Paula: Today we’re delighted to be meeting Finnair for the first time, which is one of the world’s oldest airlines founded back in 1923. Finnair’s network specializes in connecting Europe, North America and Asia via its hub in Helsinki, with sustainability at the core of its strategy.
Finland is a small country with a population of about five and a half million people. And it’s perhaps best known for its ranking as the happiest country in the world, according to the United Nations World Happiness Report, holding the top title since 2018.
Today we’re meeting Valter Sandell, who is leading the loyalty and membership strategy for Finnair Plus, which has undergone some comprehensive changes to its design and strategy just recently launched in early 2024. I hope you enjoy our conversation.
So Valter Sandell, welcome to Let’s Talk Loyalty and to Loyalty TV.
Valter: Thank you so much for having me, Paula.
Paula: Great. Great. I’m very excited to hear your entire story, Valter. I have never been to Finland, never really known a lot about Finnair. And I know you’ve done some extraordinary work and recently launched a huge amount of changes. So for anyone listening in terms of loyalty programs, we know that the airline sector is always doing some super fun stuff. So we’re here to hear your story.
But before we get into that, Valter, as you know, we have an opening question, which we always like to ask. every loyalty professional when you come on the show. So to kick us off before we get into Finnair Plus, will you please just tell our global audience, what is your current favorite loyalty program?
Valter: This is a good question. I gave it some thought. I chose actually a small Finnish company selling skincare products. I noticed that it really works for me as a customer. I purchased one or two items from their website. And then immediately I got some bonus points and they asked if I wanted to use the points on a new purchase, trying some new products, which I did. And I noticed that there’s a positive loop in, in every time I order, I get more points. I can try some new products and I keep ordering more and more different kinds of products. So the company is called Dermosil and their program is Dermosil Club.
Paula: Wonderful. Well, we will definitely Google that one. Thank you so much for bringing a novel answer to it. We have so many people here who admire some of the big, you know, famous programs around the world. So always wonderful to get an insight what’s happening in your local market.
I really want to understand a lot about Finland today. I had a wonderful time researching the country, obviously the airline and your loyalty program in preparation for our conversation today. And it really is an exceptional country and one that I just hadn’t realized, but I’m a big fan of Scandinavia, actually in general. And for reasons I’m sure we’ll get into later in the conversation.
So let’s kick off with getting an understanding Valter of Finnair as an airline. And if you could share any context in terms of, you know, how it operates in your home market. I know you’re joining us today from Helsinki. So would you mind just introducing the airline to our audience?
Valter: Absolutely. Finnair is one of the most experienced airlines in the world. It’s the sixth oldest actually still operating airline and it’s the flag carrier of Finland. So we fly to Asia, to a lot in, in, in Europe to, to North America as well. And we’re part of one world ever since 1999. That’s maybe a short and sweet introduction.
Paula: It totally is. Yeah. And I will give a little bit of what I discovered on a good old Wikipedia as well Valter. Finland has been again in 2024 rated at the World’s Happiest Country. I think it’s the eighth year in a row that you’ve achieved that. And again, lots of incredible reasons. It seems to be a very beautiful country and really does some things exceptionally well. Things like education, innovation, architecture. I don’t know. I mean, I’m sure there’s so much more to what Finland is proud of.
So from your perspective, Valter, is that a fair representation? I know it’s a small country. I come from a small country as well, from Ireland, as you probably know. But what is Finland like? What are you most proud of as someone coming from there?
Valter: Well, I think you, you lifted up many important things. The nature is of course very beautiful. The archipelago. We have a nickname, the Country of a Thousand Lakes, but in fact, we have many more lakes than that, but I think overall the society is great. It’s safe and it’s things just seem to work, the infrastructure and education and everything.
Paula: Amazing. Yeah. You know, there’s very few countries can actually say that Valter. I mean, you say it so casually, but for things to really work that really takes a huge degree of commitment. I get a guest to excellence.
So, as I mentioned, I’m a big fan of Scandinavia. I’ll give a shout out to some friends of mine in loyalty in the tech side that got me into actually content creation as well. Quite a few years ago now. They were based in Norway, but they but from working for them and writing content about the whole technology sector in Scandinavia, I really had a whole appreciation in terms of the expertise there. So, at some point I am determined to get to Finland. So watch this space I’ll be coming to visit.
So let’s talk a bit about it. You mentioned the sixth oldest airline in the world that’s continually operating. And I saw your announcement on LinkedIn that’s more than a hundred years old. So absolutely an incredible achievement. How big is the airline in any sort of sense? Can you give us things like aircraft or staff numbers again? I know Finland itself is a small enough country but to give us a sense of your route network or the scale at which you operate.
Valter: Yeah, we have roughly 80 aircraft flying around in, as I mentioned, well, far East Asia and the Europe and the US. Overall, I think in terms of aviation in Finland, we are probably by, by far the biggest player. So, of course there are others here as well but everything knows Finnair and has some sort of connection to Finnair.
Paula: Amazing. Amazing. So listen, let’s get into talking about loyalty in Finnair. But even before we do that, let’s talk about your career background, Valter, what have you done to get you into this wonderful position?
Valter: Yeah, well, I started off working in management consulting. I worked for a number of different management consulting companies in Helsinki for roughly five years.
Paula: Okay.
Valter: And then I found this job posting within loyalty in Finnair. And of course, Finnair is such an iconic brand in Finland that of course, that’s very interesting by itself but as I read the job posting, I realized that loyalty is, it’s very interesting also. And I was sort of kicking myself that I hadn’t really been educating myself enough on that part earlier. But then I applied for the job and had some good discussions with my now boss and joined roughly two years ago.
Paula: Incredible. Yeah. Well, I think you told me offline that in your management consulting role, while you didn’t work on loyalty strategy per se, you did work on, I suppose, a couple of things which are extremely relevant to our industry. If I’m not mistaken, you have a background more or less on the analytic side. And I think you said brand marketing as well. Is that correct?
Valter: Yeah, that’s correct. So, I worked for a lot of retail companies. Especially on the brand side and then different projects with lots of data. And that’s something that I’ve found very useful now, of course that loyalty marketing should be and is using lots of data and doing different kinds of estimations, calculations and business case.
Paula: Absolutely.
Valter: Calculations. So that’s very useful.
Paula: So you didn’t actually do any of that side of things for a loyalty program. If I’m hearing you correctly, when you were in the management consulting, you’re basically taking those same skills, but bringing them into loyalty for the first time.
Valter: Yeah that’s exactly the correct. So it’s been, of course, lots of learning for me as well. Coming into loyalty without loyalty background.
Paula: Yeah. Well, it is, as you said, it’s an iconic brand, so I can totally understand why the job posting jumped out at you. In terms of the loyalty industry, was it the first time that you realized that you had a passion for it? Because for me, you know, there’s so many people in our industry that just really have this love of taking care of customers.
And for me, you know, that’s probably more of a skill. I don’t have the analytics background that you have. What was it particularly about loyalty as well as the brand that appealed to you in terms of applying for the role?
Valter: Yeah, I was actually listening to your show just this morning and someone, one of your guests was saying that he had been a fan of loyalty programs since what, five years old or something. I definitely. Unfortunately, don’t have that background.
To me, it was about developing a program where you can use data to influence people’s behavior. To me, that was very fascinating and still is. And just being able to crunch those numbers and see what kind of changes have what kinds of effects. It’s endlessly fascinating.
Paula: Amazing. I totally agree. I’ve often said on this show, Valter, as well, that I’ve never worked on the kind of brand side myself of marketing because I just don’t know how you measure it. And I don’t know how you feel like you’ve done a good job, you know? So for me, the whole thing about loyalty is the measurability and the fact, as you said, that we’re driving profitable behavior change. And that’s obviously something that you’ve already spent a couple of years now thinking through.
So would you talk us through the history of Finnair Plus before you joined?
Valter: Yeah, Finnair Plus was founded in 1992. So, actually just after I joined, we celebrated 30 years of Finnair Plus. And then in 99, we joined Oneworld. And actually I think that ever since 99, when we joined Oneworld, we haven’t had as big changes as we are or have implemented just now. So, it was a good program. It worked well, but I think that maybe the time was right for us to make some bolder moves at this time.
Paula: Wow. Yeah. Well, 30 years is certainly a very long time for any business. So an incredible milestone. What was the, I suppose, business context in terms of the changes that you’re about to talk us through that you made to the program? What were you kind of concerned about and what were you trying to improve in terms of this relaunch?
Valter: Well, I think, of course, Finnair was in a special situation to say the least after the covid pandemic and also after Russia’s attack on Ukraine, which closed the Russian airspace for Finnair.
But I’m not maybe seeing that as much as a reason for our loyalty changes. I think that the changes we are making have different reasoning behind them, and I’m sure we’ll get into that. The spend based model, the new currency and the new benefits. They all have a slightly different reasoning behind them. But the context was maybe still that I was looking at the program, of course, with a, with the fresh eyes having just come into the company. And after some discussions, we decided to see what could be done differently.
Paula: Okay. And what did you change?
Valter: Well, we changed a lot of things to be honest. I like to group them into three main parts. So, the first is the move to a spend based model for earning currency and status. Then the second one is we changed our loyalty currency. So we had Finnair Plus Reward points and now we have Avios.
And then finally we introduced some new benefits, for example the messaging wifi on most of our European flights or milestones, which are different benefits that come in within the tiers rather than just that at reaching or maintaining it here.
Paula: Okay, so that’s pretty huge. The spend based one, I don’t think will surprise anyone listening to the show, Valter. Definitely something I’ve seen so many airlines. I think we’ve all been talking about it for a long time, but how did it how did it go internally, you know, because I think previously I’m sure you were using a distance based model, I think you said, based on fair class and distance traveled. So probably a fairly complex model, which I think is exactly what frustrates most of us who ever, you know, fly. I want to understand what we’re earning. But what were the conversations like internally when you started to think about moving from distance to spend based?
Valter: Well, I think we had many different discussions. Luckily we had people in the team as well, working as devil’s advocates. And, uh, it’s good to get the arguments ready and see whether it’s actually a good idea. In the end, I think that this came down to well, what we see a lot in a lot of retail programs, loyalty programs in Finland, for example, is that they don’t award you for how often you go to the supermarket, but rather how much you purchase things. And it’s a similar sort of logic here. And to me, it just makes sense that the more value a customer is bringing to the company, the more benefits they are receiving as well.
Paula: I think that makes sense, actually, as well. You’re right, because consumers now have grown up with loyalty, particularly for airlines. So, yeah, I think we do appreciate that there’s differences between low cost carriers, full service carriers, what we spend, be it on the actual, you know, basic fare itself. Things like ancillaries. So yeah, I think you’re right. I think consumers are ready for it.
I never really thought about the the equivalent thinking from a retail perspective and you’re absolutely right. It’s always based on the spend. We don’t reward people for going further to the store or anything like that. So that’s a funny idea for sure. So it makes perfect sense and I’m sure it’s going down well. Of course, we’ll touch on any initial reaction. I know it’s still early days for you.
But before we get into, I suppose, any feedback you’ve had since the relaunch tell us about the move to Avios because I think that’s very exciting news. We’ve had you know, other airlines on the show. We’ve had IAG on as well, of course I’m ex British Airways, so always have a soft spot as well. So, what was it like to to choose to move to a currency like that?
Valter: To me, it was again a way to, to bring more value to our members moving into a new currency and Avios is now, I think the only currency for one world airlines in Europe.
Paula: Okay.
Valter: It brings value for members. For example, a Finnair Plus member flying through Heathrow can can earn obvious for their purchases at the airport on top of any potential credit card earning. So to me, that’s it’s a good move in the sense that it creates more value for members. It’s maybe easier to see or think about purchasing on BA metal or Iberia or Qatar. And on the other hand, I really fail to see any drawbacks for members in this move. But of course the communication is one thing and it’s not always very simple when you’re changing currencies.
Paula: I think that’s probably the understatement of today’s conversation, Valter, you know, because for me, again, thankfully in the industry, Avios is now extremely well known.
But of course, its predecessor, you know, the executive club miles where, you know, so well established. So, you know, the rebrand takes actually just a lot of time. And again, you had a currency had a program running for 30 years, as you said. So the people who have, you know, a very good understanding of a points of your own to suddenly learn, okay, it’s a new name.
But with all of the upside, I think you’re absolutely right. You know, I hadn’t realized that of course now all European carriers, of course, are using Avios that are within One World. So the upside is amazing. Again, I went through a little bit of it with Airclub when they rebranded and relaunched from Gold Circle. So I think it’s a fabulous move.
Remind me it was early March. I think you did the actual launch of 2024. Am I right? So we’re here coming into now early April. So it’s only about a month old since you’ve made these changes, is it?
Valter: Yeah, just under, just under a month. So 9th of March was when we made the changes.
Paula: Amazing.
Valter: And the changes went fine.
Paula: Okay. How did it go?
Valter: So still exciting times for sure. It’s always like I said, it was an exciting weekend but everything went very smoothly, actually. No, no hiccups at all. I think everyone was relieved and very pleased with that.
Paula: Well done.
Valter: So, so, yeah, really no problems.
Paula: Yeah, and you did give me your membership number, Valter, last time we spoke. Would you mind sharing that just again for our audience who mightn’t be aware of you know, just the size and scale of Finnair Plus?
Valter: Yeah. Finnair Plus is we have roughly four and a half million members. Maybe something to mention and come back to the discussion about Finland. Finland, I think has roundly around about five and a half million in population. So, so obviously our member basis is global, but still.
Paula: Amazing.
Valter: It’s member base and one we’re really proud of.
Paula: Yeah. Yeah. Talk to you about the conversion ratio, Valter, because just looking on your website, I’m pretty sure this is where all your analytic skills came in, but how did you decide the ratio of converting, you know, Finnair Plus points over to Avios?
Valter: That was of course a difficult question to begin with. It needs to be a simple conversion. No one wants to try to understand what 1.792 means as a conversion, but the three to two that we ended up with, I think works well. I think originally it boils down to BA being a mile based program and us being a kilometer based. So it kind of follows that, that logic. But of course we did many analysis and then found out that this seems to work quite nicely.
And I think again it’s a communication challenge, of course, because it’s been a few years since Finland joined Euro. Maybe the currency conversion is not something people think about every day but to see that you’re, balance of points is reduced. The name of the currency is changed, but then at the same time, the prices go down as well. So the value remains, it’s something we’ve been communicating quite a lot, but I think it’s never too much.
Paula: A hundred percent. Did you go through a research phase in terms of testing it externally, or did you just decide, you know what, this is going to be something that, as you said, is going to be a business decision and for the right reasons because, as you said, it’s a you know, at first glance, it might look like a negative if the points balance has gone down, but if actually the costs have gone down as well on the redemption side, and of course, there’s all the new benefits as well that you’ve brought in, which we’re going to talk about, did you go through a research phase or just decide it felt right from a, from the business side?
Valter: Well, the options we really had at that point was to have a conversion rate like three to two or something very close to that, or then, uh, have a conversion at the time when members are transferring their Avios between us and British Airways Executive Club. And it was quite clear to us that it’s more important that the Avios transfer doesn’t, or that Avios doesn’t have different values depending on the program. It’s much easier if Avios is always one Avios. And in that sense it was better to take the hit now once than then always have the confusion.
Paula: Yeah, absolutely. Nail it once. As you said, you guys haven’t been through too many major changes in your 31 years now of operating the Finnair Plus. So pretty sure that everybody, you know, was happy enough to kind of feel the updated program and hear about the new benefits. So I think that leads us nicely into what else did you change as part of this dramatic development for your program?
Valter: Well, we brought in a number of new benefits. Maybe one, one that I, or a couple that I like to talk about this is the messaging wifi. So when most of our European flights, all of our members get wifi for sending messages, for example, WhatsApp messages, and that’s really popular especially the fact that even the lowest tier members get it. And actually we’ve seen an increase in our member enrollments through the wifi of more than 400%.
Paula: Wow.
Valter: So clearly this is something that is very popular.
Paula: Yeah.
Valter: Then the second one is milestones. So depending on the members tier after they’ve maintained or renewed their tier, they can earn more tier points to unlock additional benefits. And again, this is different to what it was previously. So the tier benefits came in once you reached your tier or maintained it. But now there’s always an incentive to keep flying with Finnair or Finnair’s partners to earn more tier points.
Paula: That’s quite an unusual strategy. Yeah. I haven’t heard of milestones for tier progression. I mean, I’m wondering, did you think about maybe including more tiers, you know, as an alternative? I think you have five tiers now, if I’m not mistaken, plus milestones.
Valter: Correct. Yeah.
Paula: Yeah. So is it almost like, you know, a mid tier, like a new tier halfway to, as you said, drive that momentum?
Valter: That’s one way of looking at it for sure, but of course this is a lot of a lighter touch in a sense that it doesn’t have to be branded as, as strongly as a new tier would be no one word linkage per se and so on. So, so that makes it a lot simpler.
But to me, it was a good idea in the sense that if, you know, If you’re a member and you have like two months left of your tracking period, you know, you’re not going to reach the next tier because it’s, it can be fairly far away. So then there’s less of an incentive to keep flying with us. But with these milestones, there’s, like I said, the incentive to, to always choose Finnair or Finnair’s partner.
Paula: Brilliant. And then you mentioned this magnificent messaging benefit. Did that come literally as part of the loyalty relaunch? It sounds like it wasn’t something that existed previously for members of Finnair plus, so 400 percent increase in people signing up on board. That’s absolutely amazing.
Valter: Yeah that’s something I’m very pleased with, of course. We’ve, it was part of the same job internally. We launched it a little bit earlier. So at the end of last year, that’s why we’ve already seen data from a couple of months and we’ve seen the increase. Whether it’s part of the relaunch, who’s to say? But it’s part of the same package internally, at least that we’ve been working on.
Paula: Brilliant. Brilliant. And anything else on the either earn or burn side Valter or co brand actually, I’m always interested as well from an airline perspective. I did see on your website, did you have a co brand, anything changing on that side or is that literally business as usual?
Valter: The co-brand is for the time being business as usual, of course, the accrual had to change from award points to Avios, but last year we did also include a tier point earning for the credit card. So you can earn a little bit of tier points for your credit card usage as well.
Paula: It’s also a favorite benefit of mine and something I’m paying increasing amount of attention to, Valter. I was unfortunately not flying enough last year to maintain my gold status on Emirates here. So, yeah, so I’m back down to silver and now I’m checking my credit card every month to see exactly that. How many tier points did I get in addition, of course, to the miles. So, so it is an important part of the strategy. So, so really good to hear.
So a lot going on. As you said, it’s a, it’s barely a month old. Anything else coming up that you want to share with our audience around the world? Or is it a case of now it’s just time to catch your breath and focus on, I guess, building the size of the audience and I guess the engagement?
Valter: No, we’re not stopping to catch our breath. We’re continuing full steam onwards. Maybe one, one thing to mention for the audience and for you as well, since you’re probably coming to Finland pretty soon, I hope.
Paula: Yes.
Valter: So we’re opening our new lounge at the Helsinki airport, Schengen side in the summer of 24 this year. So expecting to see a clear impact on NPS on that side with the new lounge. I think that’s going to be very exciting.
Paula: Wonderful. So it sounds like NPS then is a key indicator. Is that on the airline side that you tend to measure that? Do you do it separately for Finnair plus? How is that as a KPI, if it’s something that you’re obviously very tuned into?
Valter: Yeah, absolutely. We follow the NPS both of course for the airline but in the loyalty team as well, of course we want to see. I want to see high NPS scores for our members particularly.
Paula: Well, we will definitely have to stay in touch with you on that one then Valter because you know, it’s something that I always love to hear, particularly over time, you know, what kind of NPS you’re experiencing after the major changes that you’ve just announced, you know, obviously settle in over time. So I hope you’ll keep us updated and come back on Loyalty TV please God in the months and years ahead to keep us up to date.
Valter: Absolutely. Sounds good.
Paula: Great. Great. And you’re absolutely right. I do intend to get to Finland, but that’s a different conversation. And of course, if I’m coming, I will let you know, and I’ll make sure to check out that lounge. It sounds absolutely wonderful that you’re investing in that in Helsinki airport.
So I think that’s all the questions that I have for you today, Valter, from our side. Is there anything else you wanted to share with our audience before we wrap up?
Valter: No, I think I managed to get in the lounge as well now. So, I’m very happy.
Paula: Amazing. Great stuff. Well, listen I’m delighted to have had you join us today, Valter. As I said, I’m a huge fan of the work that you’re doing. Any move to Avios, of course, always pics my interest, having seen it happen in Ireland. And clearly it’s a brand you’re very proud of and a lot of amazing work going on.
So with all of that said, Valter Sandell, Manager, Program and Membership Strategy for Finnair. Thank you so much from Let’s Talk Loyalty and Loyalty TV.
Valter: Thank you so much for having me.
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