A Loyalty Program Gone Amok #united

You are probably too young to remember the classic movie scene in “Network” where Peter Finch raises the windows and screams, “I mad as hell and I am not going to take it anymore.”  It is one of the iconic scenes in movies.

After having flown 2.77 million miles on United, I feel that way about United Airlines.

There is a valuable lesson for golf course owners in structuring a loyalty program.

The concept of loyalty programs started in the 1880’s with tangible goods, i.e., free chocolate chip cookies.  S&H Green Stamps first provided cash incentives in the 1930’s, and loyalty systems were introduced by American Airlines in the early 1980’s.  Today virtual rewards abound, i.e., a like on Facebook or a new follower on Twitter.

The airline loyalty programs was a simple concept of earning miles based on actual distances flown that were redeemable for future air travel. For as little as 15,000 miles, one might be able to fly a round trip coach flight.  25,000 miles would have provided you a first-class flight within the United States.

The rule of thumb back then would redeem miles at $0.04 per miles.   In other words, you would redeem a first-class ticket for 25,000 miles if the cost of the ticket exceeded $1,000.  A coach ticket that would cost over $600 suggested redeeming miles was advantageous.

Based on the miles you flew annually, there were additional perks one might earn:  free baggage, complimentary upgrades to first class and early board privileges ensuring your carry on luggage could be placed in the overhead bins.

The popularity of these programs soared, and so did the way one could accumulate miles. One could earn miles by using the airline’s credit card with an initial bonus of 50,000 – 80,000 miles.  One can also purchase miles as shown here:

As with these additional venues for accumulating points, the complexity of the rewards system has expanded exponentially with the introduction of:

• Qualifying Miles
• Qualifying Segments
• Qualifying Dollars
• 4 Flight Segment Minimum

Please don’t ask how qualifying dollars are calculated.  A flyer must spend a minimum of $12,500 that is determined by an arcane system where one only receives a portion of the actual dollars spent.  I presume it is some percentage of what is spent vs. the full fare coach ticket penalizing those who buy tickets in advance at discounted fare.

Today, you are lucky to be able to redeem a ticket at $0.0075 to $0.015 per mile.  United Airlines has greatly devalued the intrinsic value of miles despite hailing themselves as #1 Airline Loyalty Program.  They have also greatly restricted the number of seats that are eligible for redemption.

Here are some examples:

• For the months of December through May, no saver awards have been available on flights from Denver, Los Angeles or San Francisco to any airport in Hawaii. I have checked weekly for three months wasting time in a fruitless search.   At a recent Castle Pines Village dinner, many lifetime UAL passengers expressed the same frustration of the limited availability of saver awards – even when searching 11 months in advance.
• On February 28, 2017, I used miles to fly from Denver to Johannesburg and on March 17, 2017, from Capetown to Denver. While we were able to obtain business class seats on Swiss Air and Ethiopian Airlines, the connecting flights from Denver to Chicago (UA457) and Los Angeles to Denver (UA314) we wait listed though we purchased the tickets on October 28, 2016.  Though first-class seats were available on both the UAL legs the day of the actual flight, we were not cleared for the upgrade on either.  To see first class seats available and not be upgraded on the day of the light according to our Platinum status is very disconcerting.
• Based on one’s program status, you are awarded global or regional upgrade certificates.  Have tried to redeem them on many occasions without much success.  They priority those certificates are given so low that advanced booking an upgrade is near impossible.
• When logging in and booking a flight, I am offered Bundle 1 and Bundle 2 options – none of which apply to me as I get free luggage and lifetime UAL Club access. UAL’s software should be able to recognize who the customer is upon logging in and only show relevant, not frivolous options.  United doesn’t recognize me based on my status but rather just part of the masses.
• Lifetime miles are only accrued on flights on United Airlines – none of their affiliates.

We believe that United Airlines has the fiduciary responsibility to its shareholders to maximize its net income.  We believe that United Airlines will accomplish this goal by providing customers value, demonstrating respect and efficiently flying passengers timely to their intended destination.

What is the lesson for golf courses?  For a loyalty program to have value it should include the following:

• The requirements to earn a reward should be defined.
• The point redemption system easily understood based on a single criterion.
• Higher accumulated spending should be rewarded with more favorable point redemption.
• The value of points earned should be not degraded based on annual adjustments.
• An individual can redeem instantly without having to engage in a prolonged search to find products or services desired.
• Monthly statements should be emailed to the customer summarizing their earnings.
• If miles or points are not posted by the Company, the customer should have 12 months to correct their account.
• Points should expire after >18 months.

What do you think are the essential components of an effective customer loyalty program?  Comment below