Airlines Discuss Rebuilding the Value Proposition of Loyalty for the GenZ Generation - World Aviation Festival Blog
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Airlines Discuss Rebuilding the Value Proposition of Loyalty for the GenZ Generation

Airlines Discuss Rebuilding the Value Proposition of Loyalty for the GenZ Generation

What price do you put on loyalty, and how do you make that currency grow in ways that go beyond transaction? This is one of the central questions airlines have had to answer since miles and points programs were first introduced to the industry in the early 80s to ensure return flyers and reinforce brand loyalty. It proved to be a brilliant scheme, which has kept airlines afloat through hard times. But does this offering resonate with younger generations? That was one of the critical discussion topics during a special panel session at Aviation Festival, London. Matthew Hall, Head of Loyalty Planning and Management, Air Canada, Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, Pekka Antila, Head of Loyalty, Finnair, Grant McCarthy, Director of Loyalty CarTrawler, and Kian Gould, Founder & Chairman, Omnevo shared their views.

 

“I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition”

 

Pekka Antila, Head of Loyalty, Finnair, believes there is an advantage in simplifying the loyalty program transaction. “My background in leisure travel I still look at loyalty through those eyes. I see a lot of complexity in loyalty and loyalty programs and a great opportunity to simplify the value proposition. First, by simplifying the way we communicate [value]. We could be more relevant for a large number of consumers.”

One example was the airline’s partnership with ePassi, which allows consumers to use their Finnair loyalty program points as currency at retailers around Finland. “Our members can redeem their points with close to 30,000 merchants in Finland—at restaurants, gyms, yoga schools, and cultural venues… You need to encourage your members to identify themselves and connect, but it’s so easy after that. You just choose a merchant, open your app, and redeem your points for the service that you like.”

Sid Krishna, Director of Loyalty and Cobrand, Spirit Airlines, shared how the airline made loyalty points meaningful to low-frequency, highly changeable leisure flyers by embracing digital wallets and mobile payments appealing to a new generation of “mobile humans.” “What we did with the co-branded card products we have—one of the first things we focused on—was to make sure that we had the ability for those cards to be presented in the Apple Wallet and all of those different [mobile payment options]. Because we have seen, and the data have shown, that people who end up putting their card on their digital wallet have more engagement with the program in the end. I think the push will always be there to book these folks into mobile. Also—for the millennials and Gen Z—the focus area that we’re talking about today is that they are more [active] on their mobile phones than any other system that they’ve ever been on. So that’s our best way to tap in into these folks.”

Anthony Woodman, Vice President Customer Journeys and Reward, Virgin Atlantic Airways, suggested that aligning the brand value proposition is essential to loyalty as the consumer mix changes, with younger Millennials and GenZ having different expectations of the brands they transact.

 

“We’re working on the seamless experience, the overall digital journey for your customers”

 

“One of the most critical things for younger customers mixing experience, so that is a lot of the loyalty value proposition. [We’re] working on the seamless experience, the overall digital journey for your customers…That the end-to-end experience is seamless and perfect is critical for these younger customers… The question that I always come back to is, what does your business represent? More and more, we find that customers are purpose-driven and that they want to interact with companies that have a clear value proposition—a purpose statement at heart. It’s not as simple as, ‘We have a business, we sell some stuff. We want some younger customers. Can we give them some points?’ You have to say that we are a brand committed to selling value propositions to customers. And if we don’t, then actually, let’s start there before we get too involved in the micro-loyalty economics.”

Matthew Hall, Head of Loyalty Planning and Management, Air Canada, agreed with Spirit Airline’s Krishna on the importance of a mobile-first experience and emphasized that one of GenZ consumers’ expectations is to ensure the value of their data. “We’ve got to build the mobile experience first…For Gen-Z—they are the most privacy-aware folks that I’ve ever seen. It’s not so much to say privacy. It’s more that they know what their data is worth. So to get them to give up their data will take more convincing. See, it’s less about the machine or being worried about privacy, per se, as they mature [as consumers]. It’s that they say, ‘I know what it’s worth. I want to make sure I know what my data will be useful.’ So making sure that these privacy policies are very clear versus just the long-form T&C’s.”

Hall’s comments, coupled with the insights from Antila, Woodman and Krishna, suggest that GenZ expects companies to apply their data in a way that adds value. Simplifying transactions because the offers, booking flow, and transactions are informed by the data consumers have willingly supplied. Making consumers enter information they’ve already given or switch out of a payment method they have already indicated they prefer would erode the loyalty proposition, as would pushing products or services unrelated to their consumer identity and behaviour.

 

“Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology.”

 

Kian Gould, Founder & Chairman of, Omnevo emphasized the importance of this, saying, “Gen Z’s are a lot less tolerant of screw-ups from airlines when it comes to technology. We all have had these experiences of going through airline checkout where you have noticeably recognized that you’re interacting with four different sites because they all look different. This is something Gen Z is very intolerant of—if it doesn’t work right. They will just stop. It is much more than an error, whereas older generations will tolerate more. This has always been one of the most critical aspects when we’re doing rollouts with airlines when it comes to the payment question. You need to accommodate much more than just the standard payment options… Someone might not have enough points to pay for half of the journey, and they want to use WeChat to pay for the rest or AliPay. So you have to support that entire Payment ecosystem, from native payments and third-party payments and cash, and Miles payments. That’s one of the most complex aspects of creating these marketplaces, but it has a huge impact on conversion.”

Grant McCarthy, Director of Loyalty CarTrawler, said the personalization of loyalty program communications is also critical to loyalty building.

 

“They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’”

 

“There’s a great study by McKinsey where they’re saying the same thing. The different generations would suggest ‘extra me.’ You think about loads of programs and join one, and you stay in it forever. But Gen Z are less [tolerant of] the big rubber stamp emails—[and just booking] if it’s a pretty pointless destination [to them.] They want it to be personalized to them. They want to say, ‘You know my lifestyle. You know I want to travel to Orlando, and I go to Disney. You’re going to offer me a car which will meet my needs…a hotel that meets my needs as well.’ So you want to follow-up personalization. The broad-brush approach to people, which we have taken historically, [won’t work]. This is a new generation. So if you offer a truly personalized offering, they are more inclined to convert and spend money to help you make money. If you don’t offer a personalized solution, they are more inclined just to switch off and go to another partner, another supplier. There’s no loyalty anymore to a particular brand. If you don’t deliver what they want in a personal way, they walk and go to somebody else.”

A final thought on the brand loyalty proposition from McKinsey’s ‘True Gen’: Generation Z and its implications for companies:

“Young people have always embodied the zeitgeist of their societies, profoundly influencing trends and behaviour alike. The influence of Gen Z—the first generation of true digital natives—is now radiating outward, with the search for truth at the centre of its characteristic behaviour and consumption patterns. Technology has given young people an unprecedented degree of connectivity among themselves and with the rest of the population. That makes generational shifts more important and speeds up technological trends as well. For companies, this shift will bring both challenges and equally attractive opportunities. And remember: the first step in capturing any opportunity is being open to it.”

 


bu Marisa Garcia