Why Does the Airline Industry Rely so Heavily on Customer Loyalty Programs?


Almost all airline companies around the world have customer loyalty programs. This is where they incentivize the purchasing decisions of their ideal customers in choosing to ride with them over other competing brands. Normally packaged as loyalty points, these can be exchanged for discounts, various gift items and other promotional offers when a customer's loyalty points reach certain amounts. So, why exactly do many airlines rely heavily on these tactics? What other things are motivating airline companies to offer these incentives?

Top Reasons Why Airlines Depend on Customer Loyalty Programs

You've seen a lot of offers from airlines. These include discount deals, rewards and incentives for frequent flyers and so on. A lot of these offers are customer loyalty programs. So, why do most airline companies offer these to their customers? Read on to find out.

First, many airlines have customer loyalty programs. Well, almost all of them do. This forces them to create similar programs that can be more enticing in the eyes of their target prospects than what their competitors are currently offering.

Second, many passengers are already familiar with these customer loyalty programs. This means most of them tend to expect to get these incentives and reward points when they use an airline. So, this again forces most airlines to offer these rewards and incentives.

Third, price is a main aspect that airlines are competing for. These customer loyalty programs are intended to make passengers think and feel that they'll be getting lower rates for their next ride because of these incentives and reward points. Since they actually do get to save up on the cost of their rides, especially frequent flyers, many of them choose to ride with credible airline companies that offer the best deals.

Fourth, well-crafted customer loyalty programs aren't significantly reducing the bottom-line of an airline company. That's because an airline can partner up with relevant brands for their offers, especially if they have large numbers of passengers frequently choosing to fly with them annually. This entices brands like Visa, Mastercard, well-known hotels, restaurants and others to join the reward programs of these airlines.

Fifth, these customer loyalty programs have been proven to serve as a cost-effective customer retention strategy for airline companies. Since recent studies point out that an airline company spends 6 to 10 times more on getting new customers as opposed to getting repeat sales from passengers who have flown with them many times in the past, they can save up on their marketing resources. Plus, they sell the same product over and over again to customers anyway, and the same studies indicate that it's 60 to 70% more likely for an airline to close sales with existing customers than it is for a new one to choose them over competing brands.

So, if you're a frequent flyer, then by all means - Choose a credible airline company with the best customer loyalty programs. On the other hand, if your job is to promote the services of a certain airline, keep these things in mind the next time you and your team need to develop a cost-effective customer retention strategy for your company.

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