Loyalty Innovation in Travel & Hospitality, International
Founded in the Queensland outback in 1920, Qantas has grown to be Australia’s largest domestic and international air- line. The Qantas Group’s main business is the transportation of customers using two complementary airline brands–Qantas and Jetstar. We also operate subsidiary businesses including other airlines, and businesses in specialist markets such as Q Catering.
When the global financial crisis consumed the developed world and companies struggled to maintain a profitable business, let alone hang on to their travel budget, airlines became a major casualty in the ensuing fight for what remained of the corporate expenditure budget. In this fiercely competitive atmosphere, frequent-flyer programs remain a key driver of choice for regular travelers. To protect its position and provide its most frequent flyers with a reason to stay loyal, Qantas needed to expand and invest in its 25-year-old Frequent Flyer loyalty program. Qantas focused on a strategy to protect and grow its high-yield passengers.
At a time when many other airline loyalty programs devalued their programs by reducing the number of points earned from flying, Qantas increased earn rates for its middle-tier members. Then it launched Platinum One, a status-recognition level within the Platinum tier program. By introducing a new aspirational level with exclusive services and benefits, Qantas hoped to retain and grow high-yield business from its most frequent flyers.
Based on research, and in close cooperation with its yield management, sales and operations teams, Qantas developed a suite of benefits exclusively available to Platinum One members. By developing the systems to recognize and report on Platinum One members throughout the customer journey, Qantas was able to highlight them to its customer-service staff, who would then provide extra support and services, such as a 24/7 dedicated on-call unit. In May 2011, Qantas announced that Platinum One would be launched later that year, providing details of what would be required to qualify.
Between the announcement and launch, data showed a shift in airline choice as members strove to reach the high-status credit qualification levels. At launch, membership was 35% more than forecasted, and results continue to improve. Growth levels were, on average, 22% higher than anticipated and retention levels were tracking as 30% higher than forecasted. Also, Platinum One members on average open and read emails 25% more often than other Frequent Flyers.
Voice of the Voters:
- “Qantas has recognized the aspirational nature of loyalty programs, and used analysis to create a new goal level (and profitability level) for valuable customers who had maxed out their aspirations. The new level apparently hit the right buttons. Bully for Qantas for fishing where the fish are.”
- “Continued innovation in a mature program – a challenge for all aging loyalty programs.”
- “Very comprehensive strategy. Very well analyzed.”