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Travel Market Life

Joined by Mark Ross-Smith, CEO of Status Match, with 20 years’ experience leading loyalty programs in telecoms and travel, and previously Malaysian Airlines. The Editor of industry news site “Travel Data Daily” https://www.traveldatadaily.com/ shared with us his experiences as a frequent flyer and what he is expecting from loyalty programmes and why value is at the centre.

 

Speaker 1 (00:02):

Welcome to Travel Market Life, your companion for industry insights and professional business development

(00:13)
Travel Market life. Join us by webcast, video or podcast.

Ryan (00:20):

Hello and welcome to Travel Market Live. Today’s theme is Creating Relevant Loyalty programs. I’m your host, Ryan Haynes and joined by Mark Ross Smith, CEO of StatusMatch with 20 years experience leading loyalty programs in telecoms and travel and previously Malaysian Airlines. Editor of industry news site, travel Daily Daily, the tech entrepreneur has won the World Aviation Festival 2022 Travel startup contest and 30 under 40 aboard in loyalty. We’ll be discussing what’s wrong with loyalty programs, data customers, and optimizing revenue through loyalty and the technology to benefit loyalty programs in your business.

Speaker 1 (01:00):

Travel market life.

Ryan (01:04):

Hi Mark, thanks ever so much for joining us. So I’ve come across you recently. You have been very vocal in the loyalty space, particularly around airline retail, and I was particularly in interested by one of your recent LinkedIn posts where you shared your recent experience with an airline loyalty program. I’d love to, if you could just summarize that particular frustration that you’ve had and explain why there’s so much problem with the current loyalty programs in the industry.

Mark (01:35):

Thanks, Ryan. It’s great to be here. You’re right, I’m a bit of a cheerleader for the loyalty industry. Needs a couple of people to stand up and sort of beat the chest, beat the drum of how great loyalty is and I try to put a bit of a spark in that loyalty corner of the world. However, to point, yes, recently I had a very interesting experience where I booked this flight with a pretty well known airline in Asia. I was booking a flight for my family and through the booking process on the airline’s website, you know how they try and sell you, do you want extra bags? Do you want to select your seat, pay a fee, this kind of thing. Now I’m a gold member with this airline, which is the mid-tier sort of status with this airline. And on one of the upsell ancillary pages, they were trying to sell me business class lounge access for my five-year-old daughter.

(02:29)
And I thought, hang on, that’s a bit weird because I’m a gold member and I get lounge access included in my ticket no matter what class I’m traveling and kids under 12 don’t count as guests. So they would come in for free as long as I could access the lounge anyway. And I thought this was kind of weird. They’re trying to sell me something that I get for free. And that got me, I kind of stepped back a bit and I thought, why are they doing this? Because people that have status with an airline or hotel, this applies to both a silver, gold, platinum diamond, these kind of guys, these members to an airline represent between 30 and 50% of revenue to airlines and they’re the top 5% of your loyalty members. And these people spend more, they spend more frequently, they spend on high margin fares, they’re more likely to book the business class seat or buy the suite at the hotel.

(03:27)
Why are you trying to sell me something I get for free? I’m actually more likely to spend more money and buy something that is relevant to me on my trip. Why not sell me the concierge service or a private car to board the aircraft or triple miles or something on the flight? And it just sort of struck me how in this circumstance I felt the airline had totally missed a brilliant revenue opportunity. And then you times this by millions of global travelers every year that have gold platinum type status. I think this might be the next sort of $100,000,000,000 ancillary revenue opportunity out there that is yet to be tapped.

Ryan (04:10):

It is fascinating when you look at different tiers in loyalty and what you can get as a member. And obviously there’s so many people wanting to move up those tiers, want to get those additional points, want to spend that extra money with the airline to be recognized or with the hospitality company to be recognized in a certain way. But it does seem to be very much a templated approach that’s taken to all the members. There’s no personalization, there’s no recognition as to perhaps where that person’s going, what they’re doing. Why do you think we’ve reached this point? Is it just pure laziness? Is it lack of technology? Is it the fact that we just don’t have the insight on the customers? I mean what do you think went wrong in your particular case when you were making that booking for yourselves and your daughter?

Mark (04:55):

In my particular case, it’s probably just the airlines not thinking about it. We take a step back and think how these decisions are made in airlines and hotels. I mean this extends the cruise line, car rental, the whole sort of travel ecosystem. Most people that work in these companies, super smart people, but they’re just not customers of their own product. So what this means is when it comes to making decisions, they have to send out surveys, focus groups, more research. This is kind of how they learn, all they learn from the vendors that are trying to sell them stuff. And when you are making decisions, what should people see through a booking flow they’re thinking from typically, not always, but typically through their personal experience lens. And let’s face it, most people on airline have never personally themselves ever had gold status earned on merit.

(05:46)
You typically don’t see airline employees willingly shelling out 20 grand for first class flights across the world. They’re happy to pay 200 bucks in business class on standby ID 90 tickets. And so when it comes to creating products, super smart people, they’re just coming from a different perspective. They’re not coming from the perspective of understanding what their core customer really wants. And their core customer is not them, it’s not the CEO, it’s not the CEO’s wife. The core customer is probably someone else. It’s typical sort of leisure airline. I mean a bus business focused airline. It’s a probably someone male, mid-forties, business travel travelers frequently. It’s probably someone like that. So how do you create an experience for them? How do you create new products and new upsell opportunities, things that they’ll buy. And there sure is, oh, [inaudible 00:06:42] a lounge access for their five-year-old because they’re expecting that for free, which they probably do get anyway.

Ryan (06:47):

No, I mean with StatusMatch, it is all about identifying who the person is and making sure that they’ve got the relevant product being presented to them. Am I right in that? And so there must be quite a bit of data that you need to better understand your customers. How closely should companies be following their customers and collecting data to drive new opportunities? So what do you think are the data metrics that really are key to optimize those revenue program, those loyalty programs?

Mark (07:17):

I’ll share a bit of the story here. In the airline world, when I first started hearing these data monetization collection personalization, when I start really started hearing this at events was probably about eight years ago or so, eight, nine, 10 years ago. And I’m fairly sure it was suppliers trying to just sell their latest data science tool or whatever it was. But in that time, I really don’t think much has changed in terms of, if you think about your experience with air travel or hotels, what really has changed from a technology or personalization perspective? It kind of feels about the same still. I still get emails from a very big Australian based airline where I have a lifetime status with them. The emails they send me are selling me products based in Australia. I haven’t lived in Australia for 10 years and yet they still send me these kind of things.

(08:09)
This is kind of personalization 101. They should be able to see that when I’m opening the email, when they’re opening emails, they can get your IP address, they can reverse that, they can tell what country you’re in and they could see, well Mark Guy, he’s clearly not Australia, he’s opening emails when he is in Singapore, London, Malaysia, USA, very rarely Australia. And so why are we continuing to send him stuff based on thinking he lives in Australia? So I think sometimes it’s about going back to basics and I think there’s a pretty big up upside on just getting that right because that affects every member in the database. But in terms of collecting data to drive revenue in the airline world, we talk about what’s called the golden loyalty metrics. And so these are the ones that sort of stand head and shoulders above every other metric in terms of what you want to track.

(09:08)
And the number one’s called is a share of wallet, which loosely means how much are you flying this airline versus other, what percentage share of spend are they getting. So you might be doing, I’m making up, say two flights a year. You’re doing two sectors, you’re going to visit grandma and you’re coming back and that’s 100% of your flight activity. So you’re actually very loyal. And yet your cousin John, he’s big hardcore business traveler, he’s doing 200 sectors a year, but he’s got 100 sectors with one airline, 100 sectors in another. And he’s actually less loyal because he’s 50% share of wallet. So he spends more, the airline looks and goes, this guy’s worth tons of cash, he’s got platinum status, he’s a great customer, actually could get a lot more out of him.

(09:57)
So when you know what percentage of spend you’re getting from people, how to target your marketing, where there’s sort of room to grow and how to be able to capture more business out of people. So airlines that keep tabs on supplies to hotels as well that keep tabs on some of their top customers. It’s actually really cheap to be honest, to keep tabs on top customers, 1000 bucks kind of thing. And you can keep tabs on them. And when these people are spending 50, 80, 100, 200,000 a year, it’s pretty cheap to track what they’re doing, where they’re going and use that as an opportunity to be more personalized in your office because where they are and how much business you’re missing out on.

Ryan (10:42):

I mean is that sort of the typical CRM or are there sort of more advanced, sophisticated loyalty management programs that travel businesses really should be looking at to track this data and keep tabs on their top tier customers?

Mark (10:59):

Yeah, I think it’s a bit of both mean. Obviously our business runs a bunch of technology that empowers travel loyalty programs. And how we’ve come to creating this stuff is because everyone in our management team has run an airline loyalty program in their career on three different continents. And in that time you see what works, what doesn’t work, et cetera, et cetera. So I think is a bit of both. There’s a bit of this technology play, smart people, smart companies that create stuff that’s really cool that can plug into other system. Then there’s a bit of data aggregators and these kind of guys out there, some of the big ones like Axiom, these kind of guys marketing like Adara, you can sort of tap into this. It’s the whole one plus one equals three scenario. You get your core and data, you get some other third party data, add those together and magic, equals three or four.

(11:57)
But at the heart of all this is we’re in the travel business and travel and the emotion or the joy of travel sort of go together. Ultimately, people don’t really care. Travelers I should say, don’t really care about what technology you have. They just want to see how it impacts them. And if that means they’re going to get a slightly more personalized email, they’re not going to notice it. They shouldn’t notice it. They should just think, oh, this is kind of cool. I like beaches and I’m getting more emails now about beaches. It should be as simple as that. It shouldn’t be, you figure out exactly how much they’re willing to pay. And they get an email saying you can go to Fiji for this much. And that amount there just happens to be exactly what they spend on holiday.

(12:43)
There’s a borderline there where it’s interesting personalization, you like to click on it versus creepy where you are showing your hand that a little bit too much about the customer. People will shy away from that. And so I think ultimately at the end of the day, if you can have that balance between knowing them or showing that them just enough but not too much in a way that has an emotional message wrapped around that, I think that ultimately performs the best.

(13:17)
Because you think about what people really want when they travel, they want that feeling, they want that emotional experience. They want to see the great pyramids, they want to climb the mountains, they want to sail in the Mediterranean, they want to see the Great Barrier Reef, they want to see the amazing wonders this world has to offer. And our job as travel marketers and being in this industry is to help facilitate that and to invoke those emotions that are all within everyone, I believe travelers at everyone’s DNA. And it’s about how do you just bring that out in people in a way where they see it and they go that good deal to click, I want to book it.

Ryan (13:58):

I mean obviously, yes, our job is just to inspire and to take them through that sales funnel in a way that, as you say, that really taps into their particular needs, their interests, what they’re looking for. And I mean this sort of role of loyalty, you mentioned ancillary products the very beginning and the opportunity to earn additional revenue there and really drive the profit margins for travel businesses. What about that relationship then between revenue management and loyalty? Because that’s not traditionally necessarily been a collaborative team effort within a lot of travel businesses. Why is that so important and how would you advise that they could work together and or what ways have you seen it work together most effectively?

Mark (14:47):

So there’s a secret handshake that you need between both management and loyalty and once you know that… No, seriously, I think it’s about internal education. So most, traditionally, people that work in the loyalty program or travel business have a marketing background or the marketers and traditionally people that work in revenue management, like the numbers, like structure. And these typically two different types of personalities, which means they less likely to hang out together. And so I think there’s a bit of education where loyalty needs to take the time to go around to revenue management to be fair at the whole company and educate them on the value that loyalty brings to the organization. And then also talk about the numbers, speak their language as well. Not just speak the coloring in departments, marketing language, speak the numbers, speak the hard numbers. When we do this, customers do this, they spend this and this is what a goal member has worked at the airline when they have these three different products.

(15:53)
Revenue management then sees that and goes, ah, you’re speaking my language now. I can understand this. So you mean if we give away this seat or we give this room away for this rate, we can kind of look at a holistic perspective and go as a company we can in theory lose money on the left hand to make twice as much with the right. And overall that’s a good thing for the business. The customer then also feels like they’re getting a great deal. They’re going to engage with the program more, they’re going to start buying more cash fairs or buy more room nights. So instead of each, which is pretty typical in a big organization like this, every department, they’ve got their own KPIs very siloed off from everyone else. I think once that education is the way to break down those barriers, and so once everyone’s on the same page in terms of everyone understands what everyone else is trying to do, sometimes you can sacrifice some KPIs over here to double, triple something on the other side.

Ryan (16:57):

Excellent. Thank you Mark, thank you very much for those insights there. I think it’s really incredibly interesting when you look at all those different dynamics and you come from it from a personal perspective. And I think it’s really, as you say, it’s essential that the industry puts themselves in the shoes of those customers to really understand the value that they’re offering within their loyalty programs. So thanks so much for joining me on the show today.

Mark (17:24):

Thanks Ryan, being a lot of fun having a chat with you.

Ryan (17:27):

So that was Mark Ross Smith, the CEO of StatusMatch. You can find out more about his thoughts and his activities across the loyalty program space at traveldatadaily.com, where there is a lot of different articles for you to really better understand how you can apply some of this thinking that Mark shared on our discussion today.

(17:51)
You’ve been listening to Travel Market Life. Thanks for joining us. Stay tuned for the next episode and look out for all the others on the regular podcast channels. I’m your host, Ryan Haynes.

Speaker 1 (18:06):

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