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Mark Ross-Smith is an award-winning global airline loyalty industry leader, and he is CEO & Co-founder at StatusMatch.com, helping airlines grow and manage their most valuable customers. Mark has worked with major brands like Emirates, Lufthansa, Air Canada, Frontier, Spirit, El Al, Copa, Royal Air Maroc, LATAM & more. Known as “Mr Loyalty”, Mark is the most followed airline loyalty leader on social media, and he won Loyalty Magazine’s ‘Loyalty Royalty’ 30 under 40 Award in 2022.

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Ned Hayes (00:00):

Welcome to Spark Plug where we talk to smart people working at the intersection of business and technology. Brought to you by SnowShoe, your smarter loyalty leader.

(00:11)
Spark Plug is excited to welcome Mark Ross-Smith to the podcast today. Mark is an award-winning global airline loyalty leader. He is a CEO and co-founder at StatusMatch.com that helps airlines grow and manage their most valuable customers. Mark has worked with major brands like Lufthansa, Air Canada, Frontier, Spirit, Copa, Royal Air, and many more. Known as Mr. Loyalty, Mark is the most followed airline loyalty leader on social media, and we are very excited to have him as part of our podcast today. He won Loyalty Magazine’s Loyalty Royalty 30 under 40 Award last year, and we’re thrilled to have him. Welcome, Mark.

Mark Ross-Smith (00:53):

Hey, Ned, Ashley. It’s great to be with you today. I’m looking forward to our conversation.

Ashley Kosak (00:58):

As are we. Thanks so much for joining us. Well, Mark, let’s start with StatusMatch.com, which you founded in 2020. Can we start by defining the industry term status match? Will you share a definition and explain why this is an important practice for the airline industry?

Mark Ross-Smith (01:16):

Sure. So straight off the bat, StatusMatch as an idea is the cheapest, fastest, most effective way for airlines, hotels to drive new high value customer acquisition. And so the idea of a status match has been around since about 1986 where a gentleman was flying with United Airlines quite a lot. He sent a fax to American Airlines and said, “Hey, I fly with your competitor quite a lot. If you give me some perks, I’ll shift my business to you.” They gave him some perks and he shifted his business and, voila, status matching was born.

(01:47)
So it’s about 35 years old as a concept. And the idea goes something like this. If you have a silver, gold or platinum status with an airline or a hotel, the other airlines and hotels, they want your business as well, right? Because if you’ve got status with an airline, presumably you’re worth some money to the airline. Yeah? And so the competitors, like the leeches, they want some of that, right? So they say, “Hey, you’ve got gold with airline A, we’ll give you gold status over here so it’s equivalent sort of thing.” So they’re matching your status, right? So they’re giving the equivalent kind of thing. So, “Here’s gold status. Now come fly us, please. Pretty please.”

(02:26)
So that, it’s kind of like wooing a new partner on a date, take him out to dinner and say, “Please, let’s hang out again,” kind of thing. It’s a similar kind of idea with the status match is you’re taking initiative, showing some goodwill upfront and saying, “We’d like more of your business.” And it’s very effective because if you’ve got gold stars on one airline, presumably you’re pretty hooked on that brand already, and someone comes along and says, “Here’s gold over here. Just come try us, just once, just for a second, just one time.” You try it, you’re like, “Hey, this is actually not too bad.” And then from then on it flows on and you might give them more of your business, might give them none of your business, but at that point it’s entirely incremental for that brand and the new business they could capture from you.

Ashley Kosak (03:12):

Yeah. Wonderful, thank you. And you mentioned that the concept of status match is about 35 years old. And I know you’ve said before that the way that airlines do status match hasn’t really changed very much since then. So can you tell us what wasn’t working from your perspective and what solution you sought to provide to airlines?

Mark Ross-Smith (03:34):

So back in the day it was fax machines. So fortunately, we’ve moved on from there. I liken it to Apple and iPods and iTunes and stuff. If you rewind 20 years ago, you could download music pretty easily off the internet for free. You took a few risks when you did it. Some are legal, some not. There’s all these viruses and all sorts of stuff you had to watch out for, but you could get it. Just like airlines and hotels, they can run a status match promotion themselves, but there’s risks that come with it.

(04:05)
So what we’ve done is effectively cleaned it up. So we’ve made it easier, faster for the user, just like Apple did and started charging people for music. We charge people for status matching. So we charge the customer a fee to go through this process. And that fee varies depending on the brand and the timeframe they get status for, all sorts of stuff. So what that means is suddenly there’s money in this as well. It’s not just giving out for free and hoping for the best. When there’s money behind it, suddenly there’s money for marketing. Suddenly, there’s money to put behind anti-fraud tools and security and all these sort of problems that have riddled status matching at airlines and hotels for a very long time. We’ve seen fraud levels up to about 50%, 30, 50% in airline status matching, which is astronomical, obviously.

(04:52)
And so if you look at all these things combined with what generally has been a fairly poor experience for people… I mean, think about it, right? You’re a gold member with an airline, right? How much are you spending? 10 grand, 15 grand a year? I don’t know. Maybe more. 20,000 bucks, right? You’re a good customer at that point, right? And you have expectations, right? So you’re used to the being treated like a business or first class passenger. You’re used to the priority check-in, the priority lines, the lounge access, the champagne before it. You’re used to all this kind of stuff, right? And if an airline over here offers a status match without a good process, it’s a fairly average brand introduction type experience, you’re used to this level and then you’re treated not so great, it’s just not a great way to onboard a new high value customer. So we’ve cleaned it up, made it really beautiful, really fast, really easy, really, really easy for brands to acquire these high value customers that contribute massive amounts of money to the bottom line.

Ned Hayes (05:51):

I’m curious, your platform provides unique tools to make the process smoother and create a better customer experience. So can you dig into what your platform is actually providing to customers and to airlines?

Mark Ross-Smith (06:03):

So I posted on LinkedIn recently. Anyone listening, go check it out. I said that our business has no big data, no AI, no Web 3.0, no crypto, no blockchain, no ChatGPT, nothing like that. We’ve just focused on the fundamentals, right? Pretty boring business if you think about it. There’s no buzzwords, right? There’s no PowerPoint deck that says, “We’re the next crypto e-wallet,” none of that stuff. And yet we’re effectively a start-up, two or three years old, work with a bunch of major global brands. And I think part of what we’re doing, part of the traction we’re seeing is because we haven’t focused on the technology, we’re focused on this customer first approach. How do we make it better for travelers? How do we make it better for airlines and travelers to come together effectively? Because we’re kind of like a matchmaking service in a lot of ways, right?

(06:55)
So we think about technology. I mean, I’m a tech guy. I’m an engineer. I’ve made money programming for a long time. So I’m always a big fan of new tech and new ways to do things, especially if it’s easier. There becomes a point where I think just going back to the basics makes a lot more sense. Not trying to ride on the latest thing or get the whatever, big data, AI. These are great. For this business, it’s fundamentally a customer service function, customer introduction function. And I think technology has played an important part, but it hasn’t been the thing we lead with, right? So when we talk to consumers, we talk to airlines, we don’t say, “Hey, we’ve got this amazing Web 3.0 blockchain solution that’s going to revolutionize the industry.” We say, “Hey, we’ve got this pretty boring thing, but we’ve solved this issue that you’ve had for the last 35 years, and we can get you X, Y, and Z results off the back of that.”

Ned Hayes (08:01):

You really focus on the elite travelers, as you described, people who are spending 10,000 a month or more, global travelers who represent, what, 30, 40% of airline revenue? So can you tell us more about those particular people and how you reach them?

Mark Ross-Smith (08:17):

You’ve done your research, Ned. Correct. So these are the people who have silver, gold, platinum, diamond type status. Typically, they fly business or first class. They tend to book their flights or hotel rooms somewhere between three and seven days in advance. So the booking window is a lot shorter than a leisure traveler who might plan six months in advance to go to Disneyland, right? So when you book closer in, you tend to pay more just because revenue management, things cost more. Yeah? So they pay more. They tend to fly more. They fly more frequently.

(08:48)
To your point, these are the most valuable customers an airline can get. There’s a significant overlap between these customers and business travelers. Business travel in the US is worth somewhere around $330 billion. Around 14% of all trips in the US business travel related. And I’ve seen stats, they contribute somewhere around 70, 75% of profits for airlines. That’s in terms of airlines that are profitable from selling seats to customers. Roughly translates to about 950 bucks per travel, these per trip. So that includes flights, hotels, car rental, Ubers, the whole travel sort of experience per trip, right? So there’s a large overlap between that and people that have elite status or a silver or gold type level at an airline because they just interact more, they do more. So you would think that these brands would want more of these travelers because the more of these you have, the more money you make, the more premium revenue you get.

(09:46)
Another important fact here is that there’s another overlap, it’s like a three-way Venn diagram happening here, where these people that have the credit cards as well. So this is earning you points and miles from swiping your card. You earn your one mile per dollar, that kind of thing. Those miles drive high margin revenue for airline loyalty programs. They make a lot of money out of it. It’s extremely profitable. And so these things all need each other to work, right? So you need the points and miles. That drives people to get the credit card. When people have the credit card, they tend to fly more, they tend to spend more, they tend to then earn the elite status. And it keeps people in this, what we’ll call the premium loyalty ecosystem, right? Because if you’re not in this premium ecosystem, what are you doing? You’re flying based on price. You’re flying based on the preferred airline or the one with the least connections, or they serve your favorite snacks on board, or you’re choosing for something else that’s not loyalty related, right?

(10:52)
But what we’re seeing over the years is people will go above and beyond and do crazy things purely for loyalty, purely for the status, especially. They’ll fly halfway around the world just to keep their gold status. They’ll spend money unnecessarily just to keep it. And this is the thing. It’s a big thing in travel, actually. Anyone just Google status runs on forums and just see the millions of people talking about, “If I fly from New York to Paris and connect through Doha on Qatar Airways, I’ll earn 8,647 miles, and that’ll get me to gold for another year. And that will mean next year when I visit my parents in Hong Kong, I can go to this business class and I can try this champagne that I’ve never tried.”

Ashley Kosak (11:36):

That’s pretty incredible.

Mark Ross-Smith (11:38):

So these customers obviously are people that the travel industry wants to cultivate and keep happy because they have-

Ned Hayes (11:45):

Right, right. I have friends who do trips to Dubai just to rack up the miles.

Mark Ross-Smith (11:48):

It’s fascinating. It’s large groups of people that do this, especially around the end of their qualification year when they’re just short of keeping that platinum status for another year. It’s, oh, mysteriously the whole office needs to go for a trip to Cairo for the weekend.

Ashley Kosak (12:06):

Yeah.

Mark Ross-Smith (12:07):

Funny, that.

Ashley Kosak (12:07):

There’s just some committed travelers. Well, let’s actually look at travelers in general, if that’s possible to step back just a little bit, and talk about traveler behaviors and expectations and how they’ve evolved over the past couple of years because, of course, pandemic had a pretty big effect on travel. So in general, how have behaviors and expectations from travelers evolved over the past two years, and how are airlines responding?

Mark Ross-Smith (12:36):

What a fabulous question. We could talk for about three hours long. I think 2020/2021 really taught us that there’s some airlines that care and there’s some that don’t, and that split travel companies into two groups. I think it lowered some people’s expectations and what to expect from an airline. In many ways it brought forward the importance of having loyalty status with an airline or hotel where if you’re a gold or platinum member, suddenly if something went wrong, you’re looked after first, right?

(13:09)
So you’ve got 300 people the airline’s trying to re-accommodate or do something for. You just have that security of knowing that you’re at the top of that list, that you’re being looked after more than someone else. So a lot of people gravitated to try and get status purely because of that. Because that was the only way you were going to be more looked after by the airline. And I’m talking about things like being first in the refund queue, like a fight was canceled or you couldn’t fly because a border was closed or something and then getting a refund. That could be the difference between getting refund in a week versus six months. And that’s a big deal. You can talk about a lot of money here. There’s, I think, a lot of that going on.

(13:46)
There’s also, what, 80 new airlines that have started in the last couple of years? Mostly smaller airlines. And I think this is good for the industry in a lot of ways because there’s people out there that have seen how travel brands have triggered people in the last few years and thought, “We can do better.” Right? So they’ve come along, they’ve gone out, they’ve raised funds, they’ve got substantial backing. If you think about it, these new airlines are actually a better financial position than legacy carriers because some of those legacy carriers, they went out and got billions of dollars in loans, right? They’ve got all this debt that they’re carrying.

(14:19)
Suddenly, you’ve got this startup airline, has debt, but it’s a lot less. So actually a stronger position, if you think about from a financial perspective. And I think some of these new brands are trying to change the game a little bit. They’re learning. You know what? If I was starting out today, I’d just trawl through the internet and look at people’s complaints about the competing airlines I’m going to compete with and say… I’m making this up, but say British airway is my competitor, right? “What don’t people like about British Airways?” And then I would just do the exact opposite. I would fix all those things and put it in my airline. I don’t think it’s that difficult.

Ned Hayes (14:59):

Yeah. Well, it shouldn’t be that difficult, but with the pandemic, with all these changes, I mean, a lot of people are on the verge of being downgraded, right? I think you’ve said 50% of elite travelers are going to be downgraded in 2023. So that’s a downgrade tsunami. So what does that mean for travelers?

Mark Ross-Smith (15:18):

It’s pretty scary, downgrade tsunami. It’s the status cliff. The New York Times calls it the “Great Reset of elite status in 2023.” We’re in the end of Q1 now. Between Delta, United, Hilton, Marriott, so these are some of the bigger travel brands, between them I think there’s around 10 million people that have lost status or been downgraded already this year, and we’re only in Q1. So we’ve still got another three quarters to go this year. This is pretty scary if you think about it because we sent out a survey to 20,000 high value travelers at the end of last year, and one of the questions was, “If you’re downgraded in status, how will that affect your travel?” 86.6% of people said that they would change their travel brands in some way.

(16:06)
So what this means is some people might just stay home and do a Zoom meeting. Some people might rent a car to drive the hour or two hours instead of taking the short flight. Some people might just not go on the trip at all. Some people might fly cheaper airlines. Some people might do some other activity that isn’t aligned with what they used to do. And this obviously is great, I think, for travelers because we get to try new things. We’re not so etched on without the old brands we used to engage with. So I think in a lot of ways that’s good for travelers.

(16:39)
For a travel brand it’s pretty effing scary, I think, because you’ve got a big chunk of your database, for some airlines we’re talking 30, 40, 50% of people of elite status holders being downgraded, right? So if 50% are being downgraded, but 30% of your total airline revenue comes from these people, that’s a big chunk of revenue you’re putting at risk just by downgrading people, knowing that 86% of them said that they’re going to change their habits. Yeah?

(17:07)
So I think we’ll wait and see how it actually pans out. There are airlines handling it better than others, sending out a lot of offers to try and just keep you engaged in some way. A bunch of people needed to be downgraded, obviously, because they haven’t been on a plane in three years or four years. Realistically, what’s the value that they bring to the brand? Right? So downgrading them, not the end of the world. However, there’s one lady we know of works for a very large bank in the US and she was downgraded. And it was about a month after being downgraded, her travel budget for her department was reestablished, was put back in. And when I say travel budget, I mean many tens of millions of dollars, right? It’s not a small amount. And so you can guess what airline she was not going to fly at that point.

(17:55)
So there’s definitely a shift in terms of the customer share shift, I think, in the industry that’s happening right now. Airlines maybe not seeing it as much because anyone that’s traveled recently knows that it can be darn expensive to fly and stay in hotels right now because flights are full, premium cabins are full. So airlines are not seeing it as much now. I think towards the end of the year as demand softens and more capacity comes back into the market, more countries… China’s just reopened up, right? I mean, there’s a third of the world ready to go travel again, right? So you bring that back into the mix, suddenly airlines need an extra 100 flights a week to this country. And I think then we’re going to start see the implications of the long-term effects of downgrading large numbers of people very quickly. So we’ll wait and see how that pans out.

Ashley Kosak (18:45):

Yeah. Well, so what we’ve been talking about this whole time is really traveler’s loyalty to a certain airline, and I’d like to get a better idea of how airlines actually measure loyalty. I understand that an airline loyalty business can actually be more profitable than the entire airline itself. That’s something you might’ve spoken about before. But can you tell us, Mark, how airline loyalty businesses are valued, how they operate, and what can other industries learn from these airlines?

Mark Ross-Smith (19:14):

I may have mentioned this once or twice before, and you’re right, some airline’s programs are worth more than the entire airline group. It’s because of the type of revenue they generate, right? So when you fly, you buy a ticket, you pay 500 bucks to go across the country, think about what the margin might look like on that transaction for the airline. Two, three, 5% in coach, right? A bit more in a premium cabin. Whereas if you look at the airline, the loyalty side of the business, we’re talking credit cards, banks, miles, points, this kind of stuff. Yeah? And miles don’t exist. They technically don’t exist, right? You can’t touch them. You can’t feel them. You don’t need pilots to run miles, right? You don’t need aircraft. You don’t need landing slots. You don’t need 50,000 employees. And effectively, the airlines are selling miles to banks, right?

(20:04)
So you get your credit card that might have the airline logo or not, you swipe your card. There’s money in that transaction, right? So it’s a $100 transaction. There’s interchange fees. So what it means is the issuer, whoever runs your credit card brand, they get a small clip of that transaction, right? They get some of that money, and they split it. They keep a bit themselves and they use a bit to give you miles. So what they’re doing is they’re buying miles from the airline and putting it into your airline loyalty account, right? So making it up, they make a buy a dollar of miles for that one transaction that you did, right? That’s one of 10 transactions you’ll do today, and you’re one of 200 million people in the country doing that every day. So there’s a lot of money there to the point where the three big US airline loyalty programs in 2020 were all valued somewhere between 22 and 30 billion US dollars, just the loyalty program itself, where the airline was valued somewhere between 10 and 15 billion.

(21:00)
So what it means is in theory, the airline has negative value, right? Gary Leff from View from the Wing talks about how American Airlines has to fly aircraft to support the value of its loyalty program. So they’re not an airline. They’re a marketing company that flies metal tubes in the sky to support the valuation of their loyalty business, their marketing business. I think that’s a really interesting way to look at it. So what can other brands and other industries learn from this?

(21:32)
Actually, there was something interesting I saw recently where this guy was saying if you wanted to start a new credit card product today, it would be cheaper for you to start an airline, run an airline, get a billion dollars, start an airline, do it, get planes in the sky, hire staff, catering, landing slots, fuel, do all that jazz, all the safety stuff, it’s cheaper to do that as a method to acquire credit card cardholders for your bank, it’s cheaper to do that than go through traditional customer acquisition channels like digital marketing online overall to get scale quickly.

(22:06)
So that’s how powerful airline loyalty programs are in driving transactional revenue for banks and credit card signups and stuff like that. Hence, the value of these programs, which is all underpinned by the type of revenue they create. We talked about airline ticket sales and the margin on that. The typical margin on selling points or miles to banks can look from anywhere between 50 and 70%. So if you think of it like a marketing or a technology company, the type of money they’re earning and the multiples that would trade at and the valuation, it’s not crazy to think 20 to 30 times profit earnings ratio on a loyalty program. Whereas an airline typically might trade about six to eight times, which means for every $1 profit in airline loyalty business, it’s worth about six to seven times more than a dollar profit in an airline business.

Ned Hayes (22:59):

That’s really fascinating. We’ve talked in generalities about airline profit margins and loyalty programs. I’m curious if you could name some names? What are some examples that you have of really successful airline loyalty programs, ones that you admire?

Mark Ross-Smith (23:14):

There’s a couple that come to mind. I mean, I’m a bit of a Qantas fanboy. I’m Australian. I grew up there. I have lifetime status with them. I know they’re program really well. And for people in Australia, it’s a really fantastic program. The Qantas team put a lot of effort into it in terms of the benefits, and it’s extremely profitable as well. Again, probably worth more than the airline.

(23:34)
Another one that comes to mind, definitely last three or four years, I think, is the Air Canada Aeroplan program. They’ve done a lot of really great innovative things, new partnerships. They launched their thing with Starbucks, which is pretty cool. And more interestingly, they’ve launched partnerships with other airline brands that you wouldn’t normally associate with Air Canada. And what this means is it’s kind of brand introduction, right?

(24:01)
So you’re earning all these points and miles with an airline, and suddenly you can use them for some obscure airline you’ve never heard of before because you really want that business class to get to Europe. And so you try it, you redeem for it and go, “Hey, this is actually pretty cool.” So I think, yeah, Air Canada’s doing a lot of pretty innovative… In terms of airline loyalty innovation, I think they’re definitely up there in the top ones. And I think because of that reason, they’re one of my favorite as well. Because I like seeing innovation. I like seeing new things. Who doesn’t, right? Even as a customer, you’re rooting for your airline loyalty program to do something new, because when they do, it benefits you as well.

Ned Hayes (24:37):

Absolutely, yeah, it benefits everybody, right? So in the travel industry, as in many other industries, we’re beginning to see AI and big data disrupting industries, changing the game. So I’m curious if you could share with us and our listeners how the travel industry might be able to use these technologies to really personalize rewards, to really understand traveler preferences and optimize for different behaviors?

Mark Ross-Smith (25:04):

So we talked earlier about how we’re not using big data and AI and all this amazing stuff, but I’ll share some insights here, how I think it can be applied. Airlines collectively last year was about $90 billion worth of ancillary revenue, right? So this is selling meals and drinks on board, bag fees, seat selection fees, stuff like that, right? So airlines, funny enough, like making money. So they’re thinking, “Where’s the next 90 billion of revenue going to come from?” Right?

(25:33)
And so they’re looking to these new technologies. They’re looking to these new ways of personalizing offers and trying to extract more money out of passengers. It’s just the way that airlines are wired. That’s how you get people to pay more. Yeah? So I think those two might be a pretty good marriage. If I could start to predict with accuracy what you will pay for, even something that doesn’t exist today, if I can figure that out, you’re going to open your wallet, you’re going to put your credit card in, you’re going to spend more.

(26:03)
And that might not be the traditional things that airlines have been thinking about. So it might not be selling you an extra drink on the plane. It might be you earning triple miles on this flight, right? It might be pay this and get something else next time. I don’t know what the answer is, but there’ll be something there that, Ned, you’re willing to pay for that Ashley isn’t, that I’m not the next flight. And everyone’s going to be different. So I think having a greater understanding of who the travelers are and what they want, which also includes what they don’t want… Because if we look at ultra premium passengers, the last thing they want is to get an email about, “Sign up here. Get the credit card.” Right? Or if you only fly first class and suddenly I get an email, an airline has done this to me before, “50 bucks and fly from this city to the city,” I don’t care. It actually disengages me, right?

(26:58)
So in some ways, learning what not to send people I think is just as valuable as learning what to send people and how to engage people, right? And definitely at the higher echelon of society, these people tend to not want things. They’re not going to open the emails because someone else is probably opening the emails anyway. So I think there’s a learning curve that has to come here with travel loyalty programs and it’s about learning what people do and don’t want. And from there I think we’ll be able to figure out what technology is best beat out or applied to then figure out how extract more from people.

Ashley Kosak (27:38):

Well, and in addition to using these new technologies to offer more personalized experiences and predict consumer behavior, do you see the airlines also using these technologies to change how they operate? And I’m thinking specifically about interactions with travelers, chatbots, things like that.

Mark Ross-Smith (27:58):

Have you ever used a chatbot with an airline?

Ned Hayes (28:00):

No, you don’t.

Mark Ross-Smith (28:01):

Have you tried that? Don’t. They’re horrible. So I really hope that they can start there. I’m pretty old-school with this stuff. I like the romance of travel. I like dressing up in your Sunday best to go on a plane. I like this kind of stuff, and I’m sure there’s many millions of people like me out there and many millions that are not. I like going to a check-in counter. I like putting my passport down and saying, “I’m traveling to New York.” They go, “Oh yes, sir. Let me check you in.” They bring out the business class tag. They put it on your bag. They get the boarding pass and go, “So here’s your special invitation to the lounge today. It’s up the escalators to the right, through security. Oh, and here’s George. He’s going to escort you through security to the lounge today because you’re one of our most valuable frequent fliers.”

(28:50)
I love this stuff. I love the hands-on stuff. Where else do you get that? What other business treats you like that? It’s something special about it. Maybe I’m old-school, but I kind of like that. I don’t see a chatbot replacing that. I don’t see AI replacing that yet, just because it’s a human interaction. If there’s a robot that comes up to me and says, “Mr. Ross-Smith, I will take you to lounge, blah, blah, on concourse A now,” it’s going to be cool the first time, but there’s something special about a real person there and having a real conversation.

(29:27)
Quick story. I recently was flying out of Kuala Lumpur in Malaysia, and I was flying Emirates. I was walking to the first class check-in counter there, and the lady from the airline runs over to me and way before the counter, this is in the middle of the airport, and she goes, “Are you Mr. Ross-Smith? We’ve been expecting you.” Okay, I’m no one special. I’m a mid-tier member, right? I’m no one important, by any means. She’s like, “Let me take your bags.” Just go for it. Okay, fine. And I’m a tall guy. I’m 6’6″. I go to the gym. I’m very capable of carrying bags and navigating through an airport, and a tiny little Asian woman has grabbed all my bags and is trying to take them to the counter. My point here is that human interaction, I think, is something special. I think it’s something special the travel industry has going for it. And in my view, I think it should embrace it. I think it should double down on what it does best, which is human interaction.

Ned Hayes (30:22):

Yeah. Human interaction, I think, is going to be something that changes in the future as people start using all these different technologies, right? So I know you talked about human interaction as really driving engagement. Just now, your example of being really engaged made a difference. So I’m curious if there are other innovative marketing techniques that you’ve seen that’s really powerful?

Mark Ross-Smith (30:46):

Yeah. Airlines especially are in this unique position where they capture your attention, right? Because when you fly an airline, you’re traveling somewhere. You go to an airport, right? They’ve got you at that point, right? You’re not at home on your computer. You haven’t got, I don’t know about you guys, about 50 Chrome windows open at any one time, right? My attention’s really not on any one of them, right? Got stuff happening in the background and stuff floats in and out of what you need to do during the day. But when you’re at an airport, you’re at an airport, right? You’re there, right? A lot of people disconnect from reality at that point. They’ve turned off their phone. They’ve turned off their computer.

(31:22)
I think there’s a lot of opportunity for airlines to… I think doubling down on the human interaction, I think that’s actually a powerful point because you’re thinking a little differently at that point. People are still on their phones and they’re still doing that stuff in the airport, but there’s something a little different there. They’re kind of open to new ideas. They’re open to new things because they’re traveling. Traveling is really quite magical when you think about it, and it always has been. And I think that magic, if I can call it that, a lot of it comes opportunity. And I think airlines are really only just starting to understand the real power they have, the influence they have of people. When people are in this… Heightened centers. They’re excited. We know that people in airports spend more just on just nonsense stuff. “I need to buy the perfume.” How much do bottles water cost in an airport? Astronomical.

Ashley Kosak (32:18):

Yeah, they do.

Mark Ross-Smith (32:22):

If you’re willing to pay 15 bucks for a bottle of water at an airport, what else are you willing to do? There’s a good question.

Ned Hayes (32:29):

That’s a great question. What else will you do for me? Right. So right now with status match and with everything happening with airlines, we’re in a shift out of the pandemic towards some positive things and also, as we talked about, the tsunami of loyalty engagement ending for some people and changes happening. So let’s look out. Five to 10 years, where are things going to be going? What does the future really look like in this domain?

Mark Ross-Smith (32:59):

Yeah, really interesting. If you look at the last five years and then try and use that to project the next five years, I think it looks pretty dark, to be honest. So I’m going to give you two answers. I’ll give you a dark answer first. With that in mind, looking at the last few years, then project that forward, I think we’ll be mostly in the same… Some part of me thinks we could be in the same place we are now, if not worse, right? Think about what travel looks like today. Let’s compare it to 20 years ago, just for fun. It takes more time to get through airports now, right? There’s more process. There’s more paperwork. There’s more security stuff happening, right? There’s new machines that detect metal on you and all sorts of stuff.

(33:40)
So has the experience really improved all that much if we look back and to compare to today? I really don’t think so. Not that much. So I mean, that’s the dark aspect, but I’m an eternal optimist and I like to think that bad times brings out the best in humanity. Or it can. It can. It’s kind of like a forest. It burns down and it regrows stronger and faster, that kind of thing, right? There’s, what, nearly 100 airlines started in the last couple of years? I think what we’ll find is that combined with banks waking up and realizing how valuable airline loyalty programs are and that value is underpinned by the product that they have, which is credit cards and the money that comes from that. So I think new airlines plus banks realizing the power actually is with them, less so the airlines these days, I think it’s a bit of a power shift that’ll change there. I think we’re going to eventually… Five, 10 years, I think it’s going to be more about customer service and customer recognition again and less about points and miles.

Ashley Kosak (34:45):

Well, Mark, thank you so much for joining us today. Your insights are just so fascinating and just, yeah, it’ll be interesting to see what does happen in the next five to 10 years. We do have one last question for you, which is what do you want your legacy to be? What would you like to be remembered for?

Mark Ross-Smith (35:02):

Travel is magical, and I think we all remember our first big trip somewhere. The first time we’re on a plane, the first time we went to… Maybe it was Disneyland or somewhere like that when we were young, right? I think if I can light up a small corner of someone’s world by creating more of these magical moments, I’d feel like my job is done. I could sleep pretty well for a lot of nights knowing that I’m just making life a little brighter for a few people in a little way.

(35:29)
The first time you have a gold or platinum status from an airline, you go into the lounge for the very first time and you realize everything is free. And you see that $1,000 bottle of champagne, you go, “That’s free?” No [inaudible 00:35:40] caveat. Or you’re boarding a flight and they call you to the front of the boarding line and you just waltz past 300 other people. There’s a small moment there that goes through your mind and goes, “This status thing, this is all worth it.” It’s a feeling, right? The feeling lasts about five seconds and then it goes away, and then you’re back at the aircraft again. I think these kind of small, magical moments, I think the world needs more of these, especially in travel, and if I can help create products that bring these small moments and bring joy to people’s lives through travel, I think I’d be pretty happy with that.

Ashley Kosak (36:21):

Thank you.

Ned Hayes (36:22):

Thanks so much for your insight and advice here. I’m really interested to see where the loyalty industry goes.

Mark Ross-Smith (36:27):

Been great to chat. Thanks, guys.

Ned Hayes (36:29):

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