🟢 The problem with the business model of miles and loyalty programs
I could have titled this article "Why I Don't Fly KLM - Air France Much Anymore," but I'm certain you'll relate to some of the issues addressed here regarding the evolution (or lack thereof) of loyalty programs in many businesses.
Many industries rely on various forms of loyalty programs, with airlines leading the way through their miles systems and tiered statuses ranging from silver to platinum. In a stable world with a steady economy, this business strategy has had many merits. In our current environment, however, it's becoming a significant liability for brands.
Let me explain.
On the surface, the core mechanism is brilliant: provide an ongoing, measurable incentive for customers to engage with your brand and repeatedly purchase from you. Allow them to earn extra perks and status as they reach significant consumption milestones, propelling them forward, and celebrate top customers with additional privileges. This should lead to a virtuous cycle where customers feel increasingly valued by your business and desire more.
Whether it's straightforward loyalty cards at Starbucks, fast lanes when renting a car at the airport, or receiving discounts and promotions on seasonal products ahead of the crowd, all these incentives theoretically lock in customers progressively as they gain access to them. If your airline status grants you access to the business lounge with excellent Wi-Fi, complimentary drinks, and food, how do you go back?
