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Time for Partnership Marketing 2.0
The airlines and large hotel chains, especially the US-based ones, have become increasingly vested in partnership marketing, to the point where today a majority of their profits come from this activity rather than from selling tickets and rooms to their own customers. The airline partners buy miles to use as incentives and rewards for their own customers (and prospects).
While airlines often lose money in less than stellar economic times, these partner programs generate large profits for the carriers. This has led to the airlines to consider spinning off their loyalty programs and in some cases even taking them public. This will be a disaster for the members, as the goals, objectives and strategies of the programs will be increasingly decoupled with the idea of creating customer loyalty.
Airline miles and hotel frequent guest points will be increasingly devalued. Miles are barely worth $0.01 each at this point, notwithstanding new capacity controls instituted on reward travel just recently announced. The combination of fewer award seats and hotel rooms coupled with an increasing supply of miles and points is surely a deflationary combination!
As the airlines all figured out how much money they could make doing partner deals, more and more of their frequent flyer programs ended up with virtually the same partner offerings. Thus, the partnerships programs have become increasingly undifferentiated and irrelevant to the majority of frequent flyers.
In one recent example, I recently received the exact same Hyatt offer from two different airlines, Delta and Northwest, who even happen to be alliance and code-share partners! From Delta, Northwest and Hyatt's perspective, little is gained by blasting out "me-too" offers over and over to the same customers.
As we approach the holidays, there will be numerous, similar emails advocating doing your holiday shopping so as to earn as many miles or points as possible. While that's a great idea, as every program will be doing it, what's the big deal?
At a minimum, the large travel loyalty programs should challenge themselves to look at partnerships as a tool to help them go beyond selling miles and generating accruals through partner transactions.
What if they figured out how to generate incremental trips via partners? What if they found new partnership categories, providing incentives beyond just another way to earn bonus miles. What if they created a specific product and/or service related offering? A tie-in with an innovative new travel company like I'm In? (For those who don't already know, I'm In is a website that helps you organize group travel with friends. Kind of like evite but for travel.)
Creating value for customers beyond points and miles can leverage partnership opportunities in a whole new way, not just for airlines but for other industries as well. Partnership marketing should not only be about bonus miles and points, it should be about creating new touch points, adding tangible, unique benefits (hard and soft), and it should be about sharing insights. Only with the latter will partnerships become more relevant.
There are limitless opportunities for innovation in partnership marketing...it only takes a willingness look for new partnership opportunities to compete, differentiate themselves, and succeed.
Airlines have been so successful selling miles through partners that there
are now far more miles in circulation than there are seats available for
redemption. Plus airlines have an insatiable desire for the revenues (and
income) that partner miles sales generate. Hence the proliferation of “me
too” offers you noted in your post