Loyalty Lab Blog

by Joshua Tretakoff | VP, Client Services

Offered as a different perspective to David’s praise of Clear.

I travel often to visit clients, train teams on the usage of our platform, and more. In my last few trips out of the San Francisco Airport, I marveled at three things:

1) It is now a reasonable concept to get from downtown to SFO in less than 30 minutes, for less than $6 (thank you, BART).

2) It is a decadent treat to be able to pick up some of SF’s fabled Dim Sum right in the airport (thank you, Fung Lum).

3) It is now possible to sign up for a “FasTrak” for airport security, allowing you to go to the head of the line, for $100 a year. (thank you (?) GE).

This last one was interesting. Called Clear, the service, on the surface, makes perfect sense to frequent travelers: pay a fee, get prescreened by TSA, record some biometrics, and zoom! No more waiting. Kiosks liberally sprinkled around the airport, usually near First Class check-in, and staffed by 2 attractive, friendly and professional staffers, add to the allure. One of our team already is a Clear card-carrying member, and with the value proposition, why not?

Here’s an example of a compelling hook of a loyalty program that can be derailed by the details behind the program. First, the value proposition itself: it’s not, as is marketed by those kiosk staffers, a “FasTrak” for airport security. You can’t simply bypass the TSA at the checkpoint. Instead, you meet a Clear “concierge” who escorts you to the front(ish) of the security line. Not the First Class security line, mind you: that’s determined by your ticket. In a recent flight, without Clear, my wait time from entering the line to getting to the same spot a Clear member is escorted to was 2 minutes. That means that, if I fly once a week for a year, my net savings from Clear is 208 minutes. That works out to a little over $2 a minute. Ouch. Compare that to the cost of a typical inflight movie ($5): that works out to about $0.05 a minute. Yikes.

SFO can occasionally have longer wait lines, so perhaps the cost comes down to about $1 a minute at worst. Where does this help? When you are running late to a flight. Will you spend $10 if you see an extremely long line to bypass most of it? You bet.

Now, here comes the 2nd potential underminer. The service is currently only available in a dozen airports. Conspicuously absent? Chicago. Atlanta. Washington DC. Seattle. Dallas. Los Angeles. Ouch. Airports that are included? Luckily, if you’re heading to Albany, you’re golden. Little Rock? You’ve got it. To be fair, all of the New York airports are included; even Westchester. But the commonalities of these airports are interesting: they either already have high throughput (NYC, SFO), or are not highly trafficked (Little Rock?). In those locations, how much will Clear actually help?

With those details, this loyalty program looks to have a lot of future churn. They are clearly betting long on the odds that rapid enrollment growth will sway other key airports and perhaps convince TSA to allow further express options. But their target demographic will only briefly tolerate the letdown in promised services; they won’t renew. This means Clear will have to spend more to retain these members…for what is supposed to be a membership program!

Look at your hook: if your program is designed to add benefits over time, and is hampered by restrictions at first, and your primary goals are to build membership and generate revenue, turn your negatives to positives. Market the opportunity to be among the first to benefit. Experiment with introductory pricing or incentives (hey, Clear: how about some frequent flyer miles?) to generate the enrollment and offset future cancellations. Offer aggressive incentives for long term lock-in. Instead of spending big money to market a limited service to a broad market, target your marketing to people who’ve booked certain routes with airlines to the cities you DO service, for instance. And invite your early adopters to be part of the program’s evolution: offer forums for people to give objective feedback, and even rate one location over another.

The best programs offer an easily understandable value proposition, an incentive to join, and reinforcement. Maybe this will soon become Clear?

David Rosen | Senior Vice President

Last week I registered for the Transportation Safety Administration’s “Clear Registered Travel Program” – or simply, “The Clear.”

While not a loyalty program per se, its concept and execution are very much in line with the best practices that we espouse for retail, hospitality/travel and consumer loyalty. Here’s how it works:

o Travelers register online with Clear by providing certain personal identifying data points (SSN, address, employer, passport and drivers license)

o Either at a participating airport (there are about a dozen including SFO, JFK, MCO, CVG, EWR, SJC and more to come) or at selected city locations, the applicant completes his or her application by providing finger prints, a photograph and a retinal scan

o The application is processed, and assuming no red flags, a membership card is mailed to the member

o Then, at participating airports, all the Clear member must do is arrive at the Clear kiosk, scan his or her finger and retina and head directly to baggage scan (he or she still must go through the same check, but bypasses the entire labyrinth of lines

It’s the classic relationship of “give-to-get” which defines the core element of a loyalty program. I as a business traveler, am willing to give my personal information in order to get a much faster, streamlined experience while I’m traveling.

Applying the program to Loyalty Lab’s “Best Practice Score Card” I’d grade the program a sold “A.”

Easy to Understand: Extremely, get the card, go through the line. The way we travel has changed dramatically over the past six years. This program addresses those changes head-on.

Worth-It Factor: For about 45 minutes and $99, for most frequent travelers the value proposition is crisp.

Speaks Uniquely to the Targeted Segment: Clearly not intended for twice-a-year travelers. This is for the road warrior. The program itself is presented professionally and at the expected level that any business traveler would expect.

Has a Unique and Defensible Hook: At this point, the only game in town, but I have to wonder how they will keep the lines down once the membership grows.

Significantly Increases Customer Insights: Well here is where the Clear departs from loyalty programs. According to its privacy promise, while personal information is collected, it is not transferred to the airport when you go through security. Nor are the airports into and out of you travel tracked. I think I’ll give them a pass on this one!

But beyond the privacy differences, the similarities are pretty striking. The Clear has forged marketing partnerships with several leading travel programs and even offers a Refer-a-Friend program where the referring member gets a free month for every member he or she enrolls.

Go TSA!

By David Rosen | Senior Vice President

Unlike Europeans who can spread four to six weeks of vacation across the year and truly decompress, I’m pretty typical of most Americans who must gear up to wind down over just a couple of weeks a year.  Now that school is back in session and soccer games and college football tailgating occupy our weekends, I can look back on a couple of great relationship management experiences from our summer’s end.

I am consistently blown away by Disney.  No one is better leveraging a wide breadth of media and entertainment properties by tying customer relationships back to the household.  While the task is daunting, and top marketers at Disney will tell you that there is a long way to go with regard to truly solving the puzzle, as a Disney-loyal household we are intelligently connected back to the brand based on our theme park, hotel, movie club and other online relationships.  Disney’s 30+ million U.S. household database stands above all other family marketers for its depth of information and actionability.But, my favorite CRM capability at Disney is how they allow visitors to their theme parks to best utilize their time by avoiding the long lines that characterize any summer or spring break day.  For the top attractions – what were called the “E Tickets Rides” when I was a kid – guests can reserve a return time for later in the day and enter the attraction with little or no wait through the Fast Pass line.  All you have to do is insert your admission ticket into a Fast Pass dispenser and a ticket will be issued with your return time (a one-hour windowy).  Fast Passes are open to everyone (who takes the time to figure out the system) — it is not a special privilege for those who can afford to pay more.

But what’s interesting from a CRM perspective is the data model and capabilities behind the scenes.  Every park admission pass identifies its holder uniquely, allowing the database to recognize each Fast Pass that has been issued – the system limits the number of passes you can hold at any given time and lets the hold know when he or she can get another.

Even more sophisticated than “get one, use one,” the Fast Pass system acts as a yield management system diverting crowds away from the most crowded attractions and towards where there is more capacity.  Additionally, the Fast Pass CRM logic allows ticket holds to load up on Fast Passes when the park is empty (e.g. the morning) and restricts their issuance when the park is full (e.g. from 5 pm to closing).

So keep the following tricks secret, but it is the best way to avoid long lines at Disneyland and Walt Disney World, even on the busiest days of the year:

• Get to the parks as early as you can (on property guests can enter the park an hour early on many days)
• Reserve your Fast Passes for every attraction that you would like to enjoy later in the day – remember when you reserve early, you can hold multiple passes; later on and you are restricted to one at a time
• Use the passes during the busiest time of the day.  While the passes will have a return time, you’ll be OK as long as the time you return to the attraction is after the return window begins

by David Rosen | Senior Vice President 

I had the pleasure to fly Virgin America (VX) last week on one of the carrier’s first scheduled flights.  As someone who is more than a little obsessed with frequent flyer programs, it was an interesting experience to fly an airline that is essentially starting from scratch:  no elite members, no tangible membership benefits – really not much of a program at all.

Prior to take-off, Virgin America soft launched its frequent flyer program, “eleVAte” on its website.  As a fan of great user interface, the sign-up process is fabulous – the virgin branding, the palate, the flow – all top notch, intuitive and a model for others to emulate.

The program itself is clearly still in design – other than the fact that accrual will be based on dollars paid rather than miles flown, not much else is known.  One noticeable absence is the connection back to the greater Virgin Group – not surprising given the multi-year battle that Virgin America waged in getting the approval to move forward given the industry skepticism of their true ownership structure.

At the airport, the visual branding was equally impressive. 

But it was at the gate where the lack of a frequent flyer experience really set in.  As a regular traveler, you don’t really think about how dominant the airlines’ programs are to the flying experience until it’s missing.  Even egalitarian Southwest engages each and every flyer with their Rapid Rewards Credit Card in every terminal they occupy.  Among the old hub/spoke carriers, virtually every interaction is based on Frequent Flyer hierarchy:  on which terminals you check in, through which security line you pass, the likelihood of squeezing into a standby seat, the order in which you board, the zone of the plane you sit, the number of inches between you and the seat in front of you, the speed with which your bags are deposited on the belt.

At Virgin America, there was none of that.  No mention of priority boarding, no “take-ones” to enroll in the program at the gate, no free beach towels for applying for the Virgin America Credit Card.  Oddly fair, genuinely egalitarian. 

But, with more flights come more miles flown, more dollars spent and more of an expectation for both finishing up this unfinished project and making the program a deeper part of the VX experience.

Next week…  CRM at