With 26 partners, the big ‘C’ that comes to mind when you contemplate Star Alliance is ‘Complexity’.
Diving a bit deeper, we surface 5 other C’s that offer insight into how this super successful loyalty coalition actually makes it all work.
Communication and commitment
26 individual airline partners (several of whom compete in various markets) must balance local customization in ‘home markets’ with a more global understanding of member priorities and needs. Commitment to the coalition also means consulting the larger group before taking decisions at a local level that may impact global members.
How do they do it? Group Director of Loyalty, Renato Ramos puts it down to disciplined communication between partners, following a strict meeting calendar. They set common goals, agree on execution standards, iterate new initiatives, and define technology, data, and insight-sharing protocols. The latter is especially key not only in an era of personalization but also data privacy concerns.
Convenience and connectivity
All of this sounds incredibly complex. Yet, as a customer, the experience and value proposition has to be simple and elegant. Star Alliance conveniently roots global reach, worldwide recognition, the ability to earn and redeem across a wide network of airline partners, and seamless service in the member’s primary preferred program.
It would be easy to get lost in the superficial aspects of this proposition, but the program’s longevity comes from first prioritizing the basic need of frequent flyers: a comprehensive airline network with optimal connectivity and competitive prices. Filling gaps in connectivity and enabling members to earn anywhere is a key reason for Star Alliances’ success.
Star Alliance does not run a loyalty program by itself but supports 20 different programs under 26 partners to deliver a seamless, consistent experience to each member.
One of the challenges with multi-partner coalitions is getting all the partners to see the value of each customer through a consistent and standard lens. Aside from the ‘points framework’, this needs people to share a mindset that equally respects the customers of each partner; and the technology and processes to recognize and provide a seamless CX across the board to them all.
Cost of Retention
Several studies have recognized that loyalty programs are a critical revenue stream for most airlines, especially post-pandemic. For Star Alliance, loyalty is the core business strategy and not a marketing initiative. Their goal is to retain the most valuable customers and make them more profitable. Tracking and optimizing the cost of retention as well as a members’ share of wallet are thus north star KPIs. Ramos shares a recent example when data from their co-branded credit card partner revealed a mere 50% share of wallet with top-tier members in some markets. This led to a tailored and targeted retention campaign which ultimately grew the share of wallet and profitability.
The pandemic highlighted the need to keep members engaged even outside of flying. Star Alliance realized the need to elevate the member experience and drive engagement in lean travel times by better understanding their customers’ new way of living, working, doing business, and of course, traveling.
As a result, they are focusing innovations around ember engagement in non-home markets, and leisure travelers.
To drive engagement, relevance, and share of wallet in markets not covered by the ‘home markets’ of the 26 members, they adopted a loyalty approach to creating member value with non-airline partners. For instance, members can avail cabin upgrades on the Heathrow Express to downtown London.
The pandemic, coupled with a recession and a new generation of hybrid workers has also hit them where it hurts most: business flyers. Despite the fact that leisure travellers fly less frequently, Star Alliance is challenging itself to create a value proposition for them with flight and non-flight-based earning and redemption options in a post-pandemic world. For instance, experimenting with dynamic pricing for anytime, anywhere, no-blackout redemptions; and the ability to buy a limited number of miles per month to ‘save up’ for a future flight.
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