Opinion: How low-cost airlines can unlock the value of loyalty programmes
10 Oct 2018 - by Nic Vlok
Loyalty programmes. Your hairdresser has one, your favourite coffee spot has one, and so does your local pet shop - these programmes continue to rise in popularity because today’s consumer is always on the hunt for more bang for their buck. Collecting points, receiving discounts, or even teasing shoppers with the opportunity of being part of a top-tier group (with rewards), are all ways that retailers are trying to tap into growing their customer loyalty.
In what started out as a simple programme to encourage loyalty, resulted in repeat customers and increased sales for many businesses across the globe – it remains a basic, but powerful marketing strategy.
Loyalty programmes are not for everyone
Even though they are powerful, not every brand needs to implement a loyalty programme. There are some iconic brands, such as Apple and Nike that have no need for a loyalty programme, but still have a cult-like following due to their brand status and product offerings.
This has, however, not been the case for many brands who have had to work hard at consistently driving brand loyalty through the offering of a reward programme.
How do airlines reward loyalty?
When it comes to airlines, if used correctly, frequent flyer programmes can significantly drive value in two very distinct ways: helping to solidify passenger loyalty and growing their revenue and profits, which in turn will help to grow the airline.
The history of loyalty programmes dates back to the early 80s when American Airlines launched a tiered system to reward passenger loyalty. The mechanics were simple - the more you flew, the higher you were in the tier system; and the higher your tier, the more points you earned per flight. Today, cleverly positioned loyalty programmes even extend to earning points using the airline’s preferred partners, such as car hire and hotels, and more recently, loyalty programmes affiliated with each partner.
Partnering up to reward more
In Mango’s case, our partners already have robust loyalty programmes for their members or clients in place. For example, Momentum’s Multiply offering, and Sanlam’s Reality reward programme offer their members or clients discounts when purchasing Mango tickets. So by not carrying the cost of a hefty branded frequent flyer programme, Mango has strategically managed to reach beyond our own customer base through all our various extended partners’ customer bases and unlock value to these potential flyers.
In a recent survey conducted by Answered, 53% of travellers indicated that a loyalty programme played no role in their decision-making process when choosing which low-cost carrier to fly with. This shows that, travellers are placing more value on low costs instead of loyalty programmes.
A 2015 report published by Deloitte, Living the dream or just dreaming, cautions that if the strategic decision and investments in loyalty programmes are not aligned with the overall business strategy of an airline, it could result in a wasted investment and a significant loss in customer loyalty. We agree, and in turn have been driven to find other ways to offer value for our customers. Mango believes that this is where low-cost carriers have the upper hand - by making our products available to a multitude of other programmes.
The customer can extract more value from their participation in a loyalty programme by using available points or credits to purchase air travel. Mango accepts loyalty points as a form of payment from a number of loyalty programmes run by our partners. For example, SAA Voyager rewards can be redeemed on Mango flights.
As another example, Momentum’s wellness and rewards programme provides its members with savings of up to 50% on up to 12 Mango flights per year. In this financial services provider’s 2013/14 financial year, Multiply saved its members more than R18 million on flights with Mango!
Exploring the ‘un-flown’.
By partnering up with other brands, Mango can reach new markets, one of which is the ‘un-flown’ market. We keep our ticket prices at a minimum, thereby giving South Africans who have not flown before, the opportunity to travel across our beautiful country with us as we paint the skies orange!
Mango was one the first airlines in South Africa to align with retail partners for payment options. Now, our Guests can pay using their Edcon Thank U Account card at any Edgars, Jet, Boardmans, Legit, CNA, Temptations or Red Square store. Guests can also book and pay for their Mango flights at any Shoprite, Checkers, Checkers Hyper store and Pick ‘n Pay kiosk. This has made it both easier and cheaper to fly with Mango.
To see how you can unlock true value on your travels, visit www.flymango.co.za @flymango.co.za
Nic Vlok, Acting CEO at Mango Airlines