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Mark Ross-Smith, CEO of Loyalty Status Co, discusses how his company helps airlines grow and manage their most valuable customers through loyalty programs. He explains that loyalty programs can be worth more than the entire airline group itself and that his company helps airlines acquire new high-value customers. Ross-Smith also discusses the importance of loyalty programs for everyday travelers, who can benefit from credit cards and rewards to offset the high cost of travel.

He shares an example of a credit card perk his company launched with Frontier Airlines, which allowed customers to receive silver status and various perks by using a US-issued travel rewards credit card. Ross-Smith emphasizes the value of loyalty programs in attracting and retaining customers and suggests that businesses in other industries can learn from the gamification strategies used in loyalty programs. He also advises businesses to be customers of their own products to better understand their customers’ needs.

Jon Dwoskin (00:04):

Hey everybody. Welcome to this episode of THINK Business LIVE. I’m looking forward to talking with Mark Ross-Smith. Mark, it’s great to connect with you, CEO at Loyalty Status Group. You’re basically helping airlines grow and manage their most valuable customers. Your website is traveldatadaily.com, and I’m looking forward to connecting with you on all of [00:00:30] this for the THINK community.

(00:31):

I always like to get started and as a business coach, I work with people who are successful and stuck all over the globe, and I work to get them unstuck. So I always like talking to business owners about where’s a recent stuck in your business and how did you get unstuck?

Mark Ross-Smith (00:49):

John, it’s great to be here. I might flip this question actually.

Jon Dwoskin (00:54):

And thank you, I know you’re in Malaysia and it’s midnight there, so thanks.

Mark Ross-Smith (01:00):

[00:01:00] Prime time for me. I think I’m going to flip this for a second because the business, StatusMatch operating now is less than three years old, and we started this in the end of 2020, which was the worst time in history for global aviation.

(01:17):

So myself and a couple of other former airline executives, we sort of got together and were like, in your words, “How do we unstick the airline industry?” They were totally devastated. They were totally screwed at that point. [00:01:30] End of 2020, they’re bleeding staff, people are trying to find new jobs, they’re cutting salaries, they’re really hurting. The whole travel industry is really hurting.

(01:41):

So we thought, “How do we help them? How do we bring them back from the dead? How do we in our little piece of the world, how do we have a bit of a light that can shine and help them become unstuck?” Because the idea is if we help them get unstuck, it helps us as well, right? Because we’re in the business.

(01:59):

That was really [00:02:00] the catalyst behind starting StatusMatch, which is helping them get new high value customers. And long story short, what’s happened in the past two and a half years is the world has awoken to something very interesting, and that is the loyalty programs for airlines. Especially North America and around the world, the loyalty programs can be worth more than the entire airline group itself split out as its own sort of separate entity.

(02:26):

So we carved out a little [00:02:30] piece of that world and help airlines get unstuck and help them reignite some of the magic and the romance around travel again. Get people excited about flying and travel and freedom and seeing the world and the adventure and seeing new people and have that dream again, really ignite that.

(02:48):

So obviously we’re not responsible for the travel industry coming back, but there is a small piece there that I’m going to claim fame to, and that’s getting more people back on the planes in new ways.

Jon Dwoskin (03:00):

[00:03:00] That’s great. That’s great. Well what I love about what you’re talking about is helping people get unstuck by bringing back the fun, bringing back the dream, bringing back, not necessarily the pain, but the happiness factor of things. I think that’s great, and so kudos to you. Kudos to you.

(03:22):

All right, let’s kind of jump into what a little bit more of this means, the magic of [00:03:30] having somebody’s dream come true. So somebody who’s listening to this is going to say, “Hey, I’m on board. Mark, I’m on board. I want to travel. I want to travel the world. It feels safe again.” And you’re all about loyalty programs and I think something on many people’s mind is the cost of travel is so expensive.

(03:51):

So let’s get to the foundation of what the loyalty programs that you are trying to implement are doing for the everyday [00:04:00] flyer, the everyday hotel stay or the everyday traveler.

Mark Ross-Smith (04:07):

Exactly. You’re right, some parts of the world, ultra expensive to travel right now, and so everyone’s looking for either a cheap way to fly or stay or some sort of extra perk, some sort of reward. For a lot of folks, especially in USA, there is something like 70% of credit cards issued in the USA have a travel component.

(04:29):

That means [00:04:30] you could earn miles. You could transfer to miles. You could get some sort of travel thing that’s loosely related to it. That could be that it’s an airline or hotel credit card or that you could transfer miles into an airline or a hotel program.

(04:43):

So you’ve got this vast number of people that are interested in travel, and yet the people that have a silver, gold, platinum type status on airline is somewhere around 2% of people that travel. So you’ve got this huge group of people are interested in travel but aren’t quite silver status yet, and these [00:05:00] are all called the value seekers.

(05:01):

These are the folks flying once, twice a year, maybe three. They’re not 10 or 20 times where they could get some real perks. And so the question is how do these folks get more value out of what they do? And the simple answer is credit cards and rewards. So you go out, you get the credit card, you start saving your miles, and you use your miles for your free trip or your free hotel suite. A lot of people are using it to offset the cost.

(05:29):

You’ve got [00:05:30] maybe an option of three or four different airlines that you fly. You could fly to where you want to go, and you might be a platinum status member with that airline, but it’s 20 grand to fly. It’s like, “Well, that’s a bit much.” But you’ve got airline B over here, which is half the price, and suddenly how much is loyalty really influencing your business at that point?

(05:54):

People that are members of a loyalty program typically will pay a premium to fly or travel, engage with that brand, [00:06:00] but there is a tipping point where they’re like, “Well, hang on, I’d rather save 10,000 bucks than be blindly loyal to my favorite brand.” And so points and status and big cent credit cards are playing a big part in that.

(06:16):

We launched something very interesting with Frontier Airlines a couple of months ago where it was a credit card perk. Where if you had a US issued travel rewards credit card, and that covers a lot of cards, pretty much every American Express card, [00:06:30] you could get 20 K status. Which is kind of like a silver level with Frontier, which gets you free carry on bags, free checked bags, I believe, security priority, a few other things.

(06:41):

So what this meant is for the first time in history, you’ve got people that had no status with an airline, could get some perks. They could get something else they otherwise couldn’t get through this super, super interesting offer. So I think we’re going to start to see more travel brands trying to tap into this universe of people that don’t have status, but they’re really interested in [00:07:00] collecting the miles.

(07:01):

They’re very interested in loyalty because these days it can be ultra expensive to fly, and if you can get just some little extra perk out of it, you feel like you want to get something for the prices that some of these brands are charging these days.

Jon Dwoskin (07:15):

No, it sounds exciting and it sounds like everything would be pretty custom to the clients that you work with depending on what loyalty means to them, what they think it means to the person utilizing their services. But [00:07:30] I want to go back a minute and talk about 2020, right?

(07:33):

So you have this idea, the world’s basically shut down in 2020, and so where did that idea sprout from? But really I want to understand where was the courage to launch it in a year that seemed very dark?

Mark Ross-Smith (07:54):

It was very dark, my friend, for travel. To be fair, it was hard to talk [00:08:00] to people that worked at airlines as well because they were all working from home. A lot of them are furloughed or they’re on part-time and they’re just trying to keep their job. They’re not really interested in new initiatives, they’re not trying to do new stuff. So to be fair, even engaging with some of these folks was quite difficult.

(08:17):

The concept of StatusMatch as an idea has been around for about 35 years, so it’s not a new idea. No one had built a system around it, no one had sort of formalized it. It was this kind of back-end hidden [00:08:30] process that airlines and hotels had been running. And just a quick one-on-one on how it actually works.

(08:36):

If you’ve got a gold status one airline over here, but you want to try a new brand, you want to try airline B over here. The idea is if you’ve got gold over here, they’ll give you gold status over here with a new brand and you’re matching your status match. So it’s brand introduction, it’s customer acquisition for the brand trying to get your business.

(08:58):

Because if you’re a gold member with an airline, [00:09:00] presumably you’re spending money on travel. You’re a good customer. You’re in the top two or 3% of global travelers in terms of spend and frequency. Brands, funnily enough want you high value customers. And so StatusMatch is a mechanism to help them get that.

(09:17):

The idea to formalize something on this came from my experience in 2013 when I’d relocated to Hong Kong at the time and I asked Cathay Pacific for a status [00:09:30] match. I said, “I’m super, super duper elite over here. Can you give me something here?” And they said, “No.” “Why would you not want me as a customer? How dare you.” So that’s what kind of kick started the whole building a structure around this.

(09:47):

Fast forward a few years now we’re working with eight big airlines around the world, helping them acquire new customers in a sort of systematic way. But actually this helps people as well. If you’ve got gold status [00:10:00] one airline, why would you not want another gold status for someone else? Just check it out because you get all the perks straight off the bat.

Jon Dwoskin (10:07):

Right. But you’re sitting here, I just want to go back to this, but you’re sitting in 2020 ready to launch a business where you know there’s a market, but I don’t think anybody knew how it was going to ultimately be or change or go back to how it was. And so where was the courage to jump in?

Mark Ross-Smith (10:28):

So the courage came out of, [00:10:30] I believe it was United Airlines at the time, was raising funds to keep the airline alive and they were seeking government loans. So they’d used that loyalty program as collateral to secure a loan, a federal loan. And so the Mileage Plus Loyalty Program was valued at somewhere, I think it was about $25 billion, which was about three times the value of the entire group at the time. Keep that in mind.

(10:56):

Everyone’s like, “Why are they worth so much?” And I [00:11:00] think it was a $5 billion loan they’d secured off the back of that. So there was a lot of focus on loyalty as opposed to airline operational stuff like selling tickets. That fell by the side a bit and it’s all about this loyalty program thing and why is it worth so much?

(11:16):

It got so much focus within an airline, it was a bit easier to pitch them with new ideas around that topic because suddenly the CFO, the board, all share, they’re all getting like, “How do we leverage this loyalty thing that we have [00:11:30] that we’ve never really taken all that seriously?” It’s all got to do with the type of revenue that loyalty programs generate versus the type of revenue that airline selling tickets generate.

(11:43):

Selling seats is low margin revenue. Somewhere between two and 10% is margin on a seat. Whereas loyalty revenue, which is selling points and miles, effective banks can be anywhere from 50 to 80% margin. [00:12:00] And so it’s a different type of money, therefore it attracted different type of attention. It attracts different type of valuations and the way that these loyalty programs are valued in the market. So we saw an opportunity to align elite status and acquiring new customers.

(12:18):

Because if you’re acquired new customers, more customers are going to own more miles. That’s going to drive up valuation, which means you can increase, get more loans, more valuation, all this kind of stuff, all the great metrics. So it was a bit [00:12:30] of a no-brainer really. They wanted to do something in that space just because of all the attention at the time and still today that these airline loyalty programs are generating.

Jon Dwoskin (12:40):

I like it. Thank you for that. Thank you. Let’s fast forward to how other businesses outside of airlines can kind of adopt this type of loyalty mentality. So how does from your perspective, maybe the everyday business incorporate some level of this, [00:13:00] some energy of this into their business?

Mark Ross-Smith (13:04):

This is an eight hour podcast, I’m glad. Let’s take a step back. Airlines have a lot of things going for them, and it’s very complex. They’ve got obviously planes flying through the sky, they’re effectively selling aspirational travel when it comes to loyalty. And on the other side is taking the pain out of flying because sometimes it can be not that great.

(13:26):

So caveat, not every [00:13:30] business should have a loyalty program. For some business, it makes no sense at all. For example, there’s a really nice Japanese restaurant down the road from me, and I love this place. I totally love it. It’s very expensive. Every time I go in there, they say, “Would you like to join our loyalty program? Just enter your cell number here and we’ll send you a thing. We’ll send you discounts, a birthday offer,” all this kind of stuff.

(13:53):

Every time I say, “No thanks,” and here I am living and breathing loyalty every day and I’m saying, “No,” to joining [00:14:00] a loyalty program. It’s because they’ve got such great service, such great food, the vibe, everything they offer there, in my mind, they don’t need a loyalty program. They don’t need some sort of offering.

(14:12):

And by offering discounts, in my mind, it’s actually underpinning everything. I mean, not underpinning, it takes away some of the value that I believe that they offer through this incredible service, the really nice food, the vibe, the atmosphere that they have there. And so, [00:14:30] for example, what could my local Japanese restaurant learn from airline loyalty? It’s probably not to have a loyalty program. That’s actually the biggest learning there.

(14:38):

But in airlines, there’s two parts to it. You’ve got the points and miles, which airlines typically sell to banks and third parties as a way to drive cashflow. And then you’ve got the status portion of it, which is your silver, gold, platinum, and that comes with perks.

(14:54):

So the status part actually drives the core product, which is ticket sales or room rights for [00:15:00] a hotel. And so what could a retail business, for example, learn from that is that there’s actually multiple parts to this. Airlines talk a lot about gamification in loyalty programs and effectively this comes from games.

(15:17):

I wouldn’t look at airlines what to learn. I’d look at computer games and what to learn from there because they’re just off the charts on terms of getting people addicted and the multiple currencies and the levels and the badges and all sorts of stuff. [00:15:30] I think it’s actually airlines are learning from the gaming industry.

(15:34):

So if anyone’s looking at it going, “What could we learn from airlines because they’re worth all this money and the loyalty?” I would shortcut it. Just go straight to the computer game industry.

Jon Dwoskin (15:45):

Well said. There is a gamification of things that I think people really, they love it, right? It’s like you spend X more dollars, you get X amount of miles, you get more loyalty, et cetera, et cetera. It’s great. All right, let’s do a [00:16:00] quick speed round. A book, Mark, that’s had the biggest impact on you.

Mark Ross-Smith (16:06):

Blue Ocean Strategy.

Jon Dwoskin (16:08):

That’s a great one. Best piece of wisdom you’ve ever received.

Mark Ross-Smith (16:13):

Fail more.

Jon Dwoskin (16:16):

And finish this sentence. One thing everybody can do to just retain more clients because of whatever loyalty program you have is…

Mark Ross-Smith (16:28):

One way to retain more clients. [00:16:30] Be a customer of your own product, because then you understand exactly what they want. You don’t have to do focus groups and stuff.

Jon Dwoskin (16:37):

That’s great. That’s great. That’s great advice. Mark, I really appreciate you being on the show. I love this podcast because I’m a business coach. I work with people over the globe who are successful but stuck and I work to get them and keep them unstuck.

(16:52):

I get to have guests like you to provide guidance on how they can also get unstuck. [00:17:00] So if I can extract one thing that you said, you said a lot of great things today, but I love what you said at the very end, right? “Be a customer of your own so you can really kind of get the feel and the vibe from every angle.”

(17:13):

At THINK community, we’ve talked a little bit about this in the past, on past episodes. I talk about this with my clients as well, which is when you do that, you see things with different eyes, you hear things with different ears, you go through different senses. [00:17:30] It’s really, really, really strong advice. Mark, tell everybody where they can connect with you and who your ideal clients are.

Mark Ross-Smith (17:37):

Connect with me on LinkedIn. Quite active there. Check out statusmatch.com. Our ideal clients are two, anyone that travels, that have an interest in travel, check out statusmatch.com. And if you happen to work for an airline or hotel, please hit me up.

Jon Dwoskin (17:51):

All right. Mark, I appreciate it. And THINK community, you can reach me at johndwoskin.com. Mark, this was great. I really appreciate it. Thanks so much.

Mark Ross-Smith (17:58):

Cheers, Jon.

Jon Dwoskin (17:59):

Cheers.