In Asia Pacific and beyond, the world is changing with every passing second — from customer attitudes to loyalty, payments to technology. Is your company keeping up? Download a special 26-page COLLOQUY Asia Pacific Report to learn more about this vibrant customer engagement landscape and the lessons it holds for brands and marketers worldwide. Here’s one of the stories from this compelling report.
Rewards programs must be viewed as the potential revenue and business driver they are.
I joined Cathay Pacific’s Marco Polo Club when it launched in 1999. After more than 10 years of Cathay speaking publicly about the need to reassess its loyalty program, the region’s largest carrier relaunched the club in April 2016. The reason? It was becoming apparent that its most loyal members in the Diamond tier, and the two super-exclusive non-published invitational tiers above this, felt the value equation had shifted to leave them less valued — and less rewarded.
A glance at any boarding gate for a Cathay flight was a clear barometer that change was needed: The courtesy queue for Marco Polo members was longer than that for economy!
The changes to the program have brought in much-demanded mid-tier rewards of guaranteed upgrades and supplementary cards for spouses at the Diamond tier. While there is still no implementation of the lifetime recognition many North American airlines offer loyal customers who head off into retirement, Cathay now offers the ability to take sabbaticals and still retain status.
However, those in the lower tiers of Silver and Gold did not take the changes well at all. They now have to maintain a relationship financially weighted toward Cathay Pacific just to enjoy previously expected rewards of boarding and queuing privileges, along with upgrade availability. It’s clear from social media that a number of regular but not necessarily frequent travelers are voting with their feet and wallets and giving their business to other carriers where airfares are significantly cheaper, even if the experience is not as memorable.
But perhaps that is the outcome Cathay was looking for. Why not attempt to drive more yield in challenging times from a passenger segment that would embrace these changes, while at the same time reducing the cost of servicing the lower, less-valuable tiers of the club purely through migration? The changes were ultimately about bringing a sparkle back to what is already a high-quality product that has no need to offer blatant financial incentives or rewards for the masses at a cost to the airline.
Status has always been held in high regard in Asia. As markets and economies mature and segments grow, consumers move away from the need for discounts and coupons and look for real, tailored loyalty experiences that differentiate them because of their loyalty at those moments that matter.
Other carriers, such as Australia’s Qantas, continue to operate their clubs much as they have for the last 15 years. Qantas undoubtedly has the best first-class lounge in the region, and possibly the world, at Sydney’s Kingsford Smith Airport, but it is falling short on some of the softer aspects that could bring the sparkle back.
Exclusive event invitations are a mainstay of the top tiers in any airline loyalty program. On the surface, many would see this as a great perk, but as a former colleague and frequent Australian-based traveler told me, “They know when I’m flying; they can see my itinerary weeks and months in advance. So why do they offer me access to exclusive events when I am 5,000 kilometers away or have only just landed? It’s clear they’re not thinking about me as an individual.”
That is a challenge for many programs, whether in retail, travel, luxury goods or entertainment. In the age of mobile connectivity, with terabytes of consumer data available to drive real-time interactions, brands fail to connect in a relevant and timely way, missing the critical moments that matter — moments that could drive real experiences, loyalty and dollars.
The biggest challenge to remedying this in Asia Pacific: Loyalty and reward programs are still seen by local C-level executives as a marketing cost center as opposed to a revenue and business driver. This often keeps funding levels and strategic importance low and provides marketers with very little room to prove their worth in driving revenue. A real mind-set shift is needed, and many brands need to take the bold step Cathay did to rebalance the scales between consumer offerings and true loyalty.
And let’s be clear: Loyalty is fundamentally driven by a quality product and delivering on the brand promise. Far too many large brands still think it’s about discounts and offers and struggle to break through the communication clutter as they compete for a share of the mobile wallet and consumer attention. In this region, the challenge is amplified further as we are not just one homogenous market and need to address language, market and cultural sensitivities.
So what’s needed to drive loyalty in Asia Pacific? Deliver a quality product and you’re a long way down the road to being successful. But don’t reward everyone for their different levels of loyalty in similar ways and at a similar time; it just cheapens the experience. Get the balance right, and you have almost 60% of the world’s population, in the world’s fastest-growing region, appreciating the benefits true loyalty can bring and driving your business growth.