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Podcast: Travel Loyalty Is Changing Because Consumers Are Changing First - Skift

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During the Travel Loyalty Online Summit on July 16, Skift Aviation Business Editor Brian Sumers Zoomed with The Points Guy’s Brian Kelly to talk about how consumer spending during the Covid-19 pandemic and how (hopefully) afterwards it will change how airlines, other travel brands, and travelers themselves think about loyalty.

We’ve taken that conversation and added it to the Skift Podcast feed. You can listen to it below, or through your favorite podcast app.

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Partial Transcript of the Conversation

Sumers: Thank you for the time this morning. I wanted to start a little bit by asking about your own business, because we see you as a loyalty expert and you certainly are.

But The Points Guy is also part of this ecosystem. We know that you’ve historically made some pretty big money on referral fees, which is great. How is The Points Guys business now because I think it’s a pretty good barometer for how the rest of the industry is doing.

Kelly: Yeah, I mean, it’s for sure a challenge.

We, you know, are in the business of credit cards, especially travel premium credit cards and

No one’s traveling and you know the credit card companies. Right now, we’re really challenged, you know, the risk models that they’ve had for years are out the window right when we potentially we’re going to hit 30% unemployment.

You know furloughs still happening even in the travel industry. We don’t know whether CARES is going to be renewed. There’s so many uncertain things in the marketplace.

Clearly there’s just not a lot of consumer demand for new credit cards, and certainly not an appetite from the credit card company. So we certainly still have our partnerships. People are still getting credit cards, but

We’ve been flipped on our head for sure even personally, you know, I’m I think the biggest spokesperson for travel. I think it makes the world a better place. I started traveling a little bit to Antigua a couple weeks ago. But, you know, fundamentally, I’ve had this existential questioning of, like, what is my role right now where I firmly do want people to travel safely and I do believe in education, but just looking at the numbers of what’s happening in the United States is is is crazy.

Luckily, we’re owned by Red Ventures, which is a very profitable private firm. We’ve got actually a lot of different business units from healthcare to home services that are doing great. So luckily being a part of a conglomerate has its perks where we haven’t had to do any mass layoffs, or and hopefully won’t have to.

Sumers: Great. So when we started this program this morning. A few hours ago I asked Luke at United a similar question about credit card signups because that’s such an important part of loyalty. I asked if the airline is worried about the future scientists being down and he said, look, there is nothing as aspirational is that business class long-haul ticket.

I mean, do you think that there’s going to be a shift in the credit card industry so people get more excited about getting maybe an Apple credit card or is there just something about travel that as soon as it comes back the business is going to snap back and people are going to want these travel rewards cards?

Kelly: Yeah, the business will definitely snap back you know the economy’s in a long road right now we know the economy’s not going to snap back. I think as quickly and then people want to save money. They want value. So I do believe in the long term, you know, travel, come back.

It could be a while though. And I do think it’s important for loyalty programs, you know, especially airlines, people may not be traveling for the next months. So how do you engage your consumer. We’ve seen credit card companies do it, you know, instead of travel, you know, now you can earn on streaming and your phone bill. Those are I think the industry has done an okay job at stopgap measures, you know, Chase offered five X points on the Sapphire Reserve on groceries until June.

So I think there needs to be a lot more and a lot less friction on redemption and different redemption opportunities. I’d love to see an airline team up with it RV share, you know, come up with some clever partnerships. Because people’s travel is dramatically different now. And in the next three months than it was six months ago. So I think loyalty programs. The onus is on them to create compelling ways for people to continue to redeem without stepping on a plane.

And what about when it comes to bonus miles? A lot of these cards offer three or five times bonus miles. If you spend on travel people aren’t spending as much on travel, you mentioned groceries before. But if you were advising a credit card company — and maybe you are — what bonus categories do you think would make these cards a little bit more sticky, a little bit more enticing to your readers?

Kelly: Well, I think the issue here. There’s bonus points all over the place. But you’re in a currency that it has little to no use, you know, for me right now. I’ve got a ton of points. And a lot of people already have points and they’re not going to be using them. So to me it’s not much about enticing people with more pumping the system with more ways to earn.

It’s really about redemption and I’d really like to see some more innovation on cool partnerships. You know, even around using your, your points to create an airline or hotel experience. You know, at home.

But it just starts glazing over the whole point of bonus miles being amazing is that you can redeem them to go to Tel Aviv or Buenos Aires or, you know, Palm Springs. But today, it’s just not happening. So I think we’re getting ahead of ourselves like airlines and some airlines are doing better than others with just shoring up consumer confidence and travel.

Certainly, I think our federal government should be doing a much bigger job you know mandating face masks and penalties. So there’s so many other things that need to happen. Just encouraging consumers to bulk up on more points is not strategic in my opinion.

Sumers: Yeah, you know, people have made the joke before about Delta SkyMiles being Delta SkyPesos. I won’t explain exactly why, but as you mentioned, there’s a lot of currency being pumped into the system right now. This is not that different than any other currency. Do you worry about inflation?

Kelly: Absolutely. I mean, it’s just a simple economics. What are people using these points for because there’s not many compelling ways.

You know, and black lives matter on social, you know, that’s what’s going on in the world right now. That’s what so many people are interested in creating ways to donate your miles to social justice organizations. We did a report on it and there are very few ways to actually redeem your miles for charity, certainly. United rolled out a really unique program kind of crowd fundraising for miles last fall, which I thought was great. Let’s double down on that. Let’s figure out ways. Look at what’s going on in the world today and be a part of that conversation because travel, we all know.

It’s gonna be a long slog until we get back to having the public restored faith and travel, especially with the virus out of control. So really, I’d love to just see some more innovative ways to keep people engaged, not just on earning but on the redemption side as well.

Sumers: Just in case. Mark Nasser of Air Canada is still listening, he would want me to say that you can donate miles to charity.

Kelly: I am a spokesperson for Rainbow Railroad and you can donate your miles directly from Air Canada and we help LGBTQ people around the world escape persecution and Air Canada has been an amazing partner, so thank you.

Sumers: So I wanted to shift a little bit and ask you about the actual flying and elite status. Brian, I think you’re a lot like me, although even more intense. I have done so many irrational things in the last few years, not to get Miles, but to get elite status.

Um, do you think that world is coming back, or do you think the fact that we will all go a year or two with either no travel or limited travel will make us think much more rationally about travel and, dare I say it — will just buy whatever ticket works best for us.

Kelly: Yeah, I mean I definitely think it’s an existential threat you know the the lower of elite status is in a jam packed airport. You’ve got your lounge and your Oasis and you’re taking care of when you know jam-packed flights, back to back, get delayed and you’re going to be put on the next flight out.

That’s not happening. You know, I went to a lounge at LAX a couple of weeks ago and it’s, I mean it’s sad. It’s a granola bar and a cup of coffee from the bar. Which I totally understand. And I’m not, I’m not putting that down. But, you know, paying money for lounge access to an empty room with granola bars is a tough sell. And, you know, am I going to spend an extra couple of thousand to get upgrades when frankly I can’t visit most countries in the world. Now, clearly, hopefully that will change.
I’m not sweating about elite status, especially since they’ve all been rolled over also boarding the plane I you know I flew United and paid Polaris from LA to New York and you know you board last even in even in business class. I understand it’s different on different routes, but the days that I flew didn’t matter if you’re in Polaris you board last. It doesn’t really matter in business class because I had overhead space. Anyway, in the plane was empty. But those are perks. That’s the reason why people will do irrational things like mileage run, to your point, run to get to get points. Airlines have done a great job at extending kicking the ball down the road, but you know if travel doesn’t come back and it’s not as crazy and stressful as it was it was I think the the value of a lead status will diminish.

Sumers: It’s also such a weird thing. I mean, I follow you very closely on social media. So I know that you fly JetBlue sometimes. They don’t play as many games: You pay for a service and you get it. Do you sometimes feel better when you fly JetBlue and you don’t have to think about status and things like that?

Kelly: Well, but JetBlue does really, really well is the service and the product. I love Mint and actually today’s news about JetBlue and American Airlines’ new partnership is extremely exciting. JetBlue delivers on high-speed free WiFi and a sweet and business class for a reasonable price. I love to reward companies like that, even if I don’t have the lounge.

The allure of a big three elite status to give you all these extra perks that are being eroded by coronavirus by the process of, you know, aborting and everything, you know, the new standards and lounges, it is something they’re gonna have to think about, especially with capacity down for a while. Part of elite statuses. And actually, one of our own writers summer whole turned down a first-class upgrade to get a blocked row in coach. Maybe that’s the new first-class upgrade. I’d love to see an airline give the option. I think a lot of people would choose the empty row.

That’s the type of innovation and that’s the type of stuff I’m sure the loyalty programs are thinking about. But we haven’t seen any real innovation. I think clearly we’re all hoping that travel kicks back soon, but I think we all got to embrace the fact that it’s not.

Listen to the full discussion:

Photo Credit: Picture (from left) is Skift airline reporter Brian Sumers, The Points Guy's Brian Kelly and George Hobica of Airfare Watchdog speaking at Skift Global Forum in 2017. Skift

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