The holiday season has just begun, but I am already anticipating the start of the Eternal Gloom. Many aspects contribute to this Eternal Gloom. First, unless you work in banking or the government, the next official holiday after New Year's Day is Memorial Day in May. The holiday season is always fantastic because you can take whole weeks off with only a couple of days of vacation. Even if you are working, it is difficult to get a full day in because there are so many other people on vacation. And there is a lot of free candy lying around.
But after New Year's Day, it is five full months with no free day off. That is one of the reasons we take the day after the Super Bowl off at my firm. After so much time off, it is hard to get back in the game for four weeks in a row. Eternal Gloom also means that the good weather of the spring and summer is approximately five months away. Being stuck inside with the kids who are about to completely burst out of the house is no treat.
This year it feels as though the Eternal Gloom has set in early. My holiday travel is complete with hotels, rental cars and flights. After a year of delayed flights, lumpy beds, nonworking Internet connections and flying without liquids, the holidays are my time to cash in on points and miles. Retribution will be mine. My wife usually makes all of the reservations for our trips, and I was amazed to hear of the current status of my loyalty programs.
Why Pay Once When You Can Pay Twice?
I am fairly familiar with the miles count that it takes to get to various places in the world. When I saw my most recent miles statement, I thought there obviously had been a mistake because the total was much too low. My wife informed me that we paid double miles for all of our trips.
Why didn't we pay the regular amount? Was it because we wanted to donate the miles back to the airline? Was it just because we had extra? No, it was because there were no seats available for the regular miles. Apparently, there are plenty of seats if you want to pay double. It might make sense if it happened once, but I thought it was awfully coincidental that it happened on all four of our flights.
My wife is usually very social with the other passengers on planes, and I was wondering if she found anyone else who paid double. In fact, she had. She did not talk to anyone who had paid the regular amount. This sounds very curious. You would expect to find at least find one person who paid the advertised amount, especially for people who scheduled far in advance.
When the credit card bill arrived, I was extremely dismayed. One of our trips is more of a last-minute thing, as a friend decided to have an impromptu holiday party. One of the benefits of one of my hotel loyalty membership programs guarantees us a room with 72-hours notice, so we should have no problem getting in at a very busy time of year. I told my wife to go ahead and call the hotel to book a room using my points.
When I received my email confirmation from the hotel, the rate was astronomical. There must have been some mistake because our corporate rate is approximately 50 percent of the price it was showing. I talked to the boss who made the reservations and got to the bottom of my next tragedy.
What I found out was mind-boggling. Yes, my status at the hotel guarantees me a room anytime I call 48 hours in advance. I thought it was 72 hours. However, when you use the benefit, you cannot use your points for free stuff. That is some fine print I definitely did not know, but I could somewhat understand this. You usually can't combine coupons, so I could see how you could only use one benefit at time. Still, why was the bill close to $300 per night?
It turns out that by using the last-minute reservation benefit of the program you automatically forfeit any corporate rates you may have or even deals that are publicly available. You are forced to accept a rate that is actually above the rack rate. Incredible.
Organizations, especially those coming out of bankruptcy, need to continue to improve profitability, and they cannot afford to give stuff away that in the end impacts their financial results. The paradox is that organizations need to provide something of value in a loyalty program to actually generate the type of customer behavior (in the form of repeat purchases) they are looking for. Benefits that are of no value (fake benefits) or benefits that seem like they don't match your value as a customer have a reverse impact.
Organizations that have not traditionally had a loyalty program such as newspapers, book publishers, general business-to-business organizations and other sectors are starting to dabble with loyalty. But the key question remains: What should the benefits be?
Similar to closed-loop marketing, customer intelligence is the cornerstone of this question. Not only because the data will tell you initially what benefits may make sense, but with the right infrastructure, customer intelligence will allow you to fearlessly test new benefits and evaluate their impact as soon as possible. New analytic applications are being developed to evaluate which benefits of their loyalty programs are actually being used. This will give organizations the confidence to cancel benefits, improve benefits and advertise the ones that really seem to attract customers.
When it comes to loyalty programs, don't be a faker.
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