I’ve been trying to find a good real-world example to explain the science behind airline and hotel loyalty programs, and I think I’ve come across one that summarizes how these programs work, in a really unique example.
Before I go any further, I found this clip from The Real Hustle, a UK television show devoted to talking about scams and the ways you can avoid them. Now, what you’re probably thinking is that loyalty programs are like a scam – and yes, in many cases I think they are. But, more so, I think they fall into the lines of an addictive drug, training people to come back for more, spend more money, and then receive little to no benefit, based upon previously promised perks. Take for example Delta — while they’re promising more miles earned based on your spending, they’re also increasing the price of awards, limiting stopovers, and limiting partner availability, which, while enticing on the outside, almost seems like a scam to the loyal frequent flyer.
Take a look at this clip, the Jam Auction.
You’ll notice people paying money, getting a set of products, and receiving their money back. In the first several rounds of this, they’re making out like bandits – and most importantly, they’re coming back for more. When hotels and airlines offer promotions and perks getting you into the door, you’re likely to keep using them again, and again. Between mileage bonuses, free upgrades, the best rooms in the house, and complimentary food, there’s a lot of reasons for you to keep using them. Then, when the time is right, there is a devaluation, or, as we commonly know it in the loyalty industry “an enhancement” to change the program, or tweak it towards a certain group. Now that there’s already a based of loyal members, it’s difficult to switch programs, or business.
Is this video a good representation of hotel and and airline loyalty programs?
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