Controversies in Customer Loyalty: What Loyalty Programs Must Learn

Posted on October 30, 2023 by AIRA Writes

Loyalty programs have long been an integral part of the marketing strategies employed by businesses across various industries. They serve as a means to reward and retain loyal customers, fostering brand engagement and driving sales. However, in recent years, the world of loyalty programs has seen its share of controversies. In this article, we will delve into some of the latest controversies that have emerged in the realm of loyalty programs, examining their implications and the lessons they offer for both businesses and consumers.

1. Data Privacy Concerns

Example: In 2019, Starbucks faced a data privacy controversy when it was revealed that their loyalty program app was storing customers’ data in an unprotected format. This vulnerability could potentially expose customers’ personal and financial information. Starbucks quickly addressed the issue, but the incident highlighted the critical importance of safeguarding customer data in loyalty programs.

Implications: The mishandling of customer data can lead to severe repercussions, including legal penalties, financial losses, and reputational damage. Businesses must prioritize data security and transparency in their loyalty programs to build and maintain trust with customers (read more on data privacy from a loyalty marketer’s POV).

2. Hidden Costs and Devaluation

Example: Airlines, like Delta and United, have faced criticism for making it increasingly difficult for customers to redeem frequent flyer miles for free flights. In some cases, airlines have raised the number of miles required for a free ticket, making it more challenging for customers to receive the expected rewards.

Implications: Devaluing rewards can lead to disillusioned customers, eroding trust in the loyalty program. To mitigate this, businesses should be transparent about program changes, regularly communicate their value proposition, and ensure that the rewards offered align with customer expectations.

3. Lack of Transparency

Example: Some hotel loyalty programs have faced criticism for their complex and unclear terms and conditions. Customers have reported difficulties understanding the rules, such as blackout dates and restrictions, which can lead to disputes and negative experiences.

Implications: Frustrated customers may abandon a loyalty program altogether, causing businesses to lose out on valuable repeat business. Transparent and user-friendly program terms are essential to foster trust and satisfaction among participants.

4. Complex Redemption Processes

Example: Hotel chains have been known to have complex redemption processes, often requiring customers to navigate blackout dates, minimum stay requirements, and limited room availability. These complexities can deter customers from taking full advantage of their rewards.

Implications: A convoluted redemption process can lead to customer frustration and diminish the perceived value of the program. Simplifying the redemption process and removing unnecessary barriers can enhance the customer experience and encourage program participation.

5. Inequitable Tier Systems

Example: Hotel and airline loyalty programs have faced criticism for their tier-based structures. Some customers feel that achieving higher tiers is excessively challenging, and the benefits do not commensurate with their loyalty. For example, achieving top-tier status might require an unattainable number of stays or flights.

Implications: Inequitable tier systems can lead to a sense of unfairness and alienate customers. Businesses should regularly evaluate and adjust tier structures to ensure that rewards align with customer loyalty and spending patterns (explore types of loyalty programs).

6. Limited Redemption Options

Example: Some retail loyalty programs offer limited redemption options, restricting customers to specific products or services. This can frustrate customers who would prefer the flexibility to choose how they want to redeem their rewards.

Implications: By broadening the range of redemption options, businesses can attract a wider audience and better meet individual customer needs, ultimately improving loyalty program satisfaction.

Conclusion

Loyalty programs remain a valuable tool for businesses to cultivate and maintain customer loyalty. However, as the recent controversies in the loyalty program landscape have demonstrated, transparency, data privacy, fairness, and simplicity are paramount in ensuring the success of these programs. Addressing these issues is not only in the best interest of customers but also essential for businesses to preserve their brand reputation and thrive in the evolving landscape of loyalty marketing. By actively responding to these challenges and implementing best practices, businesses can rebuild trust with customers and ensure the continued success of their loyalty programs.

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Capillary and ELI partner to armor brands with real-time emotional loyalty intelligence

Posted on October 24, 2023 by Jubin Mehta

Capillary Technologies, a global leader in customer loyalty solutions has entered into a transformative partnership with ELI, an innovative technology company specializing in emotional data intelligence. This strategic collaboration is poised to revolutionize how brands harness emotional insights to cultivate customer loyalty and foster meaningful engagement.

Co-founded by Danny Socolof, ELI (Emotional Loyalty Intelligence) is developing emotional data analytics using the fastest-growing language in human history- emojis. Emojis have become an integral part of modern communication, each symbolizing a spectrum of human emotions. ELI’s pioneering technology deciphers the emotional meanings and intensity hidden within emojis, offering brands unprecedented signal and insights into customer sentiments. The software measures, scores, and classifies individual emotions in context to Brand products, offers, experiences, and rewards using emojis and transmits that data to the Capillary platform. ELI also reports monthly on whether brand loyalty is getting stronger or weaker along with reasons and insights.

When combined with Capillary’s proprietary Brierley Loyalty Quotient (BLQ) framework, acquired earlier in 2023 from the renowned loyalty consultancy company Brierley, the Capillary platform emerges as the ultimate solution for real-time emotional loyalty intelligence.

The power of Capillary, Brierley, and ELI is unparalleled considering their independent expertise as a technology platform, consultant, and emotional intelligence analytics expert respectively. Put together, the Capillary platform is perfectly poised to help brands deliver excellent customer experiences and win customer loyalty.

In the words of Sameer Garde, CEO of Capillary Technologies, “In today’s hyper-connected world, emotions play a crucial role in customer engagement and loyalty. Our partnership with ELI, combined with the power of BLQ, allows us to provide brands with an unrivaled solution for understanding and harnessing customer emotions.”

Danny Socolof, Co-Founder of ELI, echoed this sentiment, stating, “Emojis are the universal digital language of emotions, and our technology makes it possible to unlock this language for brands. We are excited to partner with Capillary to help brands connect with their customers on a whole new emotional level.”

Don Smith, Global Chief Consulting Officer at Capillary Technologies, added his perspective, saying, “The integration of ELI’s emotional data analytics and BLQ’s loyalty insights creates a potent synergy. Brands can now tap into real-time emotional loyalty intelligence, enabling them to make data-driven decisions that drive customer loyalty and revenue growth.”

This partnership represents a significant milestone in the evolution of customer engagement and loyalty strategies. Brands collaborating with Capillary Technologies will gain a decisive advantage in today’s dynamic and customer-centric marketplace.

About Capillary Technologies:

Capillary Technologies is a global loyalty technology solutions company with a presence across the United States, India, the Middle East, and Southeast Asia. Capillary is a SaaS platform with a suite of products- Loyalty+, Engage+, Rewards+, and Insights+- which are powered by a robust consumer data platform (CDP+) that helps brands build meaningful customer engagement and win customer loyalty. Powering loyalty programs across 30+ countries, Capillary works with 250+ enterprise brands including the likes of Tata, PUMA, Shell, Al-Futtaim, Petron, Domino’s, and Kanmo Group. With a massive reach of 1Bn+ consumers and processing 5Bn+ annual transactions, the company has the backing of Warburg Pincus, Sequoia Capital, Avataar Ventures, and Filter Capital. For more information, visit www.capillarytech.com.

Maximize Airline Loyalty Programs for Profit and Passenger Satisfaction: A Guide through Examples

Posted on October 17, 2023 by Anjali Pillai

Airline loyalty programs (often called frequent flier programs) aren’t just about collecting miles while flying; they’re a dynamic long-term partnership that benefits travelers and airlines alike. In the fast-paced world of travel, these programs have evolved into powerful strategies that enhance the passenger experience while boosting airlines’ bottom lines, even during the toughest economic climates.

In this comprehensive guide, we’ll dive into five prominent airline loyalty programs, shedding light on their numerous advantages to travelers and the airlines. This guide will enable your journey of designing or expanding a customer loyalty program that deliver RoI and delights end customers.

1. Sky Miles by Delta Airlines

Delta Sky Miles, one of the most popular airline loyalty programs, is free to join and boasts a staggering 120 million members. As of 2020, Delta has earned around 2.2 billion alone from SkyMiles.

Delta Sky Miles follows a Medallion status hierarchy, which provides exclusive benefits as the customer ascends through Silver, Gold, Platinum, and Diamond tiers, based on their spending and flying activity. An increase in status level can be earned by flying, hotel stays, credit card spending, and much more.

During the pandemic, when travel had entirely slowed down, Delta Airlines was one of the US carriers that was able to secure funding of $6.5 billion by collateralizing the future cash flows of their loyalty programs

In September 2023, Atlanta-based Delta Airlines announced some changes to its Sky Miles program which has not been well received by its loyal customers. According to the new changes, the focus shifts to how much the customer spends instead of miles flown, making it two times harder for current customers to enjoy the Medallion Status. While this new shift is going to make sense considering the financial benefits for the airlines, it poses a conflict of interest for its current loyal customer base. Only time will tell as to how this will pan out but as a learning for loyalty marketers- it is crucial to analyze the repercussions of a change in loyalty program design.

2. Miles and More by Lufthansa

With over 20 million members, Miles and More is Europe’s go-to choice when it comes to airline loyalty programs. With an extensive network of 40 airline partners, including renowned names like Lufthansa and SWISS, this program offers a seamless travel experience.

In Miles and More, the tier levels are different from other airline loyalty programs. The tiers of Miles and More loyalty programs escalate as follows- Frequent Traveler, Senator, and HON Circle Member.

While qualification thresholds for membership tiers are slightly higher, even Frequent Traveler members can enjoy perks. Some of them are:

Exclusive lounge access
Priority check-in and boarding

Miles and More’s interactive mobile app helps people keep track of their miles, set miles targets, and make it easy for travelers to redeem their rewards. They also get personalized updates on daily offers based on your reward status. And the best part- the app offers free 500 miles upon signup. Miles and More does all this by using zero-party data, ensuring absolute data privacy of its customers.

Leveraging the power of coalition loyalty programs, Miles and More is in partnership with several other brands, allowing customers to earn award miles not just from flights but also through partner hotel and rental car services.

Also Read: Understanding Coalition Loyalty Programs

3. Mileage Plan by Alaska

With a revenue of $479 million, Alaska’s award-winning loyalty program Mileage Plan is another leading frequent flyer program. Alaska Airline’s Mileage Plan allows customers to earn 30% more miles than many other airline loyalty programs.

A tier-based loyalty program, Mileage Plan offers a flexible earning system, allowing the traveler to accumulate miles not only by booking flights but also through partner hotels and rental car providers, like Miles and More. Additionally, the traveling member can even earn rewards by dining at partner restaurants and if you are using their partner travel credit card, you earn miles on every dollar spent on the card. How convenient is that!

Some other key benefits of the Alaska Mileage Plan include:

Premium upgrades
Inflight magazine subscriptions
Dedicated services
Faster boarding (no long queues at the airport!)

As a brand, it will be critical to have a thorough analysis of customer behaviour and design the loyalty program accordingly. With a platform like Capillary, the AI-powered Nudge Framework enables brand marketers to deliver personalized communication tailored for an individual. This helps in increasing customer retention and win their loyalty.

4. Skywards by Emirates

Emirates Skywards is one of the most popular frequent flyer programs in the Middle East and takes a comprehensive approach to rewards.

There are four distinct membership tiers and the higher your status, the more exclusive benefits you unlock. The miles you earn depend on a combination of factors, including the route, spending, your membership tier, and fare class.

Travelers can enjoy a range of benefits based on their membership tier:

Extra baggage allowance
Waitlist priority
Flight upgrades
Priority services
Access to business-class lounges and more

Skywards by Emirates also provides a feature to create a family account where travelers can pool their miles.

Additionally, you can accumulate Emirates Skywards miles not only with Emirates but also through partner airlines like JetBlue and Malaysian Airlines. The customer can redeem their Skywards miles with Emirates and their partner brands.

5. Flying Blue by Air France

Air France’s Flying Blue program boasts 20 million members and adopts a revenue-based rewards system, where the more you spend, the more you earn.

Flying Blue miles can be earned by flying with Air France, KLM, and Transavia, with miles credited to your Flying Blue account. From booking a flight, or hotel, to shopping with partner brands or using a co-branded credit card, Flying Blue provides a lot of opportunities for its members to collect miles. This system ensures that travelers are rewarded based on their financial commitment, making it a higher ROI source for the airline and ensuring premium services for member travelers.

Flying Blue offers a number of exciting ways to spend miles through partnerships with other brands. A few to mention are:

On-flight meals
Extra baggage allowance
Promo rewards on the first of each month
Lounge Access and more

Using the miles in your Flying Blue account the member can also purchase items from the Flying Blue Store, the payment being in miles.

Conclusion

When the pandemic posed a tough time for several airlines, it was the ones with a strong loyalty program that could steer clear through the tough economic times. Although people had temporarily stopped flying, they continued to spend with the loyalty program partners, especially the co-branded credit cards, ensuring a strong source of cash flow for the airlines.

This clearly shows us that a well-structured loyalty program can be a life savior for airlines during difficult times.

With the right balance between airlines’ financial modeling and customer satisfaction, airlines reap billions through their loyalty programs. This requires a mix of the right loyalty consultancy and tech platform which comes together with Capillary and its acquisition of Brierley.

At Capillary, we provide comprehensive traveler engagement solutions, built for the airline industry. By combining a robust CDP, advanced data segmentation, and AI-driven prediction, airline brands can create a loyalty program that gives incremental value to their travelers in every phase of their journey.

Find out more about Capillary’s airlines solutions here.

The Future of the Foodservice Industry: Technology or Quality Driven

Posted on October 13, 2023 by Ned Shugrue

The Foodservice Technology Conference (FSTEC) 2023 wrapped up a few weeks ago in Dallas, and it lived up to the conference’s theme of ‘the restaurant industry and technology converge.’ Countless sessions by industry leaders shared insights and innovative strategies for using technology to drive business growth, providing value to customers, and transforming the customer experience.

In July, Capillary shared some trends driving growth in the loyalty industry. These ever-evolving dining trends use new technology to create an innovative, data-driven, digital-first customer experience (CX) ecosystem. These recent trends drive repeat purchases with the ability to alter customer behaviors while still delivering value to the customer.

Here are some of Capillary’s key takeaways from FSTEC 2023:

Everyone’s talking about loyalty, but everyone isn’t convinced loyalty works.

Several brands attending the conference spoke about their loyalty programs, but many did not believe their programs were effective. A prevailing theme in the restaurant industry is that their programs are not standing out — “punch card” programs are the most common industry standard, but this system doesn’t seem to move the needle.

Why have these programs become so commonplace? Many brands selected full-stack restaurant marketing/technology solutions with built-in restaurant-oriented loyalty modules.

Indeed, these generic loyalty programs may not be effective. The answer is to build a loyalty solution unique to your brand! McDonald’s, Starbucks, and Dunkin’ prove that loyalty works in this industry.

The secret is creating a custom-tailored loyalty program designed to enhance your customer experience (CX), is unique to your brand, allows for rich personalization and flexibility, and improves operations.

Every restaurant business is a technology business.

Technology is everywhere in the restaurant business today. Since much of that technology is now dated, many brands are exploring new technologies to help them improve their operations, margins, and customer experience.

Of course, the hot topics are generative AI and tools like ChatGPT. Restaurant brands are deciding the best way that AI can help them streamline and automate back-of-house operations, improve marketing and customer engagement, handle customer service, and optimize and automate their business operations. Exciting times ahead!

Fast-casual concepts are booming: customers love quality.

As a consumer, it doesn’t surprise me that customers consistently choose quality, interesting, fast-casual concepts over brands that specialize in making food fast and cheap. We live in a “golden age” of unique, high-quality, fast-casual concepts, and many brands are scaling quickly. The winning brands are building modern technology stacks with high-utility apps and websites to power mobile ordering, loyalty, etc. They also use technology to create highly engaging experiences, power marketing journeys, and automate offers and content. But at the end of the day, doing these things helps these brands optimize their businesses.

FSTEC 2023 proved what Capillary has been saying: new technology plays (and will continue to play) a critical role in success in all industries, but especially in food service and restaurants. Choosing the right technology partner is vital in creating a unique restaurant loyalty program aligned with your brand and that is not a cookie-cutter version of your competitors.

Connect with me or one of Capillary’s F&B loyalty experts to learn how we can help your business today!