The Goals of Loyalty Marketing: Loyalty marketing has five main goals:
Lifetime Value of the Customer: Airlines view their customers–actual and potential–on the basis of their expected purchases over the course of their lifetimes. A business traveller, for example, could spend more than half a million dollars on airline ticket purchases over his or her lifetime. This long-term perspective is largely responsible for the new emphasis on “relationship” in today’s consumer marketing. In the context of a long-term relationship with a customer, loyalty marketing seeks to maximize the share of the customer’s category spending over a lifetime of purchases.
Cost of Retention: “Cost-to-Retain” Versus “Cost-to-Acquire” Depending on whose estimate you choose to accept, it is 4 – 15 times more expensive to acquire a new customer than to retain an existing customer. Loyalty marketing leverages this disparity by focusing on customer-retention: the more frequently you purchase our product, the greater will be your reward.
Building Brand Loyalty for Frequent Flyer Programs: Business travelers are the most profitable customers for an airline can accommodate. In fact, Airlines discovered that only 5% of their customers accounted for over 40% of their business. This means that every business traveler, or frequent flyer, was more than 10 times more valuable than an occasional flyer. Obviously, questions were raised on how to keep luring these highly lucrative travelers to the product the airline has on offer and consequently build brand loyalty. One of the answers was Frequent Flyer Programs. Recent research revealed that customers want to be rewarded for their loyalty expressed with repeat business.
Loyalty Program as Status Symbol: Loyalty programs are seen as status symbol as they offer many privileges that common flyer does not get. Frequent flyers keep seeking these privileges to get the feeling of being different from others. That is one of the reasons why most airlines brand their loyalty programs. Some programs have grown so much that they themselves have become brands for the airline. Aadvantage, Krisflyer, MileagePlus, Miles&More are some of the brands of Airline Loyalty Programs that are great brands associated with Loyalty.