Postcards from Perkistan

Following Virgin Money’s launch of the Virgin Flyer credit card a couple of weeks ago Virgin Airlines have announced reciprocal agreements between all Virgin family airlines’ rewards programs.

Velocity Rewards members can now earn up to 1.5 points per mile on Virgin America and Virgin Atlantic. The link strengthens earning potential, but still contains far less flight earning opportunities than the Qantas Frequent Flyer program, with over 26 airline partners.

As a part of the celebration members can win a luxury 7 night holiday to Richard Branson’s private island, Necker Island, by flying on any two Virgin airlines before January 2011. The prize includes business class flights to LA and transfers to and from Necker Island for two. Entry details.

Although the Velocity Rewards program is more lightweight than Qantas Frequent Flyer it’s starting to pack a punch with over 100 online shopping partners in the ShopAndEarn store, no membership fee, and redemption options including gift cards for Myer and David Jones.

Has Virgin amped it up enough for you to make the switch?

Graham

Over the past four weeks Everyday Rewards has been celebrating the one year anniversary of linking with the Qantas Frequent Flyer program. The core of the promotion was a different prize each day for four weeks, with a major prize draw of 5x $10,000 shopping sprees. In considering whether the promotion has been a success I have drummed up four or so key points to consider:

Good Points: Consumers
It was extremely easy to take part in the promotion. Simply swipe your card when making any purchase at a participating Woolworths, BIG W, BWS, or Dick Smith.

Bad Points: Consumers
The promotion was entirely draws to win prizes meaning there was no instant feeling of being rewarded.

Good Points: Everyday Rewards
The promotion would have revealed which consumers are most easily swayed by promotional products and those who are not.

Bad Points: Everyday Rewards
Perhaps a loss of positive sentiment for the program, but it’s hard to find much more than that.

How would I have done the promotion differently?
Well, if I was Everyday Rewards then perhaps I wouldn’t. They now have the power, or at least more than they had before, to target members based on how likely they are to respond to a particular promotion. That’s a pretty powerful piece of information to have as there isn’t a direct link between an active user and redemption of special offers.

How did you rate the First Birthday Bonanza?
(dislike) 1 | 2 | 3 | 4 | 5 (like)

Got a lengthy response? Leave a comment below.

Cheers,
Graham

While doing an update of the AAdvantage program I’ve stumbled across some interesting 2008 stats for the program:

Q: How many AAdvantage Awards were claimed in 2008?
A: The number of awards claimed in 2008 in each AAdvantage mileage redemption category were as follows:

MileSAAver® and AAnytime® Awards: 2,858,222
Upgrade Awards: 769,527
Product Redemptions: 407,074
Special Mileage Awards / Other Airline / Other: 780,533
Total Redemptions - 2008: 4,815,35

It’s pretty interesting to see that most miles (60%) are redeemed for flights using American Airlines even though there are 20 leading airline partners that members can redeem their points with. Total redeemed on Flights is an astounding 92%.

All flights within continental US are worth 25,000 points flying AA. A flight from New York to Los Angeles on American Airlines is worth around $382. Meanwhile, if we compare this with a 25,000 point merchandise reward we are looking at getting $250 worth of value for our 25,000 points. It certainly seems that AAdvantage members are making the most of their points.

-Me

From the previous blog post I mentioned that the NAB Gold Rewards program has turned into two different cards (linked to the one account), the NAB Qantas Gold Visa (or MasterCard), and the NAB Qantas Gold American Express.

David Jones has just released (2/3/2009) a David Jones American Express card where you can redeem points earned for ANY travel (anything that a travel agent can book can be purchased with their voucher. Booked through AmEx), including Qantas flights.

Here we’ll compare the earning and burning options of the NAB Qantas Gold American Express ($145.50 annual fee) and the David Jones American Express ($99 annual fee) cards.

Shopping In-Store:

DJs: 2 points per dollar, don’t expire, no cap
NAB (in-store means Qantas): 3 points per 2 dollars for the first $3,000 per month; 2 points per 2 dollars for $3,001 to $10,000; Nothing over $10,000.

We’ll assume that you always earn 3 points per 2 dollars for the NAB card as that is it’s highest points-earning capability.

DJs $100 Gift Card: 13,300 points. At 2 points per dollar that is $6,500 to get $100 back.
NAB $100 Myer Card: 13,500 points. At 3 points per 2 dollars that is $9,000 to get $100 back.

DJs $100 Travel Voucher (includes Qantas): 15,000 points. At 2 points per dollar that is $7,500 to get $100 of travel.
For NAB they don’t have a specific dollar amount to redeem on travel, so let’s take a domestic flight from Sydney to Coffs Harbour. 1 “zone”, 275 miles, from $104 economy class.
Sydney - Coffs ($104): 8,000 points + 3,000 points for taxes = 11,000 points. At 3 points per 2 dollars that is $7,334 to get $104 of travel.

In-Store Conclusion: DJs has a HUGE advantage if you plan on redeeming your points for a shopping voucher. NAB Qantas Gold has a slight (2.26%) advantage if you plan on redeeming your points for travel with Qantas.

Shopping Everywhere Else

DJs: 1.5 points per dollar, don’t expire, no cap
NAB: 2 points per 2 dollars for the first $3,000 each month; 1 point per 2 dollars for $3,001 to $10,000; Nothing over $10,000.

We’ll assume you always earn 2 points per 2 dollars with the NAB card as that is it’s highest points-earning capability.

DJs $100 Gift Card: 13,300 points. At 1.5 points per dollar that is $8,867 to get $100 back.
NAB $100 Myer Card: 13,500 points. At 2 points per 2 dollars that is $13,500 to get $100 back.

DJs $100 Travel Voucher (Includes Qantas): 15,000 points. At 1.5 points per dollar that is $10,000 to get $100 of travel.
Using the same Qantas flight from Sydney to Coffs:
Sydney - Coffs ($104): 11,000 points. At 2 points per 2 dollars that is $11,000 to get $104 of travel.

Everywhere else conclusion: DJs extends it’s advantage over the NAB card when redeeming your points for a shopping voucher. NAB Qantas Gold loses it’s slight advantage and DJs gains the slight advantage (10% now though! 12.26% change…) when redeeming your points for travel with Qantas.

Of course you may need to consider your shopping habits and your financial needs when choosing a credit card that is right for you and this is a mere glimpse of what both programs have to offer.

Got a nice post from Tim Winship today about services that let people know when award seats come up in frequent flyer programs. Tim is spot on when he asks the question “why don’t the programs do this directly?”.

He probably knows the answer as he has worked in and around travel and loyalty for 20 years, but if he’s asking then seems like they probably should!

At Perkler we ask a different question. Why sit around waiting for a reward seat when the programs offer so many other options?

Yes - I understand that there are a LOT of people out there who can use the flights and want to invest the time to try and get the award, good luck to them. But for the vast majority of consumers out there, instead of waiting for the award, get a retail reward.

Experiences, home appliances, discounts at retailers and gift vouchers are all available from these programs. With Christmas coming up you can use Perkler to help you find out about potential presents for people you love (and even yourself).

Redeeming these rewards isn’t always the most efficient use of points (Dan’s post yesterday highlighted how different programs offer different value) but if you aren’t using them anyway - the current economic climate is exactly the rainy day you’ve been looking for.

So next time you hear someone moaning about their frequent flyer program and how they can’t get a seat. Send them to Perkler and tell them to look for the reward and forget the award (that’s nice, we should trade mark it!).

Justin

I was reading Wise Marketer this morning, a website for loyalty marketing professionals. They quoted some news from travel site kayak.com:

Kayak.com has issued a number of tips for prospective travellers, one of which is to simply: “Forget customer loyalty. Frequent flyer miles aren’t as valuable as they used to be, so book with another carrier if it means a deal”.

Now, the argument around the value of frequent flyer programs and points and accessibility is one that is covered in great depth and by extremely knowledgeable and passionate people out there in the webisphere. And they take their points very very seriously, so I’m not going to get into a stoush with them.

Miles, miles everywhere...

What the kayak research shows is that obtaining value from these programs when you are chasing their core reward (in this case flights) is hard. What they don’t highlight is that if using those points for a trip is so hard, you should look to burn them on the thousands of other retail and merchandise items you can get.

Sit on points hoping to get a reward, or (like our private beta tester Wayne) find the coffee machine of your dreams in the Perkolator™ and use those flying points on instant satisfaction.

And that’s where we come in. Instead to telling people how ‘broken’ loyalty is, we enable consumers to find their favourite brands and activities in locations near to them so they can utilise the programs in a tailored and personal way. And rather than focus on the big points programs we would much rather do this in retail programs are based on the brands people love.

Retail programs are (on the whole) simple. Spend in a store or from a favourite brand and you get rewards. Sure some of the rewards on offer seem minuscule compared to the purchase price but there are plenty of great programs, and if you are going to shop there anyway…

We will also be working hard at Perkler to tell retailers what their consumers want - we hope they will take advantage of the community and target people for extra and special perks. We are on the lookout for these kind of retailers right now and together we know we can make retail loyalty even better.

As a wise man (not wise marketer) once said “the perks are out there…”

Have a good weekend everyone

Justin