The business battle for your loyalty and dollars

Qantas’ frequent flyer changes could prove timely with customer loyalty considered even more valuable in a cost-of-living crisis | SEE HOW AIRLINE LOYALTY PROGRAMS COMPARE

Qantas's revamp of its airline loyalty program could inspire others to follow suit.

Qantas’ move to revamp its popular frequent flyer program could provide inspiration for other companies to follow suit, as customer loyalty becomes even more valuable in the current economic environment.

BDO national lead retail partner Salim Biskri said inflationary pressures were pushing businesses to think hard about how to retain their customer base, as cost of living forced households to reconsider spending choices.

He said there had always been a traditional approach for loyalty programs around discounts and promotions but changing customer demands meant some retailers were beginning to review that strategy.

“Today’s loyal shoppers want brands that acknowledge and reward actions beyond the purchase. So I think you need to recognise them for doing something that promotes the brand,” he said.

That was particularly true of Generation Z consumers, who were looking “for more than just pricing”, Mr Biskri said.

“Those customers will be looking for personalisation and an experience or added perks for their loyalty.”

As a result, he expected that tailored offers to customers would become more common as more businesses had access to significant data points.

“This is the best way to effectively promote some specific discounts to your customers,” said Mr Biskri.

“For instance some hotel chains can offer you a specific experience or a specific discount arrangement based on the points that you’ve done in the past, how many cities you visited and stayed in their hotels, insider guides around the city, promotional dining experience in a specific city that you’re going to visit.”

Perks such as lounge access are among the “rewards” Qantas offers for loyalty.

His comments came after Qantas delivered the biggest expansion of its frequent flyer program in 35-years, with the launch of Classic Plus rewards.

Designed to help frequent flyers redeem points on the seats and routes they most wanted, Classic Plus rewards were available across 20 million seats on Qantas international and domestic flights.

But the much larger amount of points needed for Classic Plus seats compared to harder-to-find Classic Rewards seats meant the new product had not pleased everyone.

Frequent flyer expert Adele Eliseo of The Champagne Mile said there was not a lot to compare the Qantas initiative with at other airlines, because Classic Plus pricing was “supply and demand driven”.

“Both Singapore Airlines and the Qatar Privilege Club have advantage versus saver redemptions with advantage priced higher and saver lower, but Qantas is different because they’re actually tying the Classic Plus redemption to commercial revenue buckets,” Ms Eliseo said.

“That means when there’s an expensive flight to Europe in peak periods you’ll pay more in points (for Classic Plus) but when there’s a sale you’ll pay less. So there is the ability for people to get in there and snap up seats early or wait for sales to get extra value.”

A snapshot of selected airlines’ loyalty offerings and fares for different routes in mid-July, showed significant variation in pricing.

For example a one-way Brisbane-Tokyo flight with Qantas on July 15, offered a Classic Rewards redemption for 25,200 points in economy and 68,400 in business.

On the same date, Virgin Australia’s Velocity rewards costs considerably more at 120,500 points in economy and 295,500 in business.

But on Sydney-Singapore, travellers could book a rewards seat through Velocity on the Singapore Airlines’ operated flight for 29,000 points or 123,700 in business.

On the same route Qantas had Classic Plus redemptions available in economy for 35,000 points, and in business for 161,300.

Originally published as The business battle for your loyalty and dollars