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Retain Podcast:
Why Airline Loyalty Programs Work with Mark Ross-Smith, CEO of StatusMatch.Com

In this Retain: The Customer Retention Podcast episode, Lauren DeSouza speaks with Mark Ross-Smith, CEO of StatusMatch.Com. They talk all about how he got into the customer loyalty business; why loyalty programs are sometimes more valuable than the businesses themselves; and some of the most common misconceptions of loyalty programs.

Mark Ross-Smith (00:02):

I walk in and this lady from Emirates comes quite quickly, almost running over to me. She goes, say, “Mr. Ross-Smith.” I said, “Yes.” She goes,” I’ve been expecting you. Let me take your bags. I’ll check you in now.” I went, “What?” I’ve flown probably, I don’t know, a thousand flights in my life, right? I’ve never had this happen once. She’s like, “You look taller in real life than you do on Instagram.” I’m like, “What?” I’m like, “Hang on, my Instagram is private.” How do you even see this sort of stuff, right? I’m like, “What else do you know about me?” She’s like, “We research all our important guests.”

Lauren DeSouza (00:38):

Hello, my name is Lauren DeSouza, and you’re listening to Retain: The Customer Retention Podcast. More and more companies are wanting to focus on retaining customers, but what exactly are the powers of customer retention and how are companies using it to keep their customers coming back for more? That’s what we’re here to find out.

(00:59)
Welcome back, everybody. Our guest for today is loyalty expert Mark Ross-Smith. Mark is a CEO and co-founder of StatusMatch.com, a platform that allows travelers to obtain elite status with airlines and hotels by matching their existing status with other loyalty programs. Mark is a seasoned executive with over 20 years of experience in the travel industry and is now considered an airline loyalty thought leader. Mark is also a regular speaker at industry conferences and events, sharing his insights on the future of loyalty programs. Mark, it’s really great to have you on the podcast.

Mark Ross-Smith (01:32):

Lauren, it’s fabulous to be here.

Lauren DeSouza (01:34):

I am thrilled for the conversation we’re about to have. We were just talking about how I love to travel, so I’m curious to know how you even got started in this whole space. So why don’t we start there? Tell me a little bit more about your background and what got you into the airline industry to start.

Mark Ross-Smith (01:51):

I think your travel gig. I’m a travel gig, so I think this is going to be interesting and anyone is into travel going to like this. I think most travel nerds, I’ve been into airlines and flying as long as I can remember. I was about five or six years old. My parents bought me this book. It was like a coffee table book, so a big thick book, big image, high res photos, and it was called Great Airliners of the World. And in the centerfold of this book… It was a thick book. In the centerfold is this double page spread of this and New Zealand DC-10 aircraft. And at the bottom, there was a caption that said this plane tragically crashed into a mountain in Antarctica in 1979, still remember that all these years later. And my parents had booked us a family trip to Disneyland later that year, and they’d booked it on, flying Air New Zealand. And so for the weeks and months leading up to that trip, I was like crying-

Lauren DeSouza (02:42):

Stressed out.

Mark Ross-Smith (02:42):

… and screaming, “We’re not flying. We’re going to crash and burn. Air New Zealand’s not safe. It’s not a good airline.” So at seven years old, I’m suddenly an expert on aviation and which brands you fly, and you don’t fly. Obviously that wasn’t the case. It was a very memorable trip. I have fond memories of it. We flew Air New Zealand. So what really hooked me at that point was on those Air New Zealand flights, there was two things that really stood out. One, I mean as a child flying, right? One was the hard boiled little candies they would give out before takeoff and on descent. You suck on it so your ears don’t… As a kid that is just free candy. So of course, it’s a yes, right?

Lauren DeSouza (03:19):

Thrilling.

Mark Ross-Smith (03:20):

There’s that and the kids’ activity packs that they sort of hand out. They still do today, the coloring and books, that kind of stuff, and I was like cool-

Lauren DeSouza (03:26):

[inaudible 00:03:26] unconscious as a kid all the time. Love the Qantas ones.

Mark Ross-Smith (03:30):

Actually funny story, Qantas packs, I wrote a letter as a… I think it was nine years old. I wrote a letter to Qantas management. I hand wrote it, mailed it, put a stamp up. I was nine years old. So you can imagine nine-year-old boys writing, right? Not great. I sent them a letter complaining about their kids’ packs, and they weren’t doing enough-

Lauren DeSouza (03:46):

You’re kidding.

Mark Ross-Smith (03:48):

… the children on flight. A true story. Funny enough, I wrote it on paper. I lined blue lined paper I’d received from an Air New Zealand flight as well. There you go.

Lauren DeSouza (03:57):

That’s got to sting.

Mark Ross-Smith (03:59):

I just complained not enough for kids, and I got a letter back. I mean, this is in the early ’90s. There’s no email yet, right? And they’d said, “Sorry, we’re going to do…” I paraphrase. I don’t remember the exact… But sorry, we’re going to do more for children, duh, duh, duh, all this nice stuff. And then for the next five or six years after that, every time Qantas would release a new children’s pack, they would mail me one in the mail.

Lauren DeSouza (04:22):

Are you serious?

Mark Ross-Smith (04:22):

Yes. This is early ’90s, they introduced a thing called the Max Pack and showing my age here, it’d be like a backpacking inside of all sorts of cool little stickers and books and stuff.

Lauren DeSouza (04:31):

I never got that one.

Mark Ross-Smith (04:31):

So for many years I’d just start receiving these things in the mail every time there was a new thing. And obviously, that’s pretty cool on itself like a 10-year-old receiving stuff from a major corporation in the mail every quarter.

Lauren DeSouza (04:45):

That’s actually so cool.

Mark Ross-Smith (04:47):

And what that did is it just reinforced in my mind like, “This is the industry for me. This is what I want to do.” If they can look after a nine-year-old that writes a letter up right in the ’90s, I just became really fascinated with it. And obviously, the stars were a bit aligned there and hence in the industry.

Lauren DeSouza (05:03):

That is really cool. And I’m pretty upset because when I was a kid flying on Qantas, it was the early 2000s, and I didn’t get any backpacks. So I’m going to write them a letter right now.

Mark Ross-Smith (05:12):

Just have really terrible handwriting, just say you’re nine-year-old.

Lauren DeSouza (05:15):

I could do it.

Mark Ross-Smith (05:15):

See if that works.

Lauren DeSouza (05:17):

I could definitely do it.

Mark Ross-Smith (05:18):

Try with your left hand.

Lauren DeSouza (05:21):

Oh, that’s awesome. And so that explains the context behind the airline industry, but what got you intrigued by the whole area of loyalty and what got you started in that area?

Mark Ross-Smith (05:30):

Yeah. So my first real job when I was 18 was managing customer retention for an e-commerce business. So this is in the dot-com days basically. And this is back when if you knew how to do HTML, you paid a lot of money to work on… Not these days. A lot of money to work company in. I knew HTML. I had taught myself and they’re like, “Oh, well, you can run customer retention. You can do that.” There was only two people doing it in the company, not a big organization. And it was like a membership recurring type business model they had. And I got to see things like people when they cancel their membership, reasons they would want to cancel, and you start seeing this all day.

(06:08)
And I was already inquisitive and entrepreneurial already. So I start thinking like, “Well, if you don’t want to pay this, what would you pay for? Or how could I get you to stay? What would it take?” And people that write and say, “Urgently you must cancel me right now because I’ve got a car payment coming up, and I have to cancel this now to make sure that…” It’s things like that. And we started figuring out that there’s actually a bunch of stuff that people would pay for within a customer retention model. So people would pay for things like priority support to get their ticket or their email read faster than someone else. And we actually started charging a few dollars to have priority support. If you want a reply within a day, click here, pay $3. $3 a lots that time.

Lauren DeSouza (06:49):

Really? Okay.

Mark Ross-Smith (06:51):

Yeah, and people did it. And suddenly, there’s a revenue stream there for something that we’re going to do anyway, right?

Lauren DeSouza (06:55):

That’s crazy.

Mark Ross-Smith (06:56):

So working that job was really good because it sort of drilled into head to hold customer retention. There’s no university back then. There’s no way you learn this stuff. It’s just sheer experience. And being the first real job I had, it was pretty eye-opening. And if you can sort of combine the customer retention with just total obsession with airline stuff-

Lauren DeSouza (07:15):

[inaudible 00:07:16].

Mark Ross-Smith (07:16):

… there’s a Venn diagram there somewhere, and you can guess where I ended up.

Lauren DeSouza (07:19):

Yeah, that’s awesome. And along the way, you had so many cool experiences including working with Malaysia Airlines as well, which I saw, which is really cool. But I want to dive into StatusMatch.com, so obviously you had all these wonderful experiences from that first job in customer retention all the way to where you’re at right now. And so what inspired you to build StatusMatch.com? How did it all start?

Mark Ross-Smith (07:43):

So it started in 2014, so I’m Australian, and I decided I need to move overseas at that point. And so I relocated to Hong Kong. It was either Singapore, Hong Kong, which one am I going to move to? I thought I like Hong Kong, let’s go there. And at the time, I was one of Qantas’s top frequent flyers in Australia. So I had their super VIP, hundred flights a year kind of customer. I was spending a lot of money. I just sold my business as well, so I had a bit of time. And so I asked Cathay Pacific for what’s called a status match. So loosely the idea is whatever status you have with one brand, so let’s say it’s like a gold level, the idea is an airline or hotel will match your status, so they’ll give you the equivalent with them straight off the bat without having to qualify, just do the flights or the hotel nights or whatever. And the idea is you’ve got gold over here, we’ll give you gold with us, now shift some business to us, right?

Lauren DeSouza (08:31):

Got it.

Mark Ross-Smith (08:31):

Because you’re used to the perks, you’re used to the benefits. You don’t want to start from the bottom because you’ve, quote, “proven yourself to the industry.” It doesn’t really cost airlines to do this. So I asked them for a status match, and they said no. And I thought, “What the heck are these guys thinking?” I spent all this money probably nearly a hundred thousand bucks a year on fly. That was quite a lot. And why don’t you want me as a customer? I don’t get it.

(08:52)
And that’s what kind of kickstarted the whole journey into StatusMatch, where I started attending industry events just to learn about… I mean, I had no job at that point. I left company, I’m like, “What am I going to do next? New City, new job?” Great. So started going to industry events and I thought, “Oh, this airline stuff’s great.” And being a customer of airlines, so I was actually using their product. And what I figured out very quickly is that in some ways I felt I knew more than some of these airline executives because I was a customer. And you could see that some of these events, the way they would talk and the conversations you would have with them were very easy because you’re a customer.

Lauren DeSouza (09:28):

You know exactly what you’re talking about.

Mark Ross-Smith (09:30):

Yeah, exactly. If you work at an airline, you don’t want to spend a hundred thousand bucks a year on flights.

Lauren DeSouza (09:34):

Exactly.

Mark Ross-Smith (09:35):

Might not even own a hundred thousand. And when you do fly, you’re flying on a staff ticket/ it’s cheap, perhaps standby. The ticket is very different. The way you check in is very different. The perks and benefits, even things like getting a meal on board might be very different, so it’s a totally different customer journey. So that’s kind of what started StatusMatch, and then what I realized is I didn’t have enough experience. I needed to get in the industry. Shocked, and so that started the journey [inaudible 00:10:01]. How do I work for an airline? How do I get experience on airline? I didn’t want to start at the bottom. So I started to blog, started just putting stuff out there, and this is sort of learning from my previous days about customer retention and stuff, and from a customer perspective, how I thought airlines could make more money from loyalty based on my experience with actually flying and start putting that there out there.

(10:20)
Suddenly, started getting invites to events as a media person now, aka blogger, and then sort of snowballed a bit and then eventually got phone call from Malaysia Airlines one day, “Hey, do you want to run our loyalty program?” Okay, cool. Did that, had a lot of fun there. And then that sort of checked a few boxes and big educational piece as well. I learned a lot there. And so that sort of completed the two hemispheres that I needed. I needed the experience of working there, I needed that. And those two came together and then sort of COVID hit, and then I thought, “How do we help save the airline industry? What could I possibly do in my little piece of the world?” And that’s what when StatusMatch was born, just solving problem as being there for both airlines and travelers for many, many years.

Lauren DeSouza (11:05):

That is so cool. And so in your time of getting this experience and learning this whole educational piece to this, what have you found are the main reasons that loyalty programs are so valuable for the airline industry? Because obviously, all these airlines have these points and things like that, and it’s obviously common knowledge, but what’s the real reason as to why these loyalty programs are so valuable for this industry?

Mark Ross-Smith (11:26):

So it’s all about the type of revenue that the airline loyalty programs generate, so especially in North America. I mean, everyone’s seen the credit cards. Airlines are always, “Get this credit card, earn this many miles.” It’s kind of stuff. So fun fact, a lot of airlines make billions of dollars from these credit cards. They’re very valuable to the point where there’s a bunch of airlines out there where the loyalty program is more valuable than the entire darn airline group itself.

Lauren DeSouza (11:52):

Seriously?

Mark Ross-Smith (11:53):

Yeah, seriously.

Lauren DeSouza (11:53):

Seriously.

Mark Ross-Smith (11:54):

And what’s driving the economics here is they’re effectively selling points of miles to banks. So you use your credit card, you swipe, it’s $100 transaction, you own 100 points. It’s the bank buying 100 off the airline notes program, putting it into your account, and the margin on those points can be quite high. So it can be anywhere between 30 to 70%. It’s high margin revenue versus when you buy a ticket with an airline. Let’s say for example, you’re flying to London and it’s 500 bucks an economy, think about what kind of margin they’ve got on that ticket. It’s not much, 5% maybe at best. All the operational nonsense and risks that come along with that.

(12:36)
Whereas when you’re selling points to banks, there’s no runways, there’s no aircraft, there’s no pilots, there’s no fuel, there’s no unions. You’re selling something it doesn’t exist technically. It’s just a database entry that someone may never use. And when they do use it in two or three years time, you redeem it for a seat that probably is going to be unsold anyway. So loyalty programs in airline and hotel are quite valuable because of the type of revenue they generate. It’s high margin revenue versus airline revenue. It’s typically not so high margin.

Lauren DeSouza (13:06):

Right. And I guess the main point that you’re making here is those operating costs aren’t a part of that entire margin that they’re looking at. So they’re just selling inventory of nothing potentially.

Mark Ross-Smith (13:17):

They need the airline to exist. So if the airline collapses, then the loyalty program value erodes very quickly. They need each other. But if you had a choice, if you are sitting at the top and you go, “Do I put a dollar a profit into the airline business or a dollar a profit into the loyalty business?” You would put the profit into the loyalty business because the way the market will value that $1 is somewhere between 30 to 40 times profit earnings ratio, so that one dollar’s be worth about 30 to 40 times in the market. Whereas a $1 profit in the airline, at best, if you’re an amazing airline like Singapore Airlines or an Emirates or someone like that, at best, you’re going to get a 10 times profit earnings.

(13:54)
So it’s worth 10 bucks an airline and 30 to $40 in a loyalty business. And so what we’ve seen is airlines, especially in North America, have leveraged the valuation of these loyalty programs to secure loans to buy new aircraft. They’re using it to secure funding basically. So they’re not necessarily selling the equity, they’re mortgaging it effectively to get something else to prop up the airlines, new seats, new planes, new stuff because the loyalty program and the airline, they need each other at the end of the day.

Lauren DeSouza (14:21):

Yeah, they’re just making the money more efficient basically through these loyalty programs.

Mark Ross-Smith (14:25):

Correct, exactly.

Lauren DeSouza (14:26):

Interesting. Out of curiosity, what’s your favorite airline?

Mark Ross-Smith (14:29):

My favorite airline to fly as a passenger today is Qatar Airways. I would say it’s probably the best economy class in the world today. I mean, economy class is economy class, but it’s probably the best business class as well like few suites, but it’s changed over the years. I think when you fly one particular airline over and over and over and over, you’d get used to it and like, “Oh, that’s my favorite airline.” I always fly whoever, Hawaiian Airlines, whatever it is. But then you try something new and you see differences, you go, “Oh, this is kind of…” Is the grass really greener on the other side? Not always, but sometimes. So Qatar is probably my favorite right now. However, I travel between Singapore and Malaysia quite a lot, and I enjoy Singapore Airlines on this flight only because they fly A350. So it’s a wide body aircraft for a 40-minute flight [inaudible 00:15:14]. Exactly. This is a lot of space. But you know what, actually the best airline… They’re not my favorite, but the best airline to fly is actually the one that gives you an upgrade. It doesn’t matter who that is.

Lauren DeSouza (15:23):

Yeah. Honestly, [inaudible 00:15:24]. I’ll take it. I have no issue with that.

Mark Ross-Smith (15:26):

Exactly.

Lauren DeSouza (15:28):

Awesome. So first things first, loyalty, there’s so much that goes under that and there’s so many different aspects to it, and we kind of just branded as this one big term as loyalty. But if we’re looking at loyalty programs specifically, what do you think is a common misconception about loyalty programs?

Mark Ross-Smith (15:43):

Yeah, I think one is that it’s a customer service function or the second, maybe another one is that points are free. It doesn’t cost anything. You’re giving stuff away from these points. It’s fluffy. It’s the coloring in department. Those are serious. I mean, look at airlines, loyalty’s worth more than the whole airline itself. So what’s the real business? Are you an airline or are you a marketing company? You’re a marketing company. You’re a loyalty company, right?

Lauren DeSouza (16:06):

So true.

Mark Ross-Smith (16:07):

So points are not free. They do cost. There is real economics behind it.

Lauren DeSouza (16:12):

Even that essence.

Mark Ross-Smith (16:13):

Yeah. Killjoy here, I’ll talk about finance. I think loyalty, especially in travel context should always be set up to drive specific outcomes. So in airline, that is to… There’s a few things. There’s one to sell more tickets. It’s to buy more when you buy a flight. So instead of buying that just cheapest economy class flight, the idea is, well, I might try premium economy, I’m going to earn more points/ or I’ll buy the extra, whatever because when I get lounge access, it’s okay to pay 200 more to fly this airline versus this airline, things like that, and that’s when they can start tracking it.

(16:47)
And they know that, well, the loyalty program’s working because you are displaying behavior, you’re not buying the cheapest possible option out there. You are buying something more expensive than you otherwise need to. They’re selling more stuff, they’re shifting behavior. And so outside airline is all about shifting behavior, create that stickiness to the brand. It doesn’t mean you’re going to be super loyal, just like you’re only ever engaged with one airline. It just means that you’ve got a choice. You’ve got two cards in your wallet. You have to make a flight to London next week. It’s like I could fly 30 different airlines, but I’ve got a gold card with this one, so I’ll just look at them first.

Lauren DeSouza (17:25):

Yeah. No, it’s literally true which is why I chose Air Canada over British Airways, so exactly that. But I think it also applies outside the airline industry as well though because you’re effectively saying loyalty in itself is almost like a product under a business versus just a slap onto the customer service. It’s not something to just patch onto customer service and sell as a side thought. It’s actually something as part of the function of the business. And so it can be more successful that way if you tie it to actual business outcomes or what you’re trying to accomplish in order to upsell or change that behavior or whatever you might be trying to do. So I guess on that note, do you think that loyalty programs play a role in both attracting and retaining customers or more shifted towards one or the other?

Mark Ross-Smith (18:08):

I mean, a great loyalty program does both. So a really good program won’t work for every customer, and I don’t think it should. I want to say 20 or 30% of customers, it probably should work really well for where they get value out of it, and it does shift behavior. It does get them to buy more, to spend more to come back the second time to repeat purchase whatever the metric is that you’re tracking.

Lauren DeSouza (18:29):

Why is that only 20 to 30% do you think?

Mark Ross-Smith (18:31):

If it was 100% of people got value from the loyalty program, you’re kind of cannibalizing your own business at that point, right? You’re giving, for example, points away to everyone no matter what. They’re going to come shop with you anyway, but you’re giving points away to everyone. Ideally, in a perfect world, you’re only giving points and benefits to people who may not have been going to come shop with you. You know what I mean? Because then you can show that you’re driving incremental spend or incremental business or share of world or some other metric.

(18:58)
So there’s a bunch of people that are just going to come to your brand no matter what because next door to the house. It’s the most convenient. One of their friends works there or they own some shares in whatever it is. There’s some other reason that they’re doing it. For some other people, it’s about price. They’re coming to buy the product just because just the cheapest, and that’s how they roll. Status, benefits, ego recognition, that kind of stuff. Ultra-powerful. Look at the top end of the world, people with money. Here’s a good example, go try and buy a new Ferrari today, walk into a dealership, try and buy the most expensive thing they’ve got, right?

Lauren DeSouza (19:29):

I mean, I could try, but I don’t know if I’d be successful.

Mark Ross-Smith (19:32):

They won’t sell you. Ego is like 10 million cash and say, “I want this.” They say, “No.” They say, “You need to be a member first. You need to buy a car first,” and once you’ve bought that you’re a customer and then we’ll let you maybe get the option to buy this other car.

Lauren DeSouza (19:45):

Really?

Mark Ross-Smith (19:46):

Right. Yeah, there’s quite a lot of brands. They work just like this. And so what it means is you’ve got status as basically driving stuff. Money’s just commodity at this point. It’s not about that. And so the amount of room to sort of move the needle on these people’s spend, it’s just so astronomical at the top end. In airline novelty, people have a silver, gold type status, platinum in airline. They’re normally the top 5% of customers, but they’re responsible for anywhere between 20 and 30% of total revenue for the entire airline. So as a group, they’re the single most valuable customers. Hence, most loyalty programs seem to be geared towards the big corporates, the freaking flyers, the people in business and first class because that’s just where the money is. And if they lose one of these customers, they’re losing potentially 50, 100,000 bucks a year out of someone. Whereas you or me or Uncle John down the street once a year to visit grandma on a 200 flight, I mean, do they really care?

Lauren DeSouza (20:45):

You’re telling me they don’t want to put me in first class from me paying the lowest economy [inaudible 00:20:50].

Mark Ross-Smith (20:50):

How dare they?

Lauren DeSouza (20:51):

That’s crazy. That’s a good point because I think naturally it’s about the distribution of the spend of a customer, whether it’s airline or not, but the natural fall of how customers spend and 20% of your customers give you 80% of your revenue in a general sense. So with that in mind, what do you think are some of the most important factors to consider when designing loyalty programs?

Mark Ross-Smith (21:12):

Get the economics right from day one. I know it’s boring. No one really wants to do it, but you’re going to get finance people involved and sort of set the ground rules, get the model right. If you screw it up, it just gets worse over time. The problem sort of gets bigger and bigger as it scales, and so you just need to really nail it down from day one. Plus, there’s also bad customer experience. You launch something. And then six months later you go, “Oh, well, we need to give you less points.” Or we’re taking away this benefit. Oh, gosh, how terrible is it? Instead of buy five coffees, get one free, you go, “Oh, well. Now, it’s buy 10, get one free.” It’s like, “Well, hang on a sec, you just-

Lauren DeSouza (21:48):

[inaudible 00:21:49].

Mark Ross-Smith (21:48):

So just getting it right from day one I think is ultra critical. I’ve heard of one of the VPs at Canada talking about this, how when they redesigned the Aeroplan Program, I want to say three years ago, I’m pretty sure he said publicly that they involved like 10 or 15 different consulting firms and had them all doing pretty much the same work because if they all came to the same conclusion about how the economics and stuff would work, then they’re on the right path. So it’s not just getting one consultant to do something. I mean, obviously this is a big example, big brand in a big country where’s lot billions of dollars at stake, so it makes sense to do that. Doesn’t quite make sense for mom and pa’s ice cream shop to get 15 McKinsey consultants on this kind of thing. You get the idea, right? It’s just nailed down the economics first because everything else, the benefits, the promotions, all the kind of window dressing will just support whatever that economic model is, so get it right from the beginning.

Lauren DeSouza (22:47):

Yeah, that’s fair. And actually, it’s something that we do on our consultation calls with Gameball anyways because we’ve really come to realize that a good strong retention strategy in general to do with loyalty programs is really about getting the economics and getting the scale right because there’s so many times where it can be done, where you’re giving too many points away, it’s too hard for someone to get to a certain point. There’s so many different adjusting things. And the fact is you do really have to base it off of your user behavior because it’s depending on how each of your customers react in those situations. So it’s a good point. And I’m curious to know, when you set up these different programs and for example, with Aeroplan and relaunching that whole strategy, they want to understand how they measure this impact of these loyalty programs. And obviously, the obvious answer is an increased revenues and more bookings and things like that, but are there any other underlying or not so obvious ways to measure impact of loyalty programs for a business?

Mark Ross-Smith (23:43):

So in airline world, the golden metric is share of wallet or share of spend. And what that means is, let’s say, we are both top tier platinum members of an airline, and you are doing a hundred flights a year, right? You’re spending $100,000, you’re in business in first class, you are jetting all around the world, you’re a great customer, the airline looks at you, you’re going to go top tier, you’re flying a lot, this is amazing. And then they look at me, I’m not platinum. They look at me, they say, “Here’s this Mark guy. He did four flights with us last year, right? Really cheap flights. Who’s the more loyal customer?”

(24:18)
So if you look at it, you go, “Well, Lauren is, not Mark,” but if they drill down to share a wallet, what they would see is I only did four flights in total, as in I flew with no other airlines at all. That was 100% of my travel with one brand, so I’m loyal check. And they look at you and they go, “Lauren’s done all this fine, great, but she’s also done another 50 flights with Delta Airlines, another 20 flights with Hawaiian, another three with Emirates, and actually she’s worth more but less loyal.” So what that means is the ability to capture more spend out of you, there’s a high chance of doing that than out of me because out of me, the airline’s already getting 100% what they could possibly get.

(24:58)
They’re just not going to get it. Maybe they convinced me to go visit grandma one more time because she’s getting old. That’s about it, and that’s 200 bucks. But for you, it’s like they could convince you to drop one of the Emirates first class trips and instead fly a Star Alliance partner or something like that. So when you measure the loyalty in that sense, you know who to target better promotions to, so that in that case they’d be better off targeting more to you even though it looks like you’re already a fantastic customer because there’s more headroom for them to capture more revenue from you. So I call that one of the golden metrics in airline loyalty.

Lauren DeSouza (25:33):

I actually think that’s quite applicable to other industries as well because I even think the very first example that came to mind when you said that the share of wallet and the spend is honestly thinking about something like cosmetics because you have examples in Canada, one of the bigger brands here is Sephora, and they have all these different brands and then all those different brands obviously have their own independent brands. So it’s a consistent fight, whether I buy from the Merit brand from their store or from Sephora, where I’m more likely to go to Sephora because I buy a bunch of different products from different brands, and I’ll get more savings if I do it all under Sephora versus going to each and every single one of those independent brands.

(26:09)
But it’s a consistent fight, and it’s an always everlasting head-to-head battle because they’re trying to get me to spend more and be loyal to the independent brand versus the Sephoras of the world. So I think it speaks to your point of it could be applicable to other industries as well or the way that people think about designing their own loyalty programs. Because even just when people listen to this podcast, for example, they’re thinking of ideas or things like that that they can apply to their own loyalty programs so that they come up with something that’s unique and interesting, and I find the best ideas come from alternative or parallel examples that aren’t exactly related to their business because it can be a really nice example from something completely different.

Mark Ross-Smith (26:49):

I agree. And another question from that would be, do you want people loyal to your brand or people loyal to a channel that they buy a product through, right?

Lauren DeSouza (26:56):

Yeah.

Mark Ross-Smith (26:57):

So good example is hotels, right? So hotels want you to book direct, go to the hotelwebsite.com, they don’t want you go to Expedia or anything like that. They want to go direct because they’ve got to pay more commissions when you go to RTA, but why is that your problem? You’re probably paying about the same rate anyway. It’s not their problem. They’re paying commissions in the bank. You just happen to like using Expedia better than hotels on website, for example. Or maybe you prefer to buy your cosmetics in duty-free catalogs and stuff because you’re owning airline miles at that point, whereas you’re not owning when you walk into Sephora store presumably. So maybe it’s purely about that. And so you’re still loyal to the brand, it’s you’re not loyal to walking into their store, which is different. So which would the brand prefer? Would they rather you take one or the other? So I mean, I think I know what I would choose if I was a brand, but nailing that is pretty critical too.

Lauren DeSouza (27:51):

Yeah, I guess it’s important too. And I guess that also ties back to the point that you made, that it’s not just a part of your customer service, it’s actually a whole strategy on the side of your business or as part of your business because it’s important to get all those factors. So I guess you could really do something interesting with thinking about it in that way as well.

Mark Ross-Smith (28:08):

Yep.

Lauren DeSouza (28:08):

Well, I think that’s a lovely place to end the conversation that we’ve had today, and thank you so much for sharing all those insights. We have one last little section, which is my absolute favorite part of the entire show, which is called the Lightning Round. So first lightning round question is what is the most interesting place you’ve ever traveled to and why?

Mark Ross-Smith (28:30):

I really like Malaysia because there’s so many storms here, and I’m totally obsessed with storms and lightning and stuff like that.

Lauren DeSouza (28:36):

Really?

Mark Ross-Smith (28:36):

Yeah, every day. This night, I go outside, look at the balcony, just watch it. I love that stuff. So purely from that alone, Malaysia is fantastic. However, I think my favorite place is probably Hong Kong. I lived there for many years. It’s high vibes. It’s fast paced, strong work ethic, strong party ethic. They sort of get everything right. It’s a great place to grow up in.

Lauren DeSouza (28:56):

Very cool. Okay, second question. If you were in control of the marketing effort for one city, which city would you love to try and sell to people and how would you market it?

Mark Ross-Smith (29:05):

There’s a bit of a spoken for Malaysia, is it? So Penang in Malaysia. So Tourism Malaysia, if you’re listening, we can talk about commission theater. I choose Penang because it’s been voted Best Street Food in Asia for many years running. And obviously, I run StatusMatch as well. And I’d strike deals, all international airlines that fly there, and with the tourism board there as well, which is me for a day, obviously. And I’d get the tourism board to fund a Status Match campaign to attract new high value customers to the city. And I think the tagline would be something like, “Visit Penang. It’s like Singapore, but 60% cheaper and with better food.”

Lauren DeSouza (29:45):

You have me sold. Incredible. All right, last but not least, on the lightning round, what’s the best experience on an airline that you’ve ever had?

Mark Ross-Smith (29:54):

Oh, hands down. End of last year was Emirates. I had walked into the Kuala Lumpur International Airport just into the terminal. It’s like midnight. There’s no one in the terminal. So I had a 2:00 AM departure. I walk in and this lady from Emirates comes quite quickly, almost running over to me. She goes, say, “Mr. Ross-Smith.” I said, “Yes.” She goes,” I’ve been expecting you. Let me take your bags. I’ll check you in now.” I went, “What?” I’ve flown probably, I don’t know, a thousand flights in my life, right? I’ve never had this happen once.

Lauren DeSouza (30:21):

That’s crazy.

Mark Ross-Smith (30:22):

Yeah. She’s like [inaudible 00:30:24]. She’s like, “I’ll walk you through immigration, I’ll take you to the lounge.” And she got chatty. She’s like, “You look taller in real life than you do on Instagram.” I’m like, “What?” I’m like, “Hang on, my Instagram is private.” How do you even see this sort of stuff, right? I’m like, “What else do you know about me?” She’s like, “We research all our important guests.” And I’m like, “I’m not an important guest.” I hadn’t flown Emirates in many years, right? I’m a gold member, which is mid tier. There’s a lot more important people in the world than me, I can tell you. And then on that next flight, the cabin crew, it was 2:00 AM departure, I just wanted to sleep.

(30:56)
So incline, blanket, and the crew were just insisting to try and feed people, fine. Towards the end, I’m like, “Alcohol, just bring me something light.” And they said, “How about some fruit?” Okay, I’ll take some fruit. They come along with this fruit platter, which was oversized and in chocolate, they’d written on the plate. They’d like, “Welcome back. It’s great to have you with us again.” I’m like, “What?” [inaudible 00:31:20] Again, never had that in my life. Took a photo, obviously, put it on mine, got gazillion likes here. I am telling that story. So very memorable experience, a lot of great things to say. I’m not anyone special to the airline at all. I’m just an normal person in that sense, but they definitely went well above and beyond. They had a great experience. And here I am under unpaid brand ambassador for the airline.

Lauren DeSouza (31:43):

Now, it’s for real.

Mark Ross-Smith (31:43):

Again, Emirates, if you’re listening to this as well, we’ll talk about [inaudible 00:31:44]. It’s two deals we’re going to get from [inaudible 00:31:44].

Lauren DeSouza (31:43):

All the airlines are listening. Is he going to mention us? Is he going to mention us? And Emirates just like, “Score.” Malaysia is like, “Yes.”

Mark Ross-Smith (31:58):

So you can contact my agent.

Lauren DeSouza (32:01):

That’s awesome. Really interesting. Okay, maybe I’ll become a gold member on Emirates. Last but not least, I always like to end on a piece of advice. So is there a piece of marketing or life advice that someone shared with you once that has always stayed with you.

Mark Ross-Smith (32:15):

Be a customer of your own product has really resonated with me over and over. I wrote an article, maybe it was 2010 or so about Facebook having a terrible Android app. And it was a quote from Mark Zuckerberg and saying he’d forced all the developers working on that to get rid of their iPhones, all their jobs had to use Android phones back in their personal lives. The concept was, and this was 12 years ago, everyone’s addicted to Facebook. And they’re opening the app on the phone. And if the developer who can actually make changes to it is the customer of their own product. So if they’re using product, they’re trying to upload photos and comment and stuff, if they see bugs or they see things they don’t like, how could I make this easier because they’re thinking technically, right? They’re thinking, upload a photo, they’re thinking that talks to this API that goes to this server.

(33:00)
And that’s how they’re thinking, that’s how they wired. They go, “Gee, this is a bit slow. How can I make it faster?” They go to sleep, they wake up and they go, “Oh, I know the answer now,” and they fix it. So by forcing the developers to use Android phones, it actually made the Android app fast superior. Even today, it’s a lot better than the iPhone app just because of that. And I think just comes down to being customer of your own product. Because when you’re immersed in it, when you’re forced to use it every day, hopefully by choice, not forced, but using every day, then you start to think of ways to make it better, make it faster, make it… And in that example, it made using the app and connecting, talking and sharing people better for billions of people around the world.

Lauren DeSouza (33:38):

I mean, honestly, even just the thinking behind it is so true because when you’re building something for someone else, that’s one perspective. But if you’re building something that you’re using yourself, it’s a whole different perspective. So it’s getting these different thinking caps on, and I think it’s a nice reminder. That’s also how you even got started with your whole business too, isn’t it? Because you were a customer of these loyalty programs and all these airlines. So I think that’s a nice reminder for any business owner out there just thinking about how to be the customer of their own product, and I love that.

Mark Ross-Smith (34:07):

Exactly, and you’re totally right. When you use your own product, and you’re coming from a different angle when you’re creating things, when you’re designing things, your heart, it’s in the product. And what that means is when you talk about the product, you tell a lot of people, you’re telling it from a different perspective. It’s not just the corporate blah, blah, blah, blah, blah. You’re saying, “This is the why.” People, they resonate with that. They understand, “Oh, you’re doing this because you’re solving your problem, which actually solves mine as well,” so everyone wins.

Lauren DeSouza (34:32):

No, it’s so true. Well, thank you for sharing that piece of advice and the entire conversation was one that I’m sure many of our listeners will be excited to hear about. So thank you so much for joining us today on the show.

Mark Ross-Smith (34:43):

Thanks for having me, Lauren. Really appreciate it.

Lauren DeSouza (34:51):

Retain: The Customer Retention Podcast is brought to you by Gameball. To find out how you can turn visitors and occasional buyers into loyal lifetime customers, head to gameball.com. Make sure to subscribe to Retain: the Customer Retention podcast in Apple Podcasts, Spotify, or wherever you get your podcasts. So you never miss an episode. Thanks for joining me and I’ll see you next time.