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How East2 is Taking a Fresh Approach to Traveller Recognition and Reward

December 2018

According to a recent article by McKinsey & Company, preserving the value of airline loyalty memberships for travellers has become increasingly difficult for airlines. As competition intensifies and demand for travel increases, one way that airlines are maintaining their loyalty programs is by selling miles to third-party programs – generating revenue whilst ‘buying’ loyalty from a market segment. Nevertheless, the issuing of miles to travellers has become a long-term liability for airlines as they need to find ways to honour their value. Heavily restrictive blackout periods and redemption rules have  been introduced to counteract any cannibalisation of revenues, which ultimately only alienates travellers and compromises the overarching loyalty proposition.

East2 have identified these same issues with respect to airline loyalty programs – as well as experiencing first-hand the frustration of accumulating a seemingly significant number of airline miles, only to find they have dwindled in value over time and do not offer fair, accessible or convenient options for redemption. Serving as a catalyst to inspire and motivate change, the team set out to conceptualise a new type of reward model that seeks to resolve the limitations inherent in the current system.

As McKinsey & Company rightly point out, the time has come for airlines to adopt a new approach by considering ways to implement the below strategies as a way to improve traveller loyalty programs:

  1. ‘Go beyond airline seats’ – expand the redemption model to include for example third-party ancillary rewards, real-time and location-based offers
  2. ‘Encourage late-booking redemptions’ – airlines should reward seats that they anticipate will be empty
  3. ‘Move to dynamic redemptions’ – vary the number of miles needed to redeem so that this can be balanced against other variables such as demand and displacement
  4. ‘Rethink how to price and manage redemption seats internally’ – revenue-management and analytics tools should be relied upon more heavily to value inventory
  5. ‘Take a more customer-value view of redemptions’ – tailor rewards so they more accurately recognise individual traveller value
  6. ‘Become more relaxed about redemptions on partner airlines’ – reduce barriers to access considering the value to travellers will exceed the nominal cost to the origin airline
  7. ‘Shift the mind-set from breakage is good to breakage is bad’ – unused miles have an opportunity cost and airlines need to recognise when it is better to take a more flexible approach to their expiration policy
  8. ‘Rethink miles’ – create a more bespoke rewards programs that seeks to reward the traveller with what they value

Looking at traveller reward through a new lens is just one way that East2 has informed the development of its core product offering, the Phoenix platform. Built into the solution is a flexible, incentivised and tailored reward model that has been designed to benefit both airlines and their travellers. Considering how best to recognise and reward travellers in a complex and crowded market environment, it seems appropriate to discuss Phoenix within context of the McKinsey article given that many of the key capabilities offered by the platform are implementations of the above. Highlights include:

  • Redeem rewards for any and all travel products and services across the marketplace
  • Deliver travellers dynamic content and personalise offers
  • Place travellers at the centre of the booking experience and grant full control over how they utilise rewards
  • Incentivise rewards to encourage marketplace interaction and generate exponential value

For more information about East2’s marketplace rewards program please contact [email protected]