Airline Rewards Programs Changing; Ease of Redemption Still Drives Satisfaction
Published on : Wednesday, May 11, 2016
While various airlines offer different ways to earn and redeem points or miles, loyalty/rewards program member satisfaction is driven by the ease of redeeming points/miles and the terms associated with the program, according to the J.D. Power 2016 Airline Loyalty/Rewards Program Satisfaction Report,SM released today.
The report, now in its third year, measures member satisfaction with airline loyalty and rewards programs based on six factors (in order of importance): ease of redeeming points/miles; reward program terms; account maintenance/management; ease of earning points/miles; variety of benefits available; and customer service. Satisfaction is measured on a 1,000-point scale.
Following are some of the findings of the 2016 report:
- Rewards Programs are Changing: Members used to earn status and rewards based on the number of miles flown or by the carrier segment in which members flew. Several high-profile programs have now transitioned to a system in which members earn miles based on dollars spent rather than miles or segments flown. There is also a minimum amount of dollar spend some programs require before a member can achieve the highest level of elite status. Points are also earned by using co-branded credit and debit cards or by spending money at associated retail outlets, rental car companies, hotels or other associated businesses. Airlines are expected to continue transitioning in 2016—and in some cases, making it more challenging to earn status and redeem miles.
- Ease of Redemption/Terms Gateway to Satisfaction: According to the report, the factor that most differentiates the highest-performing airline loyalty/rewards program from the lowest-performing program is ease of redeeming points/miles (775 vs. 661, respectively, a 114-point gap) and reward program terms (741 vs. 650, a 91-point gap). Additionally, there is a 193-point gap in satisfaction between these two programs in customer service, (882 vs. 689, respectively).
- Satisfaction Highest Among Millennial Generation: Among generational groups, overall satisfaction is highest among Millennials (739), followed by Gen X (711), Pre-Boomer (698) and Boomer (695) members. Millennials are also strong advocates, as 47% say they “definitely will” recommend their airline loyalty/rewards program to friends and family, with 46% of Gen X, 43% of Boomers and 40% of Pre-Boomers saying the same.
- Online Reviews, Reputation and Travel Location Influence Program Selection: Online research that passengers conduct prior to joining an airline loyalty/rewards program often translates into increased satisfaction. Overall satisfaction among the 11% of passengers who select their airline loyalty/rewards program because of online reviews is 829, compared with 798 among the 19% of passengers who choose their program because of its reputation. Among the 40% of passengers who choose their program because of the convenience of locations where they travel—the most common reason for program selection—satisfaction averages just 731.
“Major changes to airline loyalty/rewards programs are unfolding industry-wide right now,” said Rick Garlick, global and travel and hospitality practice lead at J.D. Power. “Airlines are juggling a delicate balance between business needs and passenger satisfaction, but they must never lose sight of the fact that members want programs that allow them to easily earn and redeem airline rewards. However, if airlines make it too easy, it takes away some of the value of having higher reward status.”
Alaska Airlines Mileage Plan ranks highest in overall member satisfaction with airline loyalty/rewards programs for a third consecutive year, achieving a score of 757. Southwest Airlines Rapid Rewards ranks second with a score of 754, followed byJetBlue Airlines TrueBlue at 743.
The 2016 Airline Loyalty/Rewards Program Satisfaction Report measures member satisfaction with airline rewards and loyalty programs. The report is based on 3,123 responses and rewards program members and was fielded in February 2016.