#100: Star Alliance's Latest Loyalty Insights, Ideas and Innovation

PAULA: Welcome to Let’s Talk Loyalty, an industry podcast for Loyalty Marketing Professionals.

PAULA: I’m your host, Paula Thomas, and if you work in Loyalty Marketing, join me every week to learn the latest ideas from Loyalty Specialists around the world.

PAULA: Hello, and welcome to episode 100 of Let’s Talk Loyalty.

PAULA: And before I introduce today’s guest, I want to take a moment to just firstly realize that I’ve actually recorded 100 episodes of the show.

PAULA: It’s not something I ever imagined happening.

PAULA: And many of you listening will know that I set out probably to record four, five or six episodes, literally to see if this was something that I enjoyed doing.

PAULA: Now clearly, there would be absolutely no point in sitting down to record these interviews every week without all of you listening.

PAULA: So I want to say a massive thank you to everyone who listens to this show, literally to make it all so worthwhile.

PAULA: So I’m excited for the future.

PAULA: 100 down, who knows how many hundreds more to come.

PAULA: So today’s guest is a gentleman by the name of Renato Ramos.

PAULA: And I was really interested, in fact, fascinated to hear his particular role as Director of Loyalty for the Star Alliance, which many of you will be familiar with as the largest global aviation alliance with 26 member airlines.

PAULA: So you can imagine the sheer amount of coordination that is required in order to coordinate their global loyalty programs.

PAULA: So Renato talks us through exactly how they do all of that.

PAULA: We also touch on some really interesting topics, such as the importance of understanding your share of your customer’s wallet and how that can be actually measured, monitored and improved.

PAULA: We also talk about the impact of COVID.

PAULA: So clearly the pandemic and some of the trends and solutions that Star Alliance Airlines have put in place.

PAULA: And finally, we talk a bit about some key areas that Renato is interested to explore for the new normal.

PAULA: So Renato, please tell me, what is your favorite loyalty statistic?

RENATO: Well, Paula, I’ll try to be more pragmatic today and explain to you that my favorite loyalty KPI is share of wallet.

RENATO: From my experience, I’ve already seen even the most frequent customers, sometimes they still have some room for improvement with their share of wallet.

RENATO: So I would really like to go back to the basics of loyalty strategy and loyalty programs to say that we need to make the frequency higher, right?

RENATO: So share of wallet is super important for the business, I would say.

PAULA: Wonderful.

PAULA: And I know you first came across that one, Renato, from your work in your home country of Brazil, if I’m correct.

PAULA: So I’d love to really understand, why did that particular one resonate with you?

RENATO: Yeah.

RENATO: So once I was having a conversation with our co-brand partner, and just identifying the volume of purchases done by our members, our credit card holders.

RENATO: And we found out that they were buying tickets from our competitors as well.

RENATO: And our share of wallet was something around 50% only with our top tier members.

RENATO: So then we decided that it would be better to start with some retention initiatives, like a very tailored CRM messages offers to these customers because we knew everything that they were buying and what they need, right?

RENATO: And it was even cheaper than, well, that is a cliche, but it was way cheaper to retain this super valuable customer than just going out and acquiring a new customer, right?

RENATO: So this is the basics of loyalty.

RENATO: So that was when I realized that, and then it was super effective.

RENATO: So just with some small efforts, we could increase the share of wallet and then the profitability was huge with this initiative, yeah.

PAULA: I always love to hear actually that something has worked, Renato, so well done, you.

RENATO: Thanks.

PAULA: And genuinely, actually, I was going to ask you, but you’ve already answered that part, which was what was the source of the data?

PAULA: Because I do think a lot of us running individual loyalty programs, particularly if we’re outside of alliances and coalition, we obviously don’t really get a lot of visibility.

PAULA: So I think it is payment partner and co-branded credit cards, as you said.

RENATO: Yes, yes, definitely.

RENATO: So even though we have many different sources of information, sometimes we didn’t have the ability to manage properly all of these different sources.

RENATO: So I strongly recommend colleagues to share data with their partnerships, so to try to get different insights.

RENATO: This one, for example, we will never be able to have a picture from outside of the company, right?

RENATO: Of course, holding all the NDAs and sharing any data that could be problematic.

PAULA: Yeah, individually sensitive.

PAULA: Yeah, of course, absolutely.

PAULA: And what I’m hearing, and just to clarify on this point, for me, very often, my decision about the airline that I travel with is dictated by the schedule or the pricing.

PAULA: So what I’m hearing, though, is they were almost comparable.

PAULA: So your competitors were flying to similar places.

PAULA: The pricing was on a par.

PAULA: So the gap was almost in the communications and recognizing and maybe communicating something relevant to your member.

RENATO: So for many times, we try to identify the key motivation factors for a customer to decide which airline they would fly.

RENATO: And of course, first one was price, and that justifies a lot how the market has been reacting these recent years on having this super competitive approaches to price with low cost carriers growing so much, right?

RENATO: And price is definitely the first one key motivator to decide for an airline.

RENATO: Then after that, it comes the right time and the right network.

RENATO: So going where I need to go, the time that I need to be there, and with a good price.

RENATO: So let’s say that these are the basic things that an airline should have, right?

RENATO: And then after this basic comes loyalty.

RENATO: So after price, after flying where I need to fly and the time that I need to fly comes loyalty.

RENATO: And the funny part is that I heard from many customers that somehow they tried to manipulate the ones that they could, like changing the time of their meetings just to be able to justify flying with that specific company.

PAULA: That’s amazing.

PAULA: Okay, well, there’s a success right there.

PAULA: I hope you got all testimonials from these people.

PAULA: Wow, cool.

PAULA: So from that amazing experience now, you’re certainly the first person that I have spoken to who is, let’s say supporting, I think you said 20 programs across 26 airlines.

PAULA: So extraordinary work that the Star Alliance does.

PAULA: So really curious to see exactly how the whole operation runs because it does sound incredibly complicated.

PAULA: So perhaps you’d explain just how the whole thing comes together.

RENATO: Yeah, thank you, Paula, for the opportunity to explain that.

RENATO: It’s not traditional.

RENATO: It has some specific complexities.

RENATO: So I had previous experiences managing loyalty programs in Brazil, two of them from Airlines.

RENATO: And then when I came to this position, well, here I don’t manage directly any loyalty program, but as you said perfectly, I support 20 others.

RENATO: And this programs, they have their own strategies to make their customers more loyal in their home markets.

RENATO: And within their networks, fighting against their local competitors, right?

RENATO: But there is this spot, this sweet spot that I support them, that is when their customers want to fly to places that they are not serving, and then they can use their air partners to get there.

RENATO: So it involves connections, it involves going a little bit more distant than that carrier can reach currently with their network.

RENATO: So then I connect airlines to other customers from other FFPs, from other loyalty programs.

RENATO: And then there it comes the seamless experience that we try to provide to the customers, that the ability to earn and redeem miles in a bigger scale with other airline partners.

RENATO: So that’s a bit of it.

RENATO: So it’s more of a articulating with the loyalty experts from this 20 different loyalty programs to see the value of addressing this customer, which is a valuable customer, to offering him or her, this customer, this extended seamless experience.

RENATO: This is what an alliance can provide, I think, mostly.

RENATO: So the nature of a loyalty within an alliance goes to the customer experience side of it, like offering this seamless experience everywhere.

PAULA: And you’ve used that word actually a few times when we’ve spoken, Renato.

PAULA: So it seems to be almost the key word that your entire role is focused on is the seamlessness.

RENATO: Yeah, not only my role, but the entire alliance role to guarantee to customers that they can fly abroad and keep a seamless experience.

RENATO: Right?

RENATO: Sometimes I make fun with my CEO and tell him that we are a loyalty company.

RENATO: We just do the alliance part as well, because out of the seamless experience, earning and redeeming miles is key in an alliance.

RENATO: So it’s a value proposition that is super important.

RENATO: And for that, we offer our member carriers, hubs and platforms to connect them.

RENATO: So if I could add a second word to that, after seamless is connectivity and the ability to exchange all this information.

RENATO: Because as we were talking before about share of wallet, it’s super difficult to have access to some information that sometime is inside the company.

RENATO: Imagine when this customer is traveling outside.

RENATO: So this is where we are important for our members to connect them.

RENATO: So they are able to identify this customer, identify that he is traveling abroad and grant him the miles, allow him to redeem this miles with a flight, and for the top tier members, for them to be recognized abroad.

RENATO: Because then it’s part of a similar experience, right?

RENATO: Because if this customer has access to lounges when flying within this airline network, and when he is flying to the other side of the globe, maybe a more exhaustive flight, right?

RENATO: Because we all know that it can be.

RENATO: He wouldn’t be able to join a lounge with a partner.

RENATO: And we allow that this lounge from another airline can identify that this is a valuable customer for the partner, and then the access is granted.

RENATO: So we have a set of what we call Star Alliance Gold and Star Alliance Silver benefits.

RENATO: That is an agreement between the carriers that when they identify that a customer is a valuable customer for the other partner, they grant access to this set of benefits.

PAULA: Yeah, love it.

RENATO: So these are the three pillars for us in loyalty for Alliance, earn, redeeming and recognition, and making this available, as I said before, where our member carriers, they cannot reach directly with their own network.

PAULA: And just to do a little bit from the history book as well, Renato, as when I was researching in preparation for today, very impressed to see that the Star Alliance was the very first global aviation alliance ever created way back in 1997.

PAULA: And I even know the five beginning airlines.

PAULA: Will I mention them for our listeners?

RENATO: Yeah, please.

PAULA: Yeah.

PAULA: So what I loved obviously was all of the different continents that were covered, United Airlines, Scandinavian Airlines, Thai Airways, Air Canada, and Lufthansa.

PAULA: So truly visionary, I guess, to have those five at the beginning.

PAULA: And now, as you said, 26 companies.

RENATO: Yeah.

RENATO: And it’s impressive to see how many other countries just were added to this world map, right?

RENATO: We have companies from South America, where I come from.

RENATO: We have companies from New Zealand, from Asia, even more India.

RENATO: We have companies from Africa.

RENATO: So it’s a true global experience, and it’s a privilege to be part of this team.

RENATO: And not only because we have so many different cultures within the Star Alliance team, but because daily, I experience having conversations with people that deal with the same issues, but they have completely different perspectives, just because of their background, because of how they see this problem, and because sometimes they address the problem in different ways.

RENATO: And it worked, just because the customer was open to have a positive response to that, just because it’s a different place in the world with different backgrounds, with different cultures.

RENATO: So that’s why I’m passionate about this position, about understanding customers, customer needs, and customer backgrounds.

RENATO: Even people, even the people that I work with, they have different backgrounds and different experiences, different cultures.

RENATO: And it’s really, really interesting to be close to them.

PAULA: So on a practical level, Renato, my mind is boggling with the complexity of aligning 20 loyalty programs.

PAULA: And yes, there’s 20 years of history, 24 years if my maths is correct.

PAULA: So the original concept obviously is very, very well embedded now.

PAULA: But just on a practical level, how do you manage to coordinate those programs just on a week to week basis, day to day and month to month?

RENATO: Yeah, you’re right.

RENATO: We are getting to the 25th anniversary and it’s impressive how many companies we know that reached that mark.

RENATO: And even with this complexity, because in the end, we cannot deny that in some markets, these companies, they are competing with each other, and how they can have a positive result on partnering with them within Europe, within Asia-Pacific, within America.

RENATO: So the challenge here is to keep the structure of the conversation going on.

RENATO: So we have a very strict calendar of meetings that unfortunately had to be adapted due to the current situation, right?

RENATO: So we started using virtual meetings as well.

RENATO: And from one aspect, it was better to keep the conversation going on, but there was a challenge as well for more intense discussions, right?

RENATO: But this calendar is very important to define where we are going and which topics do we want to prioritize.

RENATO: Then we set up the year goals, and everybody tries to prioritize these initiatives.

RENATO: And some of them, they become standards for the Alliance, and then we reach the similar experience.

RENATO: So it always starts with business needs.

RENATO: There are discussed, aligned, prioritized, implemented, and then it becomes a standard.

RENATO: So for example, if I had an airline today, Renato Airways, and I wanted to join the Alliance, I would have to fulfill certain criteria that were set before I joined the Alliance, right?

RENATO: With mileage earning, mileage burning, with the recognition, just talking about loyalty only.

RENATO: And this is not by coincidence there.

RENATO: This was defined beforehand by the loyalty experts that defined a business need, then set a timeline for implementation, prioritization, and then created an Alliance standard.

RENATO: So that is how we can manage the seamless experience that we just mentioned in the beginning of the podcast.

PAULA: Absolutely.

PAULA: And just as a general observation, is it often that the, or does it ever happen, that the Alliance priorities are very different to the individual airline priorities?

PAULA: Does it happen a lot?

PAULA: Does it happen never?

PAULA: Like I’m curious as to if I was the loyalty manager, for example, in United, you know, which one takes priority and precedence because it’s such a big task to execute any change to a loyalty program?

RENATO: Definitely.

RENATO: And we are talking about a share of their customers, right?

RENATO: So sometimes decisions that are taken because of the other share of customers, the local domestic customers, they might impact the, let’s put it this way, the Alliance customers, right?

RENATO: But then you have to execute it.

RENATO: That’s why the standards, what we call the core values, they are updated every year.

RENATO: So the carriers continue to do that, and any exception should be requested to the board of the Alliance.

RENATO: So for example, if a carrier that is fighting a local competition with a low cost, maybe, and wants to reduce the benefits, they cannot do that on their own, because this might impact the Alliance customers.

RENATO: And the partners flyers, when they are traveling with them.

RENATO: So there might be a discussion.

RENATO: So it’s a commitment to be part of any Alliance, right?

RENATO: Any Alliance is a committee.

RENATO: From marriage to…

PAULA: I was thinking the same.

RENATO: To an airline alliance.

RENATO: So they should keep the standards that were aligned before, while offering their daily services.

PAULA: And I guess it comes from a place of respect.

PAULA: As you said already, Renato, many of these airlines have been around for over a decade, probably two or two and a half, in fact, coming up to your 25 year anniversary.

PAULA: So yes, I guess they understand that they would impact their global customers.

PAULA: So you have to take a hair of them all.

PAULA: So that makes perfect sense.

PAULA: And because it is 2021, we can’t not talk about COVID, Renato.

PAULA: Tell me, how has that impacted loyalty within the Star Alliance?

PAULA: Have you seen massive shifts?

PAULA: I know you’ve done all of the global best practice things, for example, about extending status, but I would just love to hear your comments about what is happening with the COVID implications.

RENATO: Yeah, for sure, it has been dramatic, the situation, not only for us as an alliance, but for our members, for sure.

RENATO: In some places, we saw airlines stop flying for a while, the alliances, some carriers, member carriers reducing their networks.

RENATO: And we needed to adapt.

RENATO: And the most difficult part is that our customers, so the share of customers from the member carriers that fly abroad in other partners’ networks, they will be the last ones to come back to fly.

RENATO: Because they will need that regulations are in place, that the vaccination will take place, that we will have some aligned criteria to validate, but they will have to have borders open for long-distance flights.

RENATO: So this will be the last customer to return with full activity.

RENATO: And when they get there to this full activity, it will be a different customer.

RENATO: And we need to know that a customer that has been through an experience of having to deliver their business with other alternative manners.

RENATO: So as I was just mentioning, we had more virtual conferences.

RENATO: So how did this impact our customers’ behavior on making business, right?

RENATO: And the best way that we can do is not to fight this trend, but understanding and try to identify how can we correlate with it, like not just leaving it aside.

RENATO: So in order to do that, we had a series of customer surveys to understand how a customer is seeing this, new trends, new technologies, and how this will impact their travel behavior.

RENATO: And what we expect so far is that, yes, virtual conferences will still be a thing after COVID, and will support a lot daily business, but new business and closing the deals, they cannot be fully replaced, so people will still travel a lot, people will still have face-to-face, of course, respecting all the restrictions and the conditions, but a good face-to-face meeting will never be replaced for a virtual meeting.

PAULA: Totally.

RENATO: But we need to find a way to live with this new scenario.

RENATO: A carrier, a member carrier will have to adapt to that.

RENATO: And in order to support frequent flyers to come back flying, we have what we call a travel information hub in our website.

PAULA: It looks fabulous.

RENATO: We try to bring information to the customers, like where they can fly, what do they need when they are planning to fly somewhere.

RENATO: So information is super important because we can get information from many different places.

RENATO: So reliable information is super important when you’re planning to travel somewhere in this new normal.

PAULA: Well, for sure.

PAULA: Yes.

PAULA: And the word fake news, which I really don’t like, but you’ve actually just reminded me, it’s only brands like Star Alliance that I would go to because I know I can trust the information.

PAULA: So that really is critical because we were talking before we came on air about some huge positive developments that are starting, you know, just these little glimmers of hope for the travel industry where certain countries are welcoming customers that are vaccinated and no need for PCR tests, which I will be delighted when I can travel like that.

PAULA: And I think, for example, I saw the Seychelles, I saw Greece mentioned, and I’m sure there’s others as well.

PAULA: But definitely when I saw the COVID hub on the Star Alliance website, I thought, oh, this is fabulous as a resource because of the brand.

PAULA: So it’s really extraordinary, I guess, in terms of how brands really start to become even more critical to drive that emotional loyalty, as well as the transactional stuff that we all know and love.

PAULA: I think your brand is going to stand you in good stead at this time.

RENATO: Exactly.

RENATO: As you said, now we see some movements of this travel bubbles being created within specific countries.

RENATO: So maybe a travel bubble will be created between Australia, New Zealand and the region.

RENATO: And of course, this has an impact.

RENATO: As I said, our customer is the one that travels abroad, that travels outside of the network for that career.

RENATO: So I can expect that it would take some time for us to be completely aligned.

RENATO: And our brand coming to the 25th anniversary is super important.

RENATO: It’s a huge asset that we have developed in the last years.

RENATO: And it comes from the standards, the core values that we have in place, that customers really know that they can trust.

RENATO: And I’ve been there.

RENATO: I’ve been in airlines that started to launch the partnership with Star Alliance.

RENATO: And I remember the impact that the Star Alliance brand had in our local brands.

RENATO: So it’s kind of a stamp of approval that the customers from all around the world will feel safe and will be reassured on traveling with that airline.

RENATO: So it’s a really important asset that we have today.

RENATO: And it was built on top of the core values, on top of the standards that were built on top of knowledge that 26 different carriers put together.

RENATO: So it’s super rich.

RENATO: So this meeting, this conversation, they are super rich.

PAULA: Oh, for sure.

PAULA: Yeah.

PAULA: And I’m a little envious, Renato, of those type of even regular meetings that you mentioned, where you have, you know, your 20 loyalty program directors, I guess, sitting around and really discussing in detail.

PAULA: So I’d say the learnings that you get just from facilitating and guiding those conversations and ensuring, as you said, the excellence and execution, it must be just fascinating.

RENATO: Yeah, it’s fascinating from both sides, from the personal side and from the professional side, because it’s almost a UN meeting with so many different people.

PAULA: Of course, I can imagine.

RENATO: Yeah, and with so many different backgrounds.

RENATO: And it’s interesting to see how they approach business in different ways and their different results.

RENATO: So yeah, I can say that.

RENATO: And it’s a privilege to be in this role in my career, definitely.

PAULA: And I loved what you mentioned before we came on air about how you support what I know you call non-home markets.

PAULA: So I’d love just for listeners, if you would give the example that you told me about the type of activities that you do where you don’t have a home carrier.

RENATO: Yeah, so as part of things that we have done, but they were not in the core business.

RENATO: And now with this new post-COVID world, this new normal, we might address effectively is our strategy for the non-home markets.

RENATO: So imagine that we have what we call the home markets, which are the domestic markets for our member carriers.

RENATO: And we have the non-home markets, which are markets that we don’t have presence of a local carrier.

RENATO: And in these markets, we have many carriers flying to these places, and many might even offer connection services, lounges, Star Alliance branded lounges in this market.

RENATO: But today we don’t have a loyalty approach to this market, an effective loyalty approach to this market.

RENATO: And what we are trying to focus in that, for example, in the UK, today when you fly with any Star Alliance member, and you have the Star Alliance gold status with the airline FFP, when you travel to downtown London from the airport, and you take the Heathrow Express, you can get an upgrade from the cabin.

RENATO: So things like that, like this small perks, or even maybe stronger initiatives for earn and burn, we are studying with the airlines when it will be the right time to offer that.

RENATO: But we can use the same aspect of helping our member carriers to reach places that they are not there, with the support of partners, or not even with the support of partners, with joint efforts in those markets, right?

RENATO: So that’s what we have been discussing recently.

RENATO: And it might be the case that soon we will have more initiatives like this one, and we can schedule a second chat, and I can tell you that.

PAULA: Out of the press.

PAULA: Brilliant.

RENATO: This is something that we are working on, and it’s awesome because we try to understand, and how can we always see this in this very cliché t-shirt mug, that we are stronger together, and in this case, we are stronger together, right?

RENATO: So that’s the basis of it.

PAULA: Yeah.

PAULA: But what I like about that, Renato, is it’s almost irrespective of what’s happening with the international scene and COVID and those restrictions, that you’re finding non-airline partnerships as a way to differentiate and make your gold members feel super special.

PAULA: And I think the Heathrow Express is a perfect example of that.

RENATO: This year, this year, the non-air that we call non-air partnerships, they were super important for us to keep recognizing our customers, right?

RENATO: So we had different initiatives in place where loyalty programs, they just simply extended the expiration date for their levels.

RENATO: But we had as well some loyalty programs that we don’t…

RENATO: So we have one standard that is that only air bios can be used to grant status to the customer in an alliance perspective.

RENATO: But this year, we had the exception that loyalty programs, they could connect with their non-air partners and grant status based as well in some of these partnerships that they have.

RENATO: So they had the possibility of offering that, besides expanding their expiration date.

RENATO: So individually, the loyalty programs decided to use this, and it was super important to keep activity, to keep engagement, and to keep the brand relationship, right?

RENATO: That this loyalty program has for their customers and the alliance consequently.

PAULA: Of course, absolutely.

PAULA: I really like that.

PAULA: And certainly with my customer hat on, I would love to see that one continue.

PAULA: I’m not sure how the debates will go.

PAULA: I’m sure you’ll have plenty of discussion.

PAULA: So let’s say in two years’ time, or goodness knows how long, when full normality has returned, it’ll be interesting to see if you keep that position and policy, or if it reverts to, you travel with an airline to get status, you know?

RENATO: It’s about learning how to live in this new normal, right?

RENATO: Not completely putting it aside, but understanding it, and understanding how we can correlate.

RENATO: Maybe we won’t have a full allowance, maybe we will have a percentage or something like that that will make sense for our carriers, and we will still support our core business that is traveling, right?

RENATO: But we need to understand the new behavior, the impact that the new behavior has in this customer’s way of doing business, and how can we be sure that we allow these customers to have this face-to-face interaction, directions that will never, never end, because they will still be important, right?

PAULA: They totally will, yeah.

PAULA: And even, you know, obviously business travelers are a key focus for any Frequent Flyer program, and I’m sure it’s by far the dominant membership.

PAULA: But also what I did love, I was researching just again the number of destinations for things like the round-the-world tickets, which is obviously, you know, a tourist product.

PAULA: So again, I’m sure it’s pre-COVID numbers, but 1,300 destinations, 762 million passengers a year flying with Star Alliance.

PAULA: So I guess there’s an important opportunity, again, in the new normal.

PAULA: These people, again, I think there’s like this built-up pent-up demand that people do want to get back on planes when they feel safe to do so.

PAULA: So it’ll be fascinating to see how that behavior evolves.

RENATO: Yeah, this will be a new era for loyalty in the Alliance level and with the frequent flyer programs as well.

RENATO: Like how to address this leisure customers, as you said.

RENATO: We hear many CEOs from airlines saying that the leisure segment will be more and more important.

RENATO: But how do we address that with the loyalty strategy that was built in the traditional way of granting more according to frequency, right?

RENATO: So how can we address the ones that are traveling maybe once, twice, three times per year, but we have many different people that have this behavior, right?

RENATO: We might replace a seat of a corporate customer that would be flying, but now because of the new normal, because of a change in behavior, it’s reducing the amount of flights.

RENATO: You’re right.

RENATO: I think this is a challenge for the upcoming months and years, how traditional and loyal to programs that were well established, focus on business, travel, will now serve this leisure segment.

RENATO: We have some initiatives with our members, and it goes through partnering with non-air partners as well, with this daily and more focused experience, experience that they are not including maybe just a super big travel plan, but still they can feel recognized, and then they can feel that there is value in that relationship with the company and with the Alliance.

RENATO: So, well, there is this trend of cash back programs.

RENATO: Will this be an alternative to the regular mileage earn and burn?

RENATO: I don’t know, I don’t have that clear, but we should definitely study how and alternatives of how to address loyalty for the leisure customers, for the visiting friends and relatives segment.

RENATO: How could we create this value proposition?

RENATO: And this is a work in progress still, that we are learning and we need to have these partnerships in place.

RENATO: But then again, it always starts with the airlines that will create this.

RENATO: Then we will create standards for them to offer to each other customers.

RENATO: And after that, it will become an alliance, an alliance core value to allow these customers to have the similar experience.

RENATO: So there is a process.

RENATO: We are part of this discussion, but it’s not the immediate impact in the Alliance Travelers.

RENATO: So let’s see.

RENATO: It’s very interesting.

RENATO: We won’t have the same scenario that we used to have.

RENATO: So we will have to innovate and we have to invest in innovation as well.

PAULA: I love it.

PAULA: I’m a big fan of innovation, as you know, Renato.

PAULA: And actually today, as we’re recording, I was super impressed to see the new innovation hub that the Star Alliance literally just announced today.

PAULA: So you guys are currently based in Frankfurt, but there’s going to be a new location, I believe, in Singapore.

RENATO: Yeah, you’re right.

RENATO: This was just announced and we are eager to structure this.

RENATO: But I’ve personally visited Singapore before, and I’ve seen some many startups, they have their offices there, and it will be an opportunity for the Alliance to build up the partnerships, even to capture talent as well.

RENATO: So I’m very excited with this news to see how this future will be shaped, right?

RENATO: But you’re right, so this is brand news, this is brand, brand news.

PAULA: Hot off the presses today, so as and when you’re allowed to travel, which I’m hoping is quite soon.

PAULA: Actually, what is the position?

PAULA: I know from a personal perspective, I guess you can make your own decisions, but just as things stand at the moment, within, I suppose, Star Alliance, is it okay to travel on business or is it still preferred you don’t?

PAULA: Or how are you guys managing that from a professional perspective?

RENATO: Well, we believe that as soon as we get to the point that it’s okay to travel, and I mean, it’s safe to travel, and it’s the regulations, the governments, they allow people to travel, we should be the first ones to be the example, right?

RENATO: Of course, we have to respect every government decision and the health authorities’ knowledge on this.

RENATO: But as soon as we get there, okay, there are green lights, we should be the first ones in this queue, in this line, and we expect to do that, yeah.

RENATO: Personally, I expect to do that soon.

PAULA: For sure.

PAULA: Absolutely.

PAULA: Good.

PAULA: Well, me too.

PAULA: Again, I mean, I don’t travel on business, but I do travel on personal basis, and I’m looking forward and hoping to do that.

PAULA: And we know the protocols are not fun, but they are essential, and I think we’ve all kind of recognized that, and I’m certainly willing like you to do whatever it takes.

PAULA: The only other real question I had just as a general loyalty one now, so this mightn’t even be airline-specific Renato, but I’m just picking your brain because you have access to so much of the industry, and it’s really around the idea of paid loyalty programs.

PAULA: So it’s something that I find super fascinating.

PAULA: We’ve seen, you know, obviously Amazon Prime really kind of knocking it out of the park, I think, in terms of, you know, building a VVVIP experience, I think, for anybody.

PAULA: So is this something that you see more of, maybe within the airline context, or even, you know, there in Germany where you’re based?

RENATO: Well, yeah, you know, if I could pick the two trends to explore more, one will be the cash back trend.

RENATO: That is huge here.

PAULA: Yeah.

RENATO: In retail, for example, I’ve been thinking a lot about how the model could be applied, the model that is so successful with airlines could be applied in other segments with all this, the retail industry, with the FinTech industry, with payments.

RENATO: So I really believe that there’s a lot to be developed in that area.

RENATO: Cash back is one of that.

RENATO: And the other one, the subscriptions that you mentioned, could be a different approach.

RENATO: To have access to this Prime services, right?

RENATO: Personally, I am a Prime member.

RENATO: I use it every time to get my things.

RENATO: But I’m also a cash back customer.

RENATO: So I don’t think it’s related only to one specific target audience.

RENATO: It could address different types of target audience.

RENATO: But I don’t believe that in the short term, this could be applied to the airline segment.

RENATO: Maybe for leisure customers could be an alternative in the future.

RENATO: Some of our loyalty programs, they have a subscription as an option to have access to some of their benefits, to their local benefits, and it has been quite successful.

RENATO: In Brazil, for example, we have programs that also have this subscription model that they can get access to a specific amount of mileage earned every month.

RENATO: So if they are planning to have a trip in the end of the year, they can start paying for it now, and it’s a super interesting revenue source for the loyalty program.

RENATO: It could be a good thing for the customer as well, right, to start planning this trip and maybe have access to a different availability or maybe have access to a different set of benefits.

RENATO: So this is quite common in Brazil.

RENATO: It could be maybe not just like the same model that Amazon Prime has, like fully subscription, but maybe some different aspects could be applied as well.

PAULA: I think that’s incredibly insightful, Renato, and you’ve reminded me of an article called The Bank of Starbucks, which essentially talks about the prepayment value, and it’s in the billions of dollars.

PAULA: I don’t have the figure to hand, but I will make sure in this show notes to talk about and link to this Bank of Starbucks article, because I think anybody, particularly in travel, really thinking prepayment, I think that’s a genius idea.

PAULA: I’ve seen it back in my home country of Ireland, where people prepay for Christmas or big spend, but for that to be facilitated now, I just think there’s something very big in that as a possibility.

PAULA: And again, cash flow is king, particularly right now.

PAULA: So super interesting idea and definitely keen to hear more.

RENATO: I would say that it will vary a lot about considering the target audience.

RENATO: So, for example, the example that you just gave about Starbucks, and I am a fan.

RENATO: I love Starbucks.

RENATO: Everyone that knows me knows that I’m a big fan, and I buy all the time Starbucks coffee.

RENATO: And I used to be part of their loyalty program in Brazil, but I’m not part of the loyalty program that they have here in Germany because it’s not the same, it’s not as effective.

RENATO: So why is that?

RENATO: Because the target audience is different here.

RENATO: We have different behavior here.

RENATO: So all of this will have to vary according to the region, according to the cultural aspects, according to the local behavior.

RENATO: So it doesn’t mean that one answer suits all.

RENATO: And I’ve seen that.

RENATO: And then I can bring it from my experience with the different loyalty programs in the globe.

RENATO: So for example, we have this huge trend of super apps and QR code payment in Asia, but it’s not applicable to every country.

RENATO: So even this trend should be analyzed according to the customer.

RENATO: So if I have to say something, study the target audience and test, test, test for launching any new initiative.

PAULA: Oh my goodness, Renato.

PAULA: Well, that’s absolutely brilliant advice to finish on.

PAULA: Is there anything else that you want to mention from your side?

RENATO: Thank you very much for the opportunity, Paula.

RENATO: After our first chat, I’ve been following you and your podcast, and it’s incredible the rich conversations that you have with all the people that you’ve been talking to.

RENATO: It’s a super interesting channel for loyalty experts or curious people, right?

RENATO: That want to learn more about the loyalty and the business world.

RENATO: Because loyalty for me goes beyond marketing, goes beyond…

RENATO: It’s a business strategy, right?

RENATO: Most of us, we came from marketing, but I think it’s super important.

RENATO: And it’s part of a company culture, right?

RENATO: Of addressing the most important customers, the most valuable customers, to focus on retaining them and not acquiring more customers and spending more money sometimes.

RENATO: So it’s a business decision.

RENATO: It’s more than just a marketing initiative.

RENATO: It’s a business decision.

PAULA: Totally, totally.

PAULA: And I’ve often said, in fact, Renato, that the reason I call the show Let’s Talk Loyalty and not Let’s Talk Loyalty Programs is exactly that point you’ve just made.

PAULA: So thank you for that.

PAULA: I know you are listening to lots of podcasts.

PAULA: I’m super thrilled you’re listening to mine.

PAULA: So on that note, I want to say Renato Ramos, Director of Loyalty at Star Alliance, thank you so much from Let’s Talk Loyalty.

RENATO: Thank you.

PAULA: This show is sponsored by The Wise Marketeer, the world’s most popular source of loyalty marketing news, insights and research.

PAULA: The Wise Marketeer also offers loyalty marketing training through its Loyalty Academy, which has already certified over 170 executives in 20 countries as certified loyalty marketing professionals.

PAULA: For more information, check out thewisemarketeer.com and loyaltyacademy.org.

PAULA: Thanks so much for listening to this episode of Let’s Talk Loyalty.

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