Postcards from Perkistan

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