What are the benefits of loyalty programmes for airports and just how much business could airports be missing out on by not making the most of such schemes?
The Moodie Davitt Report talks to global loyalty agency ICLP Managing Director Mignon Buckingham following the company’s reports earlier this year on the importance of understanding passengers and why passengers choose airports.
How big an untapped opportunity for airports is building loyalty among consumers?
The opportunity is enormous. Currently only around a third of airports have any type of loyalty initiative. Most of these initiatives are quite simplistic, and the offering is not necessarily providing strong commercial results for the airport.
But the issue is more complex than that. Many airports don’t have any means to develop any commercial insight into their customers at all. Typically the data they do have, for example the information they collect to offer free Wi-Fi, is limited and rarely exploited for any commercial advantage.
“The best loyalty programmes should, engage, motivate and ultimately earn the airport revenue” – ICLP Managing Director Mignon Buckingham
What should an effective, viable loyalty programme look like?
The best programmes should engage and motivate, be seen to change customer behaviour, and, ultimately, earn the airport revenue.
There are four approaches, which may be operated on their own, or combined. These are: retail rewards programmes (such as the programme at Heathrow Airport); paid benefits schemes (as we see at Amsterdam Airport Schiphol); ease of transfer schemes (such as the programme at Gatwick Airport) or frequency rewards (as offered at Nice Côte d’Azur Airport ).
How does it differ by demographic group?
Not all programmes will be appropriate for every airport or every type of passenger. A younger passenger demographic, for example, may look for a loyalty programme on a digital platform. Passengers in their late 30s and 40s are more likely to be in the upper tiers of airline programmes with all the benefits that they bring, and therefore both will be looking for different things from the loyalty programme they join.
Similarly, for an airport serving a number of frequent flyers, a points-based system is likely to appeal. Whereas leisure travellers flying less regularly might be more motivated by a paid-for proposition so that the few times a year they travel, they can ensure as easy an airport experience as possible, with access to a lounge for example.
What makes a loyalty programme viable?
The programme must offer the right level of enticements to engage the customer, without being prohibitively expensive for the airport. It must also be right for their passengers.
For example, lounge access may have appeal at an airport serving mainly leisure passengers, while this picture is more complicated at airports with a higher proportion of business passengers where many travellers will be frequent flyers and already have access to an airline lounge.
How big is the gap between the available data on consumers and effective use of that data to engage with consumers?
It’s huge. But again the issue is more that, unless they operate a loyalty or CRM programme, airports have virtually no consumer data other than anonymised research. So ‘the gap’ is more between what airports have and what they could have.
Probably the most important thing is to have the ability to know about passengers’ plans in advance of their visit to the airport. Unless an airport knows that someone is coming to its terminals, it’s not possible to offer them a free glass of Champagne, duty free shopping vouchers and so on. And if they only know about their visit to the airport ten minutes in advance, the opportunity to up-sell is limited.
What elements in the wealth of data available should airports really home in on?
I would argue that most airports do not have a wealth of data, and the information they do have isn’t useful to help them target specific people at specific times in specific places. It’s mostly operational data rather than marketing data, and they will have details on queue times for example, but it won’t be in a format that’s easy for the consumer to use.
Airports need to look at what information they require and how to get it. Airports could gather location data, for example, by offering passenger benefits such as a free coffee in return if the passenger registers for their next trip at least 24 hours in advance.
What collaborations between airport, airline and retailers do you see emerging from better use of common data?
It’s a noble ambition to encourage collaboration, but it is not uncommon for organisations to have an aversion to sharing data for a range of commercial reasons. This is something we see outside of travel retail in our work with high-street retailers, hotels and airlines, as well as across this specific sector.
There are challenges. Airlines for example make money from sales of ancillaries such as hotels and car hire; sales that could go to airports if they had the data so there’s conflict there.
These entities need to see the value in sharing, and the more data is shared, the more all parties can get a complete view of their passenger, and this will certainly be in everyone’s interest.
(Source: Moodie Davitt Report)