Leaning on loyalty programs

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On the morning of Sept. 11, United.com peaked at 1,000 hits per second. But visitors did not find the usual promotion-heavy home page inviting reservations. Instead, they saw UAL Corp.'s United Airlines' corporate communications page, relaying information about the downed flights.

In the wake of the terrorist hijackings that have crippled the airline industry, airlines' existing loyalty programs and one-to-one communications have become paramount, with their role shifting from marketing to crisis-response.

"We've given over some key sections of the [United.com] home page to operational information," said Scott Praven, president of United Airlines subsidiary United NetWorks, which oversees Web and e-commerce initiatives. United also is using its e-mail database-which includes its Mileage Plus loyalty members and other registered United.com users-to deliver updated information to consumers in real time.

There is no such thing as business as usual in this time of crisis, and in the new world created Sept. 11, the old rules no longer apply.

"A lot of the rules went out the window in terms of how often people wanted to be updated [via e-mail]. Clearly once a week was not enough," said Jared Blank, an analyst at Jupiter Media Metrix, which after Sept. 11 revised its forecast for online travel bookings to $20 billion from $24 billion for 2001, still up from $18 billion last year. Jupiter predicts online travel will be a $55 billion industry by 2005.

"You always worry that you could send too many messages," Mr. Praven admitted. Since the attacks, "we've utilized [e-mail to registered United.com users] quite a lot to send updates as some changes are made to policies and procedures, and we've had good feedback," he said.

"It absolutely pays to use that e-mail list," Mr. Blank said. "E-mail is exactly the way to go. You want to be as proactive as possible, and right now people are especially aware of the airline industry and are interested in what people have to say in terms of safety."

Rick Barlow, chairman-CEO of Cincinnati-based Frequency Marketing, which designs and runs loyalty programs, said existing customer relationships become even more critical in uncertain times, for the consumer as well as the marketer.

"A loyalty program is a relationship program. It is a channel of dialog between the customer and the brand," Mr. Barlow said. "During a situation like this, the customer's looking for much more information and different kinds of information than he's ever needed before, and the airline is looking for some sign that the customer is going to return to his normal travel patterns."

That return is particularly critical for United. The airline's CEO James Goodwin reportedly circulated a memo to employees last week warning the carrier could go out of business sometime next year if it does not recover losses after Sept. 11.

Southwest Airlines, which previously had cut direct-mail marketing to its Rapid Rewards members to conserve costs, sent a letter to Rapid Rewards members after Sept. 11 inviting members to subscribe to a new e-mail list at (www.southwest.com) to receive messages from the company. The first e-mail sent by the airline outlined the Federal Aviation Administration's new policy limiting passengers to one carry-on bag. "It has given us the opportunity to speak to people via e-mail with the latest news and information," said Debra Benton, director of loyalty marketing at Southwest. "Prior to this we had not been communicating with our Rapid Rewards members specifically."

John Pincavage, president of Westport, Conn.-based airline consultancy Pincavage & Associates, said airlines were already beginning to use their customer databases for a variety of purposes, but the events of Sept. 11 hastened those efforts because of the need to get people back in the air. "I think what you've seen is an expansion in using [Web sites and e-mail] as information delivery systems," he said, "but there's no question they're still using it as a marketing tool to try to get people back on airlines without destroying their price structures."

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