that Europe is on sale and will remain that way for the foreseeable future.

About the author. Paul Laherty is passionate about problem solving. He led the Americas Air and Hotel consulting teams at Advito, a travel management consulting company. Paul also managed teams in Sales, Marketing and Finance at American Airlines. His work at AA included supervising the global corporate contract team, working closely with large customers in Global Sales, and  managing the Los Angeles sales team where he met some very well-known customers. Paul managed American’s business loyalty program and he launched a loyalty credit card with American Express. He enjoys applying original research (he calls it Phynancial Fisics) to solve problems. Paul lives in Southlake, Texas with his wife and two daughters and flies a Cherokee 140 as often as time allows. He is active on Linkedin where you can view his detailed profile here:http://www.linkedin.com/in/paullaherty, follow him on twitter @Paul_Laherty or send questions to paul.laherty@gmail.com.

Sales & Marketing Travel Management