Welcome to “Let’s Talk Loyalty”, an industry podcast for loyalty marketing professionals. I’m your host, Paula Thomas, and if you work in loyalty marketing, join me every week to learn the latest ideas for loyalty specialists around the world. Marketeers have a choice to make when engaging their audience, they can build first-party relationships that bond consumers and brands in meaningful longterm relationships, or they can Snoop creep and deliver content and offers that hold to little or no relevance. If you want to build more meaningful relationships with consumers, then join cheetah digital at signals 21.
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This October, the award-winning virtual content series for marketeers register for free today for a host of unmissable sessions from the brightest thought leaders. Leading brands and industry heads signals 21, bigger, bolder, and better than ever. Visit cheetah digital.com to save your spot and don’t miss out. Hello and welcome to episode 143 of let’s talk loyalty today. I’m chatting again with Rob Burgess, the founder and editor of head for points, the UK biggest frequent flyer and business travel website.
1m 34s
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Rob is joining me for a second time on let’s talk loyalty this time to talk about paid loyalty or subscription loyalty as an increasingly important business model for its loyalty professionals, to understand and consider together. We talk through the Intercontinental ambassador program, the coffee subscription concept from pressure Mojay in the UK, as well as skywards plus the new paid loyalty program option from Emirates airline. I love this topic. It’s super exciting. So I hope you enjoy listening and learning as much as I did.
2m 17s
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So Mr. Robert, welcome back to let’s talk loyalty. Great to have you back on the show, Rob how’s the UK today.
2m 26s
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And so it’s sunny, which after the flash, one of the storms of last couple of days is a bit of a novelty, but yeah, I’m still missing my two weeks in Spain that I had last night.
2m 38s
1
Oh, blessed. Yes, absolutely. Lovely. At least you got there, Rob. So for you who says such a frequent traveler, or certainly used to be a frequent traveler, it’s nice to be getting the worlds back on track. And you were back with me in, I think October when we had our last conversation. So it was already in COVID times, but certainly now I feel like we’re coming out the other side, finally, Rob, I’m so great to talk about travel and all the trends that’s happening in travel from your perspective. So let’s start off with our usual, I suppose, favorite statistic and just to get into, you know, what’s going on with you and with head for points.
3m 18s
1
And I will say from our last show, I was thrilled with how engaged your audience is with loyalty programs in general, because we did talk about coffee loyalty, and we talked about dad, John Lewis, loyalty, as well as the airline loyalty. So plenty to discuss you always have a great insight on the UK consumer perspective. So let’s kick it off and tell me, what is your favorite statistic today?
3m 43s
2
It’s all quite much my favorite one, I suppose, but the thing that has stuck in my mind over the last few months is that we actually made a 5% increase in page views last year. And indeed that’s carried on into 2021 when COVID struck more. My gut feeling was that we were losing 30% of our readership and over six months probably, I mean, I’ll be back in business in six months. We’ve probably passed two thirds of the business I started with. And here we are 18 months old and we actually have a bigger sites in clearly not the same revenue, but a bigger site in terms of the numbers that we had in last 2020, which is that’s partly, I think I was being very good at providing a lot of information and data on conveyed travel restrictions on getting flight refunds.
4m 35s
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Yeah, partly I think because we do still have time to spare at home. And as you have more time to mess around with instead of less sleep, but it works well. I’m not suggesting we’re writing Nobel prize winning stuff.
4m 49s
1
It gives
4m 49s
2
Me confidence because we have the people there. And actually as soon as the flight hotel markets come back to the vengeance, so we can start getting a little commissions on booking, it’s driven by our readers, but it gives me good confidence for next year. We can get back to 2019 levels of revenue if not exceed that.
5m 9s
1
Wonderful, wonderful Rob. Yeah. And, and again, just for people who didn’t hear, maybe the episode the last time, I know, even at that point, you were talking about one and a half million page views per month, which was extraordinary, 50,000 premium frequent flyers, mainly in the London area. And I think I said to you as well, Rob that day from my M few days with that with IVs, and certainly your opinion was always the one that everybody hoped that Rob Burgess would like what we were doing. So, and certainly a let’s call you an influencer in the travel industry. I would say, huh, Me neither. But it works
5m 48s
2
Well. The job comes with a level of responsibility. I was thinking that was yesterday. It is difficult because we were not desperate for every penny we can get in. You know, we, we, we have a decent balance with cushioned leave now, so we don’t need to plug stuff for the sake of it. And we’ve been doing, she turned down quite a lot of potential revenue, which people haven’t really know about and never really get us credit for. It is difficult yesterday was something. Yeah. I mean, we wouldn’t write an article promoting something, which we don’t genuinely like and recommend if a product came in and somebody wants to offer a big discount to our readers.
6m 30s
2
Even if it’s not something we would use ourselves, but that’s okay. You know, but we’re not selling it to the sake if it was in looking at, if you were getting this and lots of people like you to, even though we haven’t gotten ourselves off today, you know, we’ve never done a pop piece about certain brands of suitcase or something. Yeah. Free suitcase or a few hundred pounds. We actually make money on that longterm because the readers know that what we say has credibility, because they’ve seen in the past, what we haven’t asked, he’d just written spurious nonsense about various products or services for sake of a few quit.
7m 13s
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When we do say something was good. The level of interaction from the readers is huge because they knew our recommendation is genuine and warm and that Batman drive sales normally drive some sort of commission based on that honesty route has served as well as the years probably makes us more money overall. And just taking, you know, every 500,000 quid is very different to those to promote some random crude, terrible resort or suitcase or an insurance policy or whatever comes along.
7m 47s
1
Wonderful. So I pinged, well, we decided we talk about today is an first of all against the backdrop that we’ve already alluded to in terms of COVID obviously has, you know, really affected obviously the travel industry worldwide and not a huge amount of, of growth and in any particular area, but there is one area that is exploding across all categories and it is very new in the travel sector, but paid loyalty or subscription. Loyalty is something that I’ve been writing about, I suppose, for about two years now. And my favorite case study is probably in the coffee industry. And I know we’re going to talk a bit about the UK coffee proposition, but Panera bread is a fabulous paid loyalty program in the U S that we can talk about and follow very closely.
8m 35s
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As we said, by press Malaysia in the UK. There’s also, I know a very good subscription loyalty program for the Intercontinental ambassador program. So we’ll talk about a lot of the things that you’re excited about in that. And then more recently Amaras launched its cohorts plus program. So I know you’ve got a lot of views about that and I will be done to get into your perspective and definitely something that I think am from your side and has some benefits, but probably could go a lot further is what I’m getting. I know you wrote an article published it this morning. So, so let’s start off with maybe the Intercontinental Rob, because there’s some, I suppose, principles that you’ve really admired that they’ve implemented for their paid loyalty program that I think our audience would love to hear about.
9m 23s
2
Yeah. I mean, you know, cards on the table. I, I paid for content like different probably at least the last 10 years. So, you know, I put my money where my mouth, a little mess for those who don’t understand how he spits into the great IHG hotel world. Well, ISG rewards is technically the loyalty scheme covering all the IHG brands from all day to express oil, to region six senses and constants, or has historically always had some sort of program just press self. And they’ve lost 15 years. That’s been ambassador and Busta is not free.
10m 4s
2
And Buster is 200 us dollars to join entering you. That’s the, but there’s no sort of qualification. Denise Dooley stays to get it. You can sign up on the website. So, but there’s no sort of qualification requirement apart from having a $200 Sydney There’s ISD has done quite a good job with ambassador in my view of creating an attractive initial hit of when you sign up, I mean, good ongoing benefits. So when you join a Buster, you get a voucher for effectively, a two for one stay over a weekend.
10m 44s
2
It was called central hotel. And amendment girls said, let you use this at Kimpton. And often came to during the week as well. So effectively, if you have a, an ins content will stay coming up or stay, you could move to women’s content to form voucher can get your $200 feedback straight away in one hit, but also start putting sweets out of a high-end rooms into a two for one pool as well. So it’s like me, you have a couple of kids and you want a junior suites. You can go the extra beds or something. Then you can do that. So you can really make substantial savings. And you can certainly give the average in consensual room rate that your $200 back just about one transaction After that, you then have a decent run of benefits on every incomes.
11m 33s
2
It comes out of the state, importantly, because of guaranteed benefits. There’s no, if available there’s no, you know, if we can do it at time of check and blah, blah, blah, but benefits are guaranteed or you get a fixed amount of compensation. So then it’s guaranteed for a checkout, which I’ve always found, especially useful in the U S very late, very late night flight back. And I won’t stay in the hotel talk for, and then head down to JFK APM flight. There’s a guaranteed one level room upgrade, which Atul has to give you. And there’s a $20 or local currency food and beverage credits to be, these are things where you can put some sort of national mental value on relatively easily on two for six days a year, get towards the $200 fees, run Buster.
12m 24s
2
And once you’ve gotten Busta, if that makes you more likely to move other stays across. So if I thought, well, if I’m going somewhere and I know four o’clock checkout will be useful because I know I’ve got a late flight or train back, it makes me more electrical, but stay tuned. It’s called dental. There applies to give me that it’s not like Hilton is where it’s diamond can have a fork jam checkout. If available on the day, this is a guaranteed thing for in Boston members. And the hotel has to block your room, but checking to make sure no one lives into it. And this is, this thing works really well because one, you, as the member are getting a guaranteed upfront benefit in terms of two floor voucher piece, the ongoing benefits, which can very easily cover the cost of your $200 or hotel versus a hundred bill cost.
13m 17s
2
I mean, as long as they’re not running a hundred percent occupancy, but the four o’clock checkout is a non-cost upgrade. The real cost of hotel food and beverage credits possibly is. But then perhaps you have a meeting in the hotel. You may not have had otherwise a hotel. So that probably happened with that as well. And it all works out even the free weekend night about you have to be fair in continental hotels by mainly business focused that probably quadrat weekends probably have a stupid two-for-one deal as well. So it’s a win-win for everyone. And $200 is not, you know, it’s, it’s a relatively price to pay to have about 10 pounds a month really instilled in you really.
13m 59s
2
And it’s something that people will have to put because they think they’ll get value from it. Sure. You also get aspire league status and I asked you to wards. So you also then have top tier status. Every time you have to go to a whole DeAnn or a travel Plaza or a whole day express, but that’s not the most valuable hotel stairs ever. It will normally get you a free drink or some bonus points or an upgrade, or perhaps lounge access. So it also helps give you a bit more, a bit. What makes you slightly more willing to stay over at ISG brands as well? Yeah, it really works well. If you have any problems with the Vesta is that ISG has an issue over height positions, running two different loyalty programs.
14m 42s
2
At the same time,
14m 44s
1
I didn’t even know about the investor program role, but I’m supposed to know about these things, you know?
14m 49s
2
Yeah. I used steam last five, they bought regions, they bought six sentences and they now have these two additional high-end Browns, which in theory should probably be linked to ambassador because they have the same quality of hotel that I haven’t quite worked out how to do it yet. So as I used G is also just launched vignette, which is this new five star on branded collection to allow independent. They’d be like autograph from Marriott or Unbound from highest. So luxury independent hotels who want to be compiled by cheese, your marketing system, that would become part of your blah, blah, blah.
15m 34s
2
I’ve been yet collection by IHG hotel and these authors on how we’ll have to get brought into ambassador. So I think the program is going to have to change or at least adapt to deal with big push into the luxury sector. Yeah. But it’s worked very well. And if you look on less left flight talk, you’ll see, in, in general, it has a good reputation and people see the value and the value, it doesn’t cost much waste you to deliver, which goes forward. The investor journey will round in some ways. That’s where I think we’ve got plus plus isn’t actually delivering at the moment.
16m 15s
1
Okay. So we’ll definitely get into that. And just to summarize, because again, Rob, as you know, people listening to this show, their loyalty managers and loyalty directors, they’re globals. So the U S you know, lots of people listening there all the way down to Australia, obviously they’re in the UK. And so in its simplest form, what I’m hearing that the IHG ambassador program is doing super well is instant gratification. So an immediate reason for that too, for one hotel stay, I love that. And I also really like what you talked about an exclusive benefit that wasn’t available elsewhere in terms of the guaranteed room upgrades and obviously the late checkout. So they’re all things that I always feel.
16m 56s
1
For example, when I stay in a nice hotel who wants to leave at 12 o’clock because that’s kind of your breakfast and you’re out where it’s four o’clock feels like the whole day. So I think you’re absolutely right. I think that balance of, you know, probably quite a low overhead for IHG to deliver am in terms of benefits, but really tangible to the customer. And we all know what it’s like and, you know, to, to get those benefits and on an ongoing basis. So that the sheer fact that you’ve done that for 10 years in a row now, and first of all is a credit to IHG. And yeah, I’m really happy that you shared it with us. That’s cool. Tell me about before we move on to the, this guy what’s plus discussion. Tell me about your thoughts on pressure.
17m 37s
1
Mojay because this has been in my mind, perhaps am, let’s say accelerated by cohorts and clear. We all, we all know that there’s much fewer people, for example, traveling into the city of London. So the footfall into coffee stores is not what it is would have been. I’m sure it’s a fraction in fact of, of what it was. So, you know, the, the 20 years a month, Pret coffee subscription program is something that feels like it could be huge value, hopefully as more and more people started to get back into the city. It’s something that, that you think is a good deal for, for people in London.
18m 15s
2
Yes. The prem coffee program has been a massive disruptor, I think, to the extent that it can be with people still not coming in and as much as they used to. But yeah, I mean, fundamentally the way the scheme works is that the schemes, actually, if you look at the small print, it’s massively generous. You can have five free cups of coffee a day, as long as you leave between half at half an hour between each one that you will make. So that’d be a hundred, 150 a month. It’s a twin in the UK. It’s a 20 pound flat fee, which colored eight cups of coffee. So even if you’re only working in your office three days a week, if you just get one a day, you’ll still save at least 10 pounds a month, I mean, or 20 pounds.
19m 5s
2
So it’s a bit of a no brainer building they started doing is offering let’s do discounts. So at the moment, you’d get a hot, bright sausage sandwich in the morning. If you have a coffee card, which is actually the thing that I tend to buy anyway. But what’s interesting about this is, but even though this is a new bringing it to anyone who buys Walden eight cups of coffee in per month, they are still offering the incentive to sign up, which the first month is totally free. Wow. So you sign up online and then for a month or 30 a month, you can stick them on your phone and share it with your friends and your friends don’t frequent.
19m 48s
2
But I think there’s a bit of psychology about this, which, because most people, as you issue over, you know, how far you might go, how far out of your way you would go to get something. What interests me about this is that whilst if you’re paying cash, you might spread change, go to a Starbucks or a cafe Nero or your local independent coffee shop, just to mess things up a bit just for the sprinting for change of scene. But it gets quite difficult when effectively all your coffee at prey free beyond a certain point, because there’s an interesting psychological aspect about having to about walking into a Starbucks and paying two pounds 50 for a coffee.
20m 37s
2
You could have walked for another minute and got to Pratt and not paid for it. Even if you’re sick of bread by about point even two or three a day, the psychology of getting you into their shops and stopping you going somewhere else, because you need to get the same way. Something, nothing is quite interesting. And it’s warming has put me off doing it because I do love, I do like to run around barriers, different coffee chains. Of course, we average a week. Bizarrely. I don’t want the sort of psychological pressure of every time I go to a Starbucks or a cafe Nero.
21m 21s
2
I know I’m paying them something unless you have to pay for it. I got oppressed. This is the most bizarre thing ever. I’m refusing to take a discount on something. Cause me psychological trauma. They were competing. Shop got all sorts of sandwiches for the next month. Might, might just hit me over
21m 41s
1
The edge,
21m 42s
2
But it is a really nice coffee. A bit of shares, a lot of characteristics with a hotel room or an airline seats, but know the actual physical costs of producing that product. It’s about 10 Pete, frankly. It’s the beans in the milk. Of course. So the B gross margin is huge. Therefore you can’t afford to give out five a days appropriately when you did give sold five a day for a whole month, you still wouldn’t physically lose money in terms of the cost of the raw ingredients. So you can afford do this.
22m 22s
2
And then you using the time prep we’ll have the numbers on what to be, how many extra items someone buys or whether the average spend increased over time, because with now,
22m 37s
1
And I can share some of that action as well, Rob this already, just because again, I know your fascination with the coffee sector. And again, everybody listening is probably as fascinated about this move into paid loyalty in the physical world of products. Because again, we’ve all been doing it for so long, obviously with our Netflix and Amazon prime subscriptions, but this is a different, and I really feel it’s pivotal, pivotal, and I feel it is something that’s very COVID friendly. Dare I say, because I think in times of uncertainty, people do like the certainty of getting something that is a fixed price. So probably fewer people have the, the psychological analysis that, that Rob Burgess has from your, your amazing understanding of loyalty, but Panera bread.
23m 23s
1
I mentioned at the start of the show, they did publish some incredible statistics, Rob, which just from a business perspective, I think you’d probably appreciate, for example, they said their food sales increased 70% with the customers that subscribe. So it’s like your sausage roll sandwich that you’re talking about. So you’ve already been buying that, but it might move you into becoming a lunchtime customer, for example. And they also talked about their renewal rate is between 90 to 95%. And this is for a $9 monthly coffee subscription with them. So, but also the other one I loved is their subscriber visits increased from about four to about 10.
24m 4s
1
So you’re absolutely right. The footfall and driving people into the Pret stores. There’s definitely an extraordinary possibility there for, for any retailers listening to think about a paid model. And, and really, as you said, make sure there’s enough benefits to, to tip you over the edge, into actually signing up on a monthly basis.
24m 24s
2
Yeah. I mean, I suppose the question is how the word loyalty fits into this. I mean, Amazon has always said publicly that they don’t see prime as a loyalty program, but basically prime as a, as a fee based delivery service, which just happens to have some more things straightened with it. There is an issue over, are you buying loyalty? Is it really loyalty if you’re paying for it? I don’t know. It’s a difficult concept to fit around. Isn’t it
24m 56s
1
You’re telling me right all the time in the industry,
25m 1s
2
But to some extent, all loyalty, you know, I mean, if you take the frequent flyer schemes, it’s still a ratio as saying, you know, if you do X flights to this place, then we will give you lounge access, priority boarding, and some extra miles going forward, but still in itself, transactional loyalty as well. It’s not loyalty or the kind of, you know, surprise and delight type loyalty totally is more pure loyalty. You know? I mean that stuff that that’s coffee, again, breath staff I’ll be afforded to give away. I think it’s like 10 cups of coffee a week around them customers based on the mood of their favorite lights going every day.
25m 51s
2
I think that there’s all the I’ve done. There’s a shingle coffee near of UK, which hasn’t stopped the garden, which I never had it used to bother with carrying it around this more of an electric that the staff in the one near my house, he used to give me a free coffee every couple of weeks. this is a favor I should be able to anyway. It is about loyalty. What is loyalty? What is sort of, well, why is it toward transactional loyalty? I suppose the video you’re paying for something.
26m 35s
2
I was with hotel booking. When we were in Spain, we did a couple of nights at a no non chain hotel, some friends of hospital. We, we, we had a seven o’clock flight back to the UK stop. I went to discuss late checkout and I felt I wasn’t, you know, hotel quite a big sort of package tour. I wasn’t expecting a lot of joy, a late checkout discussion, but they said fine. Yeah. 55 euros flat rates. So four o’clock because this was quite expensive hotel. It’s a 50, 55 euros for another six hours.
27m 20s
2
Yeah. This is less, it’s easier if I know I can go to this place and just pay them an extra 50, 55 euros a day. I haven’t had to do 75 nights. perhaps, you know, Hilton style. It’s not you’re right. It’s just the best efforts to perhaps be profitable kind of overestimated. So that be a bit of it’s precedent. We’re just putting a menu of things you could buy at a sensible price. Yeah. It wouldn’t be like, it will be easier and you can still, you make your own, I mean, you could always do a subscription. You could say we charge.
28m 0s
2
Yeah. Perhaps Marriott should say, look, all the hotels will give you late checkout for a hundred dollars or the equivalent. But if you want to pay us $500 for an annual subscription, something we’ll guarantee it for you. It’s
28m 18s
1
But I, yeah. I like the flexibility though, as well of your Spanish hotel, Rob, because I think that demonstrates a mindset of loyalty. So an intention to take care of the customer and hear what you need, because at the end of the day, it’s very hard to, you know, really systemize and develop things that suit every possible scenario. So I think what you got there as somebody who’s on the bowl on a hotel that actually realizes that, that you will value it and no point I’m doing it for free. So everybody won in that situation. So again, that’s, that’s going to drive emotional loyalty and you’ll consider going back.
28m 53s
2
Yeah. But he have been choosed. We were paying about 500 euros a night. Wow. I was expecting, I was about 200 euros. She gave us the deal of distinct fixed price till 6:00 PM because they would take a lot of tour groups, had people writing very late in the morning, you know, Control of the control room, cleaning and stuff around that.
29m 35s
2
It’s interesting. If you could buy parts of loyalty, again, one issue about, about unbundling British alleys does not let you buy access to its airport lounges. So if you want access, you have to get the status in the loyalty program is now selling lounge, access sells, lounge access. So if you know, you can get all these particular aspects of status just by having some cash. Then does that detract from the valuable loyalty program? Because I think in general, people possibly spend more or make more of an effort, but I’m also guilty of this.
30m 22s
2
The people often spend more or golf away more than they should, based on the actual better that speed gets in the future. Yeah. I know if somebody, if they, if I look back over the, you know, obviously Kirby’s a slight different, but even a normal year, if I look back and say, look, you know, I’ve had Hilton five mistakes last year, but actually how many own stays have I done with that state? And so this year, how many upgrades I get, how do I actually need an ask for the bench there? Isn’t when you’re actually qualified, you didn’t necessarily get that much for the status. And then you think what was the asset required to move? Those stays to Hilton, et cetera, et cetera, actually worth it.
31m 4s
1
It’s, it’s a big one, but I just want to mention somebody who unfortunately needs to remain nameless, but a certain gentleman did tell me once that he managed to convince his wife, that he should fly from Canada to Singapore on a revenue ticket. And in order to justify retaining his gold status. I presume with air Canada, I don’t know the airline involved, but to show the extent that he valued his premium tier stages, defy halfway around the world on a revenue ticket, I was blown away. And that’s a real life example of, you know, what I probably call sometimes points junkies. So people like you and I, who love to get the extra benefits and to get into the detail I’m on.
31m 48s
1
I do want to get into the, the skywards plus conversation now with Iraq to understand, you know, I’m just starting to evaluate it myself. And as you know, I’m a big fan of skywards. And I feel like I have both my consumer and my consultants hat on for this conversation because it’s the loyalty program I have the most opportunity to use because obviously I live in its home market. So sky was plus was launched recently, and there’s about a thousand people I know am signed up for this em, paid subscription loyalty program, and really wanted to get your perspective on us from a UK consumer sides. And you know, what does it offer for M for frequent flyers or anyone, I suppose who’s looking to fly with Emirates.
32m 31s
1
And do you think it’s a, it’s a good program?
32m 34s
2
Well, let, let me, before I get into this, let me just say, just to put this in context, I also rate very highly wonderful. We were in Dubai over Christmas, new year, last year on SkyBus tickets, we changed because of the COVID situation in the UK. We delayed our return dates three times each time I was able to change my tickets for three established. More importantly, there was no problem getting four business class seats, extraordinary. Each time we rebooked a flight on a flight back to London and simply, you know, if you’d call that, we would say, you know, Richo is, there’s not only will there not have been for business class seats easily available on every BA flight back to London, they’re able to charge me 140 pounds each time I made a change.
33m 27s
2
Oh my goodness. So it would be able to just do effectively pick and choose the Everest flights I wanted and do the changes for nothing. And actually, yeah, they’re quite good on the phone as well. that was a great benefit. And I’ve done some breast reductions. I I’ve never actually paid for it. Emirates flight express transfer partner instance. So literally I can go into the Amex account, do the transfer. kind of like book my flights, just put in context. I’m a huge fan of Emirates. We outline the new first lost roads in standing a couple of years ago.
34m 10s
2
My chances rave about the quality better TV compared to British airways, European airlines, the button. So just for context, I’m a big fan skywards plus based on how they’ve currently set it up, that doesn’t seem to work for me. And if we’d be going back to what we talked about, events, content, or an investor, it’s called paradigm trust. The numbers I’m talking about here are the power instead of an equivalent and some army based scheme.
34m 50s
2
I mean, you see the Pell numbers. So it’s fundamentally about 250 pounds for the sort of base level going up to a fairly shocking 760 pounds, which there on the thousand us dollars for top level. And this is in itself, a huge amount of money for a subscription product. There is no issue is that these new incentives signing up at all. Well, no subscription models where it’s a, a magazine, you know, coasts or whatever, have some incentive to sign you up.
35m 32s
2
Yeah. Well, one is because they have an eye on lifetime customer value and that they imagine that if you join up, you will be that you will do three to five years now bridge and they make good money off you in three to five years. So if any break, you’ve a look on the first year that’s okay. But the second reason is this is what you, at least it’s called the consumer promise in that you’ll be asked to make a non-refundable cash payment. And in return, you are promised a series of benefits, which you may or may not be able to use over the term of your membership, which you can accurately quantify the value off for detail.
36m 19s
2
You can call us up from and see all the small print on terms and conditions that may be linked to this. So a good upfront incentive generally mixed up, cause you would promise easily. It’s still with you. If you pay your fee, you’ll get a big bonus at least for the first year, because that gives you the confidence. But even if you don’t make full use of the benefits, a little bit of it’s, don’t turn out to be as good as you think, but at least you won’t have lost out in the first 12 months. And you can bet after a year it’s used to twist or stick basically pluses and doing that, but they expect you to pay your 250 to 760 pounds with no signup bonus.
37m 8s
2
And you’ll then just take a sore finger in the air. If you, or wherever you can make the numbers stack up to just if I paying take these COVID times, I mean, anyone that has a decent housing won’t have which local trouble they’ll be doing in the next 12 months to know if they make money from a subscription. My second issue with it is, but the benefits are just incremental. It’s not fundamentally what we’re offering is 20% more on everything. So it’s dependent on what level you joined at. You will get 20% more Skyward smiles.
37m 49s
2
When you fly more tier points, you’re got to pay for the high level ones, get extra tip ones. You can get ’em. You can redeem the classic reward for 20%, fewer miles. Yeah, 20% psychologically. Doesn’t do it for me. If you see we’re going to shop and it’s reduced by 20%, that’s not really enough to move you from a was never going to do this to a must have this. So it’s not like a, you know, a half price sale or know 20%.
38m 30s
2
If you’ve been seriously thinking about something, it might tip you over the line, but 20% itself is not a big psychological difference to make you fundamentally change your behavior in my view.
38m 41s
1
And I was pricing it out, Rob. So I did do a real-life case study and advanced actually of our conversation today because you’ve written this phenomenal article. I’m sure plenty of people be going to, to read us. And you’ve worked it out obviously in the context of, for example, your own family. And I think you made a very good point in that if you do have a particular intention or needs to travel, as I thankfully regularly do, then that’s the time to make the decision about whether skywards plus makes sense. So I’ve just come back from a trip to Ireland. And if I was to do that again next month, for example, that would be a 90,000 miles requirement if I wanted a business class ticket.
39m 24s
1
So, you know, having worked through the mathematics on it, if I got my 20% off and that would actually save me, I think 140 us dollars when I worked it out, if I paid the pre hundred $99 for the classic subscription and which is the entry level and save myself those 18,000 miles then yeah. So the cost would be $400 for the subscription. Versus if I was to buy the 18,000 miles, I needed $540. So I I’m getting into your way of thinking in terms of how can I make this work for me. So I think there’s very specific scenarios went up 20% discount on a classic rewards is, is quite useful.
40m 7s
1
But I think what you’re saying is you have to have that needle ready, clear. You’re not going to subscribe otherwise.
40m 13s
2
Yeah, exactly. There’s the one sweet spot in the sky was plus, as I said, is being 20% discounts or reward reductions, like go look down at the Dubai business class, they’ll be printed as 60,000 Skylar to miles. Normally I decided to this lowest level actually, but 243 pounds straight three, nine, $9 level, I can get 20% off. So I’m saving immediately. You said it’s 2000. Skiles my life. My family, that’s a bit of a no brainer. It’s probably worth around in Sterling, about 700 and 700 pounds. I can pay you 250 pounds for the membership and stuff, but now there is more print on this.
40m 60s
2
This is a year offer. You call it, you call it save 20%. It’s on every single redemption you make. So I’ll do that almost. I sit here and say, it’s not a great, it’s not a great scheme. It’s not a great scheme. If, if my wife’s something else you want to go back to Dubai for Christmas, it’s possible given where we are family Denver, I may well sign up 40 hours before I pulled the trigger on visit that for instance, but that doesn’t in itself, make it a good scheme because all that happens is I say, say it 2000 miles at Emirates gets 200 pounds off me.
41m 47s
2
Let’s get to remove submit 2000 miles of liability actually, because I do it, I’ve done it forever at this restaurant spur. Then they do, they would lose probably 700 pounds of revenue from American express. So I’ll be transferring a few miles. I’d be giving them 200 pounds in cash. So in fairness it makes more sense. And if I did it, it will be a pure commercial transaction with no local talent. It would be me going fine. I’m going to pay Emirates 250 pounds because at the end of the week, I can say why solar since 2000 skywards bottles, there’s no loyalty in this on either side. There’s no reason why to the rest of my 11 month membership, I would be any more loyal to Emirates, but anybody else it’s just a pure transaction.
42m 39s
2
And I don’t see, I didn’t see. I mean, if it’s wrong, I benefit from the milestone. Maybe it doesn’t help Emirate as much. And it’s where we’ll have a more low on our wins. Maybe slightly more to invest to be here. It’s just unnecessary, but it may need to have to do it. If you weren’t running escape, I would just pay the four previous 2000 miles we’ve done. So it’s, in some ways it’s just making it a life more complicated because you have to your last book worth it or not. You know, for term it’s, it’s a lot of overhead put a scheme together.
43m 22s
1
My sense is that they, for example, I know you, you referenced in your article already as well, Rob, that this was initially launched actually in 2019. So this idea of paid loyalty for Emirates is, is, is not new. And what I think I’m seeing and hearing is that they are refining like any, I suppose, loyalty program, refining the proposition and developing it and testing at numerous concepts. What I did like you, you suggested, for example, like the idea of instant gratification would be obviously very compelling. I think you were like, you know, if we got our 30,000 miles or something upfront for signing up, that would certainly, I suppose, drive the decision to subscribe immediately.
44m 5s
1
Whereas I think what you’re saying at the moment is you do have to have the need in mind and one that interested me. And I suppose I was surprised that I, I valued this when I was looking at it today, but I do have some friends that are coming to travel and I’ll probably be flying with them. So the airport lounge access for a guest. And I don’t know if that’s available to me, for example, in any other way, it’s certainly not as a Skyward silver card holder, but as a subscriber, if I did get the savings and I got to bring a friend into the lounge, I thought actually that would make me feel, let’s say more emotionally connected. So that one did kind of resonate again with this particular context that I have coming up with somebody due to travel with me.
44m 49s
1
Is that something of my unique in that, or is that a benefit you think others would, would enjoy?
44m 54s
2
I mean, Everett does sell loud jets. I’m not sure what the cost is. I don’t, I don’t think it’s cheap as it could be. Do Dubai airport is not short of Plaza premium independent lenses, or would, you can buy us into for around 30 pounds, you know, 200 dirhams. So on that basis, it’s, it’s not great value, but then again, there’s kind of an emotional issue. You may one statement in the same language, guesting rules all, to be honest here, if you’re in a business class to get, can you get somebody else in and you’ve guessed to them, and if they’re on a different flight to you, can you guess to them, if they are different to you, these are all every airline seats, things like this, just a different way.
45m 42s
2
So I personally wouldn’t devalue that much, but it’s, again, it’s a member. You can buy it because you can buy Everest lounge, access it again. It makes it a commercial decision rather than an emotional decision because British airways don’t sell lounge access. Then it goes more of an emotional decision. Because if you want to bring the people into a lounge, we’ve you to over and above usual guesting rules, you know, you’re going to need some states and store or walk into the apartment, your stations. So it’s a key part of it is just giving them things, which as we go into, it’s got that little muster, ISU does not offer late checkout to anyone, even if you’re a top tier rewards, which aspire elite, you don’t get the guaranteed late checkout benefits.
46m 39s
2
So by, by being your $200 for an ambassador, you’re getting something which is simply not available via any other route, irrespective of how well we want to select hotels. So that’s something which you can, you can, you see the benefit to you in it, but is something you can’t necessarily get any other way. It’s a guaranteed benefit. So, you know, you won’t be turned down on the day. I’ve got to be, if you really read my stuff, there’s, I’m, I’m quite big on the concept of yeah. So it’s guaranteed because we, we all, you know, I did literally walk, stay at that hotel.
47m 20s
2
We drank where I was getting to be presidential suite three bedrooms, the fully staffed kitchen and dining room at 10 o’clock at,
47m 31s
1
And do you have a million? Certainly I’ll be honest points. And I think
47m 36s
2
Necessary will, you know, we weren’t, we didn’t get graded on, but anybody who in Paulo in, in mule code to set up, even though they will do a both books as part of packages, which came with a, you know, upgrades, guaranteed upgrade, if available at time of check, it was actually delivered, but that’s kind of what you expected pretty much sold our hotel in peak season when you’re there for a long state upgrade is a one night stay on those nights where you’re projecting up to a week, but actually knew how full that we have to be in six days time and their willingness to upgrade you into a nice room, which they could possibly sell in six days time.
48m 26s
2
Somebody else. Yeah, it was obviously not that high. So it’s guaranteed next to a benefit. And a scheme means a lot to make and Buster delivered. I did offer a fat mileage, inducement, all the things status. I mean, if you’re paying 700 pounds. Yeah, no problem. It was probably a thousand dollars. You know, the very least I would expect is an Emirates but it probably is.
49m 8s
2
If you do that, then you’re putting a price on until the stations. So like you probably the way to move flights to Emirates when we’re out of options, because you think it Wednesdays my thing actually, why bother? I’ll just pay my thousand dollars. So it’s, it’s, it’s a, it’s a complex cycle. Isn’t there because it was no, you know what? We’ll pay you a thousand dollars. If you look at those benefits,
49m 39s
1
It’s a good thing. You don’t work in loyalty rapper. It’s fascinating. These are the business decisions we have to make, you know, make it compelling and make it commercial.
49m 54s
2
Well, I always fought is if I was, if I was running a program, it would probably be less profitable, but the, the overall business would be more profitable. Probably the impact of having me running a private,
50m 12s
1
I would certainly hope so. And actually I’ll end with one name with one other quote, which I think again, for anyone listening, who’s considering paid loyalty. This is probably the most compelling statistic I’ve seen. And it was a quote. I came across from McKinsey who did a survey in 2020. And they stated that members of paid loyalty programs are 60% more likely to spend on the brand after subscribing where free loyalty programs only increase that likelihood by 30%. So I thought that that was extraordinary for a brand like McKinsey to endorse the model is phenomenal. And I think what I’m hearing from you Rob is obviously first and foremost, the product we know we’ve agreed Emirates and skywards are fabulous products.
50m 57s
1
And then obviously the subscriber subscription proposition needs to be absolutely compelling to make sure. And again, because it’s, time-bound, I think in your article, you were very clear that, you know, to, to subscribe as close as possible to when you’re going to either obviously redeem to get that one off benefit and, or, you know, to get into it, to fly more frequently. And it, that seems to make the most sense in terms of this skywards plus proposition with, would that be a fair summary?
51m 24s
2
I think it was a yes. What we paid for Amazon prime, for example have. So I think my is excellent value for you case 80 pounds. We’re probably doing at least one Amazon order a week. We go in central London, you can get stuff same day now, early next morning, but you also got obviously the music without users, you get the TV well, and you compare that to Netflix or the cost of PayPal, Amazon deliveries. And it’s, it’s just a no brainer in terms of the value, but it also, it also, it does drive you to spend more, if you look at what I was going to donate last couple of years, I’m so used to be unbelievably cheap.
52m 15s
2
It’s actually not cheap anymore. I bought a new hardback book family wasn’t actually, I didn’t use go. But yeah, I was new to normally discount Harper books from UK from 20 pounds, 10 pounds is what I looked up the other day. It was 20 pounds to 17 pounds. So there’s quite a bit margin on that. And I found some on eBay who was brand new for 15 pounds, but how they won’t stay at the same day, same day or before 10 o’clock the next morning, because you know, it’s, it’s crazy. You know, I can, I guess the rums me because I can go and actually get into the bookshop myself and buy it.
52m 58s
2
The strength of the prime program makes me less sensitive to price, of course, because of the quality of service that prime offers. And that I think is the real value of that scheme in that it moves you away from being price driven in your transactions, balancing
53m 18s
1
And the incrementality Rob as well, because as you talked about the Intercontinental ambassador program, I did think that if skywards, plus for example, had a two for one flight voucher, then I would definitely take another trip because, you know, I could travel, you know, with, with my partner, for example. And so I did think there could be an incrementality, which again, I know it’s very difficult to business case from an Emirates perspective, but I told that that was very clever. It’s not something I’ve seen Emirates doing Flaman from a flight perspective and otherwise, so that might be the kind of thing again, that would kind of get people to go, oh my goodness, there’s M there’s a reason to travel and a reason to subscribe. So yeah, from, from my perspective, I’m definitely am hoping that all of these amazing benefits are available.
54m 4s
1
So, you know, more and more people, even, I will say I traveled, as I told you last week to Dublin, the flight outbound to Dublin was absolutely, I would say 90% capacity. So very happy to see that from Emirates perspective, much quieter coming back, I will say, but yeah, maybe that’s to do with timing and all of the other things that go into the very complex airline business. So listen, I think it’s time to wrap up Rob. I could definitely talk. You’re so knowledgeable on all of this and always love to get your, your really strong, very clear consumer perspective on all things, loyalty and certainly on the London market. So, and that’s it from my side. Is there anything else that you think that you wanted to mention before we wrap up?
54m 48s
1
Always good, Rob, thank you so much. So Rob Burgess editor for head for points, the UK, his biggest frequent flyer, and this is travel website. Thank you so much from let’s talk loyalty. This show is sponsored by “The Wise Marketer”, the world’s most popular source of loyalty marketing news, insights and research. The Wise Marketer also offers loyalty marketing training, both online and in workshops around the world through its Loyalty Academy, which has already certified over 150 executives in 18 countries as Certified Loyalty Marketing Professionals. Thanks so much for listening to this episode of “Let’s Talk Loyalty”. If you’d like me to send you the latest show each week, simply sign up for the show newsletter on Let’s Talk Loyalty.com and I’ll send you the latest episode to your inbox every Thursday, or just head to your favorite podcast platform, find “Let’s Talk Loyalty” and subscribe. Now, of course I’d love your feedback and reviews and thanks again for supporting the show.
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