We’ve been devoting a lot of coverage to the airlines recently for several reasons: one, airline customer service breakdowns have been much in the news recently; two, airline loyalty programs have dominated the loyalty news feed with tales of their immense profitability; and three, even for those of us who don’t work in the industry, airline loyalty programs provide useful object lessons for loyalty marketers applicable across industries. Our latest look at airline loyalty comes courtesy of Bloomberg, which profiles Alaska Airlines and its ability to drive loyalty better than its bigger and well-heeled competitors. How does Alaska do it? By building real relationships with its customers.
By Rick Ferguson
The Bloomberg piece provides a terrific overview of how Alaska Airlines has become a serious upstart rival to the Big Three carriers in the US: The airline has won practically every customer service and loyalty award in the industry; its corporate culture is focused on customer service, which makes it an anomaly in an industry notorious for treating its customers like livestock; and its recent acquisition of Virgin America makes the airline a player beyond its core Pacific Northwest base. Far more so than established rivals like JetBlue and Southwest, Alaska Airlines seems best positioned to make a serious run on the Big Three. So how has Alaska Airlines done it? By orienting its business model, corporate culture, and loyalty program around building real relationships with its customers.
According to Michael Taylor, travel practice lead at J.D. Power, Alaska performs well— or wins— in every [service] category… Flight crew get praise. And the airline wins by its widest margins in the boarding, deplaning, and baggage handling category. ‘This [category] represents access,’ explains Taylor. ‘The courtesy of the gate staff, timely flight information, and the time it takes to get on and off the plane.’ In his mind, how you’re treated and how quickly you board are related: It takes smart, intuitive crew members, both behind the scenes and in the front of the house, to make the process seamless. It’s about making customers feel less like cattle, he says, and more like individuals. How does Alaska do that? ‘It’s not a mystery at all,’ says Taylor. ‘They’re just very people-oriented. They empower their employees.’”
Over at the Loyalty Academy, we spend a lot of time talking about the psychological drivers of customer loyalty. Loyalty is an outcome of positive relationships; relationships are in turn build on engendering the emotions of Trust, Commitment, and Reciprocity.
Here’s how Alaska Airlines generates these emotions:
Trust: Companies build trust with their customers by living up to their brand promise. Alaska Airlines lives up to its promises to its passengers by trusting employees and empowering them to make good customer service decisions. Unlike United, which dragged a doctor off a flight because flight attendants were forced to follow protocol, Alaska gives its gate agents and flight attendants the tools to resolve service issues in real time.
From an employee named Michael:
“‘Alaska empowers the agents to take care of problems then and there, whereas in my previous jobs, you give customers a website to file a complaint or request a refund.’ [Michael] says other airlines are very ‘black and white’ in a way that makes both customers and employees go home angry.”
Because Alaska empowers and trusts its employees, customers in turn trust that Alaska Airlines will provide a good experience and resolve the inevitable issues swiftly and fairly.
Commitment: Brands engender feelings of commitment by demonstrating commitment to the customer relationship – by demonstrating that you care. Alaska Airlines demonstrates this commitment in a number of ways: By generously providing vouchers and free wi-fi to delayed passengers; by offering surprise-and-delight rewards such as free cocktails and thank-you gifts; and most of all, by demonstrating commitment to employees by providing generous benefits and an empowering work environment.
From an Alaska top-tier flyer:
“‘I’ve never heard [Alaska’s] employees complain about their jobs, whereas Delta employees are always complaining about routing or unions or other things.’ On [the flyer’s] last Alaska flight home from Chicago, he ‘got thanked by name by four employees.’”
Reciprocity: Brands engender feelings of relationship reciprocity by rewarding and recognizing best customers beyond their core product/service offering. For Alaska, reciprocity means offering a generous loyalty program that differentiates from the Big Three by continuing to reward miles based on miles flown rather than revenue. While we’re on record as saying that the Big
Three were right to evolve their loyalty programs to reward their most profitable customers, we must admit that Alaska’s commitment to the traditional mileage model provides an effective point of differentiation that works for them.
“Maintaining reward status is also easier with Alaska than with other airlines. ‘Even in a down year, Alaska will grandfather you into your normal level of status,’ says David Fowler, chief privacy officer for an online marketing company. That was an informal perk until recently: Earlier this month the airline launched a ‘parental leave’ policy that lets new parents (or others with significant life changes) put their loyalty status on hold for a year.”
That, my friends, is a demonstration of reciprocity that should frankly shame the Big Three. In a previous article, we chided Delta and the other major carriers for creating an elitist approach to loyalty, in which the most elite flyers received all the benefits while the flying experience for everyone else becomes worse every year. While we would never argue for complete egalitarianism – after all, some customers are more valuable than others, and deserve to be rewarded and recognized as such – Alaska Airlines has demonstrated that it is possible to pamper your elite customers while creating a corporate culture that demonstrates trust, commitment, and reciprocity – the three emotional drivers of real relationships. It’s a business model that should allow Alaska to continue to thrive – and to pose a real threat to its larger rivals.
Rick Ferguson is CMO and Editor in Chief of the Wise Marketer Group.