What is a loyal customer?

If there’s one subject that travelers regularly debate, it’s loyalty programs. Not profitable enough for some, not showing enough recognition to customers for others, they rarely meet with unanimous approval.

This is because professionals and customers don’t have the same definition of loyalty and what constitutes a loyal customer.

To cut a long story short, let’s say that industry professionals have an absolute view of loyalty, while customers have a relative one. Or that some have a business approach, while others are sometimes more emotional.

The customer’s view of a loyalty program

Customers therefore a relative conception of loyalty programs. For them, loyalty is measured by the proportion of their trips/stays made with a given airline or hotel chain. “I fly 100% of my flights with Air France, so I’m loyal to Air France.“It doesn’t matter whether this 100% corresponds to 10, 20 or 100 flights a year. It’s sometimes a couple’s logic where loyalty rhymes with exclusivity.

Which brings me to the affective dimension of a loyalty program for customers. A customer may be a fan of a brand for one reason or another, may only fly with one airline (even if he doesn’t fly much), may be a fervent promoter and advocate of it, and expects this engagement to be recognized, a point on which he is often disappointed.

Which brings us to the airline or hotel chain’s point of view.

Loyalty programs as seen by tourism professionals

Tourism professionals have an absolute concept of loyalty. It doesn’t look at how much a customer travels or stays with it compared to its competitors, but at the absolute number of nights or flights. In other words, he will be more appreciative of a customer who spends 50 nights in his hotels or takes 50 flights a year, but who does just as much with his competitors, than of a customer who does only half as much, but without frequenting the competition. What’s more, while the customer only looks at his personal consumption, the professional has to take into account that of all customers. They have to balance status and benefits according to customer consumption, so if there are a lot of customers with more than 100 flights a year, the one who only does 50 will take a back seat.

For example, it’s much easier to obtain Star Alliance Gold status with SAS than with Lufthansa, because the thresholds for its frequent flyer program are lower. Why ? Although Scandinavians fly much more than other Europeans (due to local geography), they do proportionally more medium-haul (because of local travel) and less long-haul (SAS doesn’t have as large a long-haul network as its German counterpart). In other words, a “big” SAS customer will fly less distance than a big Lufthansa customer, and the status thresholds are calculated accordingly. This is why it can be worthwhile joining Eurobonus, SAS’s program, even if you never travel with this airline.

This is a business approach to loyalty programs. And that’s only logical, since the loyalty program is an economic tool. The benefits granted have a cost, miles/points are a debt (which justifies the frequent devaluations) and in some cases they are a financing tool for the airline (they enabled some airlines to finance themselves during the COVID). It’s not a charity program, and it has to be economically profitable, which is why some people say that loyalty programs are never a win-win situation for the customer.

This is why most loyalty programs have become revenue-based, especially in the airline industry. Rewards points, which are used to pay for flights and overnight stays, are awarded not according to distance traveled or number of nights, but according to the amount spent. Obvious: a monetary reward must be matched by an income, otherwise bankruptcy is guaranteed. As for statuses, they are based on the volume that characterizes, if not loyalty, at least the intensity of the relationship. All this was made clear when Flying Blue was overhauled a few years ago.

Obviously, when people don’t talk about the same thing, there’s a good chance they won’t be able to agree.

A dialogue of the deaf

So it’s easy to understand why airlines and hotel chains are often proud of their programs while the “lambda” customer is disenchanted with them. All the more so as they are far more loyal (in terms of their own conception of loyalty) than many “elite” passengers, who enjoy more recognition and benefits even if they fly with several airlines.

But as they travel a lot more, they sometimes even manage to accumulate status on different airlines, function much less on affect when choosing an airline and think more in terms of alliances.

Let’s just say that frequent flyers have a less affective and more utilitarian relationship with the frequent flyer program, and are often more fans of their status than of the airline they fly with. But that’s another subject.

Does loyalty pay off?

So at a time when customers are wondering whether being loyal (according to their conception of loyalty) pays off, let’s be clear: loyalty doesn’t pay off, but volumes consumed and expenses do. It’s as simple as that, even if it will disappoint many fans.

Image : loyal customer by iQoncept via Shutterstock