Southwest Airlines’ Strange Interpretation Of Loyalty

I love Southwest Airlines. If you follow me on twitter or have been a regular reader here you know I’m not exaggerating. But, just because I love them doesn’t mean I won’t criticize them.

On March 1st, they overhauled their loyalty program. They call it the Rapid Rewards program. In many respects the program is a leap forward. For example:

1. There are no black out dates. Granted that doesn’t mean there aren’t blackout flights on those days.
2. Points never expire so long as there is some account activity in the past 24 months. Very cool.
3. As soon as points are earned they can be used. The old program required you to accrue 16 points before you could redeem.

So far, so good. But, here’s where I think they made a mistake. Under the old program you earned the same number of points (1 to be exact) for every flight you took regardless of destination or mileage. Thus, a flight from New York City to Boston earned you the same number of points as a flight from New York City to Los Angeles. With the new program, you earn more points for the longer/greater mileage flights. Incidentally, these are of course, also the more expensive flights. I know why Southwest did this.

As a marketer, I genuinely understand it. Too many people were earning too many points too quickly, thus generating more free flights than Southwest preferred. In essence the new program is a traditional miles program, that’s really no different than what American, United or Delta offer. That’s disappointing when you consider how different Southwest is from those airlines.

Now, I started this post talking about how this program is a loyalty program. That’s really what it is. Great loyalty programs reward their most valuable members better than casual members. Under the new program, Southwest isn’t really rewarding loyal behavior.

Loyalty, when it comes to air travel, really is about frequency. The big question being, how many flights will this customer take on my airline. Think about it, if you fly 50 round trips a year, that’s 50 opportunities for you to choose Southwest or the competition. Under the new program, a very frequent flyer like me, is penalized for flying short flights. I travel from Chicago to Pittsburgh and Chicago to Minneapolis at least 6 times a month in total. But, I earn less points than the person traveling from Chicago to Los Angeles twice a month.

Aren’t I a more loyal customer in this scenario? Is not my frequent patronage more valuable than the longer trips flown by a more infrequent flier? I think so. What do you think?

  • http://twitter.com/torchio torchio

    I’m not a huge fan of the overhaul either. The old way just seemed simple in a industry that is incredibly complicated. My one critique to your POV would be that I don’t think loyalty is about frequency. It’s about profit. Longer flights= more expensive= more profit for them. That is what they want to encourage. Not so much frequency…

  • http://twitter.com/VegasGalB Brandie Feuer

    I disagree slightly… I bet it’s similar to casinos. “Grind” players – those that play often but not large dollar amounts are WAY more profitable in the long run than the larger “Whales” that play large amounts but come only a few times a year. Here’s an example… a flight from Vegas to LA (about as short as you can get) averages out to $100 each way. Let’s say I fly that 30 round trips a year. That’s $10,000. Now, me flying Vegas to Florida (about as far as you can get) averages to about $300 each way. I fly that twice a year at about $1,200. In the long run, the frequent, short trips are often more profitable than infrequent long ones.

  • http://www.thekmiecs.com adamkmiec

    I think you’re both right. as a marketer, I understand and I know why they did what they did, but as a consumer…a loyal customer, it bothers me.

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Digital dad to Cora and John. Love ironing, bourbon and BBQ; no necessarily in that order. Living life, like I stole it. I'm always up for a

spirited conversation. These are my thoughts and ramblings, not those of my employer.
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