Should 4% Of Customers Dictate Strategy?
As I line up to board the Delta flight from my home town of Sarasota, FL the announcement is made for all Diamond, Gold & Silver Customers to please board. At this point 75% of the people move towards the gate! It is crazy and something has to change. Well it has. Delta announced changes to its SkyMiles program designed to reward those passengers who spend the most money with the airline rather than those that fly the most miles. The change that is rewarding the Customer who fly the most with them. That sounds reasonable I hear you say. The challenge is for the average traveler it will result in a more disappointing experience.
The new system rewards benefit their top 4% of passengers the most. Targeting your top customers and treating them extra special is an important part of improving the customer experience, increasing customer retention and building customer loyalty. In this case, Delta’s top 4 percent of customers represent 25% of their total revenue. Keeping these 4 percent on board their airplanes does have a major affect on the bottom line of their organization. At this point I should reveal I am part of the 4%. I am a Diamond Member as I fly back and forth across the pond all the time.
So whilst this will be good for me personally, I can’t help but wonder what this change in policy means to the other 96% of passengers who represent the remaining 75% of the business. According to the article in Bloomberg this week, a flight from San Francisco to New York’s JFK airport that cost $400 would earn 5,172 miles under the current program. Next year, under the new rules that same flight would earn less than half of that at only 2,000 miles according to Justin Bachman in Business week. That’s a significant loss of reward miles to the average passenger.
What is even interesting to hear is that the other major carriers, American and United, are likely to follow suit with similar changes, Jet Blue, Southwest and Virgin America have also made changes that reward spending over mileage.
Delta have made this move in response to complaints from its top customers, (not me I hasten to add), that there aren’t enough perks and upgrades available to them as the rank and file have crowded into the SkyMiles program. However, I wonder if Delta might have made a different move that might have had the same effect of improving the customer experience for these top customers if it had only listened to what they were really saying, subconsciously.
Clearly, Delta got the feedback from their most valuable customers that there aren’t enough perks and upgrades available and that it bothers them. But what people say is bothering them isn’t always exactly what is bothering them.
I would argue that what Delta’s most valuable customers were really saying is that the rewards program didn’t make them feel special enough. Perhaps there had been a status before, but that it didn’t feel as exclusive as it once had, so the status had dropped. They complain that there aren’t enough perks, but the truth is that they don’t feel that they are elite anymore.
In a recent post by our senior consultant, Zhecho Dobrev, “What People Say vs What They Really Think”, we shared a story about a credit card company that had a similar problem with its most valuable customers. In the focus group these customers said that they wanted the card to be accepted more places but in truth it had never had such worldwide acceptance as it did at the time. After doing our Emotional Signature research, we learned that what really bothered these customers was that everyone had the card now, so it lacked the prestige that it had once held when they used it around their friends and colleagues.
The SkyMiles revamp has this same feel to it. Delta has made a sweeping change to the rewards program that benefits the top 4% of their clientele and penalizes the remaining 96%. Perhaps if they had dug a little deeper into the meaning behind the feedback they received from their highest value customers, they might have learned that there were other ways to reward those customers that didn’t have such negative repercussions for the majority of their members.
Instead, this looks like another way that Delta is taking away something from its SkyMiles members, under the guise that it is improving the system for all. And if there is one thing I am sure of as a customer experience expert, it’s that customers do not like to lose anything.
Delta’s changes go into effect on January 1, 2015. At this time, the other carriers haven’t announced the changes to their awards programs. It will certainly be interesting to see how this affects Delta’s customer retention next year. Chances are that many of those “less special” passengers will be looking at the Delta plane from the window seat of another airline that makes them feel elite.
|Colin Shaw is founder & CEO of Beyond Philosophy, one of the world’s first organizations devoted to customer experience. Colin has been recognized by LinkedIn as one of the top 150 Business Influencers in the world. He is an international author of four best-selling books on Customer Experience. Colin’s company, Beyond Philosophy provide consulting, specialised research & training from our Global Headquarters in Tampa, Florida, USA.
Follow Colin Shaw on Twitter: @ColinShaw_CX