Loyalty is Earned, Not Bou
With Changes to its SkyMiles Program, Delta Puts Loyalty Programs in the Spotlight
With Changes to its SkyMiles Program, Delta Puts Loyalty Programs in the Spotlight
A diamond is supposed to be the most indestructible mineral on earth. Let’s hope that’s the case for our Diamond Medallion status with Delta.
Last week, the leading U.S. airline announced significant changes to its SkyMiles program, one of the biggest and most revered loyalty programs in all of brand marketing. These changes will disrupt the loyalty bonds that Delta had built with its most loyal customers. But in a bad way or a good way?
😡 Many travelers feel betrayed and disheartened, expressing their outrage on social media. Delta customers are upset because loyalty programs are meant to involve mutual commitments, yet Delta can unilaterally change the rules, leaving members who earned status with no ownership or recourse if they decide to switch airlines. On the other hand…
🤓 Others believe Delta’s comprehensive product offerings, including improved WiFi, on-time performance, and Business Class experiences give them a competitive edge in this loyalty program transformation. This has also sparked discussions about using blockchain and smart contracts to create more transparent and mutually beneficial loyalty programs.
✈️ My take: Delta is likely planning beyond this, aiming to create an expansive ecosystem centered around this program, encompassing various aspects of the consumer journey, such as car rentals, hotels, meals, shopping, and vacation packages, rather than focusing solely on flights. They’ve seen a significant increase in traveler engagement across the ecosystem, with over 50% more participants compared to 2017, and anticipate this trend will continue to grow.
⚖️ The situation highlights the delicate balance between brand loyalty and consumer satisfaction in the world of marketing. But it doesn’t need to be that hard (right, Lego?).
Situation: The cost of acquiring new consumers is 5x higher than the cost of retaining existing ones. While acquisition allows you to increase the amount of customers you have, customer retention allows you to maximize the value of customers you have already captured. It’s not an either/or, but budgets can and certainly should shift to be more efficient.
Challenge: Yet… they haven’t. And too many brand marketers are making one big mistake over and over again: confusing strategy with tactics. This is what separates the mediocre brands from the mighty ones. Strategy isn’t about what your TikTok content should be or which influencer to work with; those are tactics.
Threat 1: The engagement ecosystem is evolving. Consumers jump across various channels and have different identities. It’s more complex than ever, which makes it challenging to centralize their activity or meaningful data. Add in influencers and you’re now even more fragmented in more places. No wonder why it’s creating a ton of missteps, mistakes, and inefficiencies.
Threat 2: Traditional loyalty programs suck. They were designed for in-store transactions and DTC commerce ONLY, struggle in this multi-platform environment. They didn’t account for creators and influencers. Or even most media and social channels, or even ecommerce platforms. Outdated loyalty programs lack the capacity to foster deeper engagement through connectivity, continuity, or community building. They have limited capabilities to offer dynamic rewards, unique experiences, or collaborative opportunities. So maybe Delta’s changes set them up for more expansive thinking? It remains to be seen.
Opportunity: At the core of every brand strategy is defining the value exchange with target consumers. Tactics are the execution of that value exchange. Offline, online, onchain throughout the evolving engagement ecosystem. A balanced value exchange, where brands offer benefits to consumers in exchange for loyalty, creates lasting customer value.
Solution: This much IS clear. To create connections with consumers, earn their loyalty, and maintain a long-term relationship, marketers must do 3 things:
Design a value exchange balancing what brands and consumers each need.
Develop a CRM strategy for an evolving cross-platform environment.
Deploy the tactics: entertaining / informative content, engaging experiences & relevant rewards.
To learn more about the next generation of impactful branded loyalty and CRM program opportunities, visit Kazm.com.
(Exerpted from this week’s Four P’s — read the full post here and subscribe!)