Joined by Mark Ross-Smith, CEO of Status Match, with 20 years’ experience leading loyalty programs in telecoms and travel, and previously Malaysian Airlines. The Editor of industry news site “Travel Data Daily” https://www.traveldatadaily.com/ shared with us his experiences as a frequent flyer and what he is expecting from loyalty programmes and why value is at the centre.
During the discussion we look at:
The status quo for loyalty programmes - and what's wrong with this approach
How companies should follow their customers and collect data to drive new revenue opportunities
Leveraging data to improve loyalty experiences
Role of revenue management and loyalty - How they work together
The technology enabling leading businesses to do this
Programme Notes
Ryan Haynes:
Hello and Welcome to Travel. Market Life. Today's theme is Creating Relevant Loyalty Programs. I'm your host, Ryan Haynes and Joined by Mark Ross-Smith CEO of Status Match. With 20 years of experience leading loyalty programs in telecoms and travel. and previously Malaysian Airlines. Editor of the industry news site, Travel Data Daily, the tech entrepreneur has won the World Aviation Festival 2022 Travel Startup Contest and 30 under 40 awards in loyalty. We'll be discussing what's wrong with loyalty programs, data customers, and optimizing revenue through loyalty and the technology to benefit loyalty programs in your business.
Ryan Haynes:
Hi Mark. Thanks ever so much for joining us. So I've come across to you recently. You have been very vocal in the loyalty space, particularly around airline retail, and I was particularly in interested by one of your recent LinkedIn posts where you shared your recent experience with an airline loyalty program. If you could just summarize that particular frustration that you've had and explain why there's so much problem with the current loyalty programs in the industry.
Mark Ross-Smith:
Thanks, Ryan. It's great to be here. You're right, I'm a bit of a cheerleader for the loyalty industry, you know, needs a couple of people to stand up and sort of beat the chest beat the drum of how great loyalty is. And I try to, you know, put a bit of a spark in that loyalty corner of the world. However, to your point, yes, recently I had a very interesting experience where I booked this flight with a pretty well known airline in Asia as book and flight for my family. Through the booking process on the airline’s website, you know, how they try and sell you, you know, do you want extra bags? Do you want to select your seat, pay a fee, this kind of thing. Now I'm a gold member with this airline, which is the mid-tier sort of status with this airline.
Mark Ross-Smith:
And they were trying to, I'm one of the upsell ancillary pages. They were trying to sell me business class lounge access for my five-year-old daughter. And I thought, hang on, that's a bit weird because I'm a gold and I get lounge access included in my ticket no matter what class I'm travelling. And, and, and kids under 12 don't count as guests. So they would come in for free as long as I could access the lounge anyway. And I thought this is kind of weird. They're trying to sell me something that I get for free. And that, that got me, I kind of stepped back a bit and I thought, why are they doing this? Because, you know, know people that have status with an airline or hotel, this applies to both, you know, like a silver, gold, platinum diamond.
Mark Ross-Smith:
These members to an airline represent between 30 and 50% of revenue to Airlines, right? And they're the top 5% of your loyalty members. And these people spend more, they spend more frequently, they spend on high margin, you know, fairs. They're more likely to book the business class seat or buy the suite at the hotel. Why are you trying to sell me something I get for free? Like I'm actually more likely to spend more money and buy something that is relevant to me on my trip. You know, why not sell me the concierge service or a private car to board the aircraft or triple miles or something on the flight?
Mark Ross-Smith:
And it just sort of struck me how in this circumstance I felt, you know, the airline had totally missed a brilliant revenue opportunity. And then, you know, your times just by millions of global travellers every year that have gold platinum type status. you know. I think this might be the next, you know, the next sort of hundred billion dollar ancillary revenue opportunity out there that is yet to be tapped.
Ryan Haynes:
It is fascinating when you look at the sort of like different tiers in loyalty and what you can get as a member. And obviously, there's so many people wanting to move up those tiers, want to get those additional points, want to spend that extra money with the airline to be recognized or with the hospitality company to be recognized in a certain way. But it does seem to be very much a templated approach that's taken to all the members. There's no personalization, there's no recognition as to perhaps where that person's going, what they're doing. Why do you think we've reached this point? Is it just pure laziness? Is it lack of technology? Is it the fact that we just don't have the Insight on the customers? I mean, what do you think went wrong in your particular case when you were making that booking for yourselves and your daughter?
Mark Ross-Smith:
In my particular case, it's probably just the airlines not thinking about it. you know, we take a step back and think about how these decisions are made in Airlines and hotels. I mean, this is good, this extensive cruise line, car rental, the whole sort of travel ecosystem. Most people that work in these companies, are super smart people, but they're just not customers of their own product, right? So, what this means is, when it comes to making decisions, they have to send out surveys, focus groups, more research, you know, this is kind of how they learn or they learn from the vendors that are trying to sell them stuff. Yeah. And when you're making decisions, you know, what, what should people see through a booking flow? They're thinking from typically not always, typically through, their personal experience lens, right?
Mark Ross-Smith:
And let's face it, most people in the airline have never personally themselves ever had gold status earned on merit. You know, you typically don't see airline employees willingly shelling out 20 grand for first class flights across the world. you know, they're happy to pay 200 bucks in business class to, you know, on standby I did 90 tickets, right? And so, when it comes to creating products, you know, super smart people, they're just coming from a different perspective. They're not coming from the perspective of understanding what, their core customer really wants. And their core customer is not them. It's not the CEO it's not the CEO's wife.
Mark Ross-Smith:
It, the core customer is probably someone else. It's, you know, a typical sort of leisure airline, I mean a bus business focused airline. It's a, you know, probably someone male, mid forties business travel, travels frequently. It's probably someone like that. So how do you create an experience for them? How do you create new products and new upsell opportunities? Things that, things that they'll buy, right? And there sure is buy large for their five-year-old because they're expecting that for free, which they probably do get anyway.
Ryan Haynes:
No, I mean, with status match, it is all about identifying who the person is and making sure that they've got the relevant product being presented to them. Am I writing that? And so there must be quite a bit of data that you need to better understand your customers. How closely should companies be following their customers and collecting data to drive new opportunities? So, what do you think is sort of like the data metrics that really are, are key to optimising those revenue programs? Are those loyalty programs?
Mark Ross-Smith:
You know, I, a certain bit of the story here in the airline world, you know, when I first started hearing these data, data monetization, collection, personalization, when I start really started hearing this at events, it was probably about eight, eight years ago or so, 8, 9, 10 years ago. And I'm fairly sure it was suppliers trying to just sell their latest data science tool or whatever it was. But, you know, in that time, I, I really don't think much has changed in terms of, you know, if you think about your experience with air travel or hotels, you know, what, what really has changed from a technology or personalization perspective, it kind of feels about the same still. you know, I still get emails from a very big Australian based airline where I have a lifetime status with them.
Mark Ross-Smith:
The emails they send me are selling products based in Australia. I haven't lived in Australia for another 10 years and yet they still send me these kind of things. Like this is, this is the kind of personalization I want. They should be able to see that when I'm opening the emails, you know, just get, you get when they're opening emails, you know, they can get your IP address, right? They can reverse that. They can tell what country you're in, right? And they could see, well Mark, he's clearly not Australia. He's opening emails when he is in Singapore, London, Malaysia, USA, and very rarely Australia. And why are we continuing to send him stuff based on thinking he lives in Australia? So, I think sometimes it's about going back to basics, right?
Mark Ross-Smith:
And you know, I, I think there's a pretty big up upside on just getting that right because that affects every member in the database. But you know, in terms of, you know, collecting data to drive revenue in, in the airline world, we talk about the, what's called the golden loyalty metrics. And so, these are the ones that sort of stand head and shoulders above every other metric in terms of what you want to track, right? And the number one's called is the share of wallet, which loosely means, you know, how much is, how much are you flying this airline versus other, what, what percentage share of, of spend are they getting, right? So, you might be doing a make up, say two flights a year.
Mark Ross-Smith:
You're doing two sectors, you're going to visit grandma and you're coming back and that's 100% of your flight activity, right? So, you're actually very loyal and yet your cousin John, who might be doing his big hardcore business travel, he is doing 200 sectors a year, right? But he's got a hundred sectors with one airline, a hundred sectors, another, and he's actually less loyal because he's, he's 50% share of wallet, right? So, he spends more the cu you know, the airline looks and goes, this guy's worth tons of cash, he's got platinum status, he's a great customer, actually could get a lot more out of him, right? So, when you know what percentage of spend you're getting from people, you know, how to target your marketing, you know, where there's sort of room to grow and how to, to be able to capture more business out of people.
Mark Ross-Smith:
So, you know, Airlines that keep tabs on supplies to hotels as well that keep tabs on some of their top customers. You know, it's actually really cheap, to be honest, to keep tabs on top customers, you know, you know, thousand bucks kind of thing. And you can keep tabs on them and you know, when these people are spending fifty, eighty, a hundred twenty, 200,000 a year, you know, it's pretty cheap to sort of track what they're doing, where they're going and, and use that as an opportunity to, you know, be more personalized in your office because you know where they are and how much business you're missing out on.
Ryan Haynes:
I mean, is that sort of like the typical CRM or are there sort of more advanced, sophisticated, like loyalty management programs that travel businesses really should be looking at to track this data and keep tabs on their, on their top tier customers?
Mark Ross-Smith:
Yeah, I think it's a bit of both. I mean, obviously, our business runs a bunch of technology that empowers travel loyalty programs and you know, how we've come to creating this stuff is because everyone in our management team has run an airline loyalty program in their career on three different continents. And you know, in that time you see what works, what doesn't work, et cetera, et cetera. So, I think it is a bit of both. There's a bit of this in its technology play, you know, smart people, smart companies that create stuff that's really cool that can plug into another system. Then there's a bit of, you know, data aggregators and these kind of guys out there, you know, some of the big ones like, you know, Axiom, these kind of guys marketing like Adara, you can sort of tap into, it's the whole one plus one equals three scenarios, right?
Mark Ross-Smith:
You get your core and data, you get some other third party data, add those together and magic is, you know, three equals three or four, right? But you know, at the heart of all this is, you know, we're in the travel business, right? And travel and the emotion or the joy of travel sort of go together, right? you know, ultimately people don't really care. CU Travelers should say don't really care about what technology you have; they just want to see how it impacts them. And if that means they're going to get a slightly more, more personalized email, they're not going to notice it. They shouldn't notice it, right? They should just think, oh, this is kind of cool, I like beaches and I'm getting e more emails now.
Mark Ross-Smith:
But beaches, it should be as simple as that. It shouldn't be, you know, you figure out exactly how much they're willing to pay and they get an email saying go to, you know, you can go to Fiji for this much. And the amount there just happens to be exactly what they spend on all it, you know, there, there's a, there's a border on there where it's interesting personalisation, you like to click on it versus creepy, right? Where you, you you're sort of showing your hand that you know a little bit too much about the customer. People, you know, will shy away from that. And so, I think ultimately at the end of the day, if you can have that balance between knowing them or showing that you know them just enough, but not too much in a way that has an emotional message wrapped around that, I think that that ultimately performs the best.
Mark Ross-Smith:
Because you think about what people really want when they travel. They want that feeling, they want that emotional experience. They want to, you know, they want to see the great pyramids, they want to climb the mountains, they want to sail in the Mediterranean, they want to see the Great Barrier Reef. They want to see the amazing wonders this world has to offer. And our job as, you know, travel marketers and being in, in this industry is to help facilitate that and to invoke those emotions that are all within everyone. I, I believe travellers in everyone's d n a and you know, it's about how do you just sort of bring that out in people in a way where they see it and they go, that damn good deal to click. I want to book it.
Ryan Haynes:
I mean it obviously, yes. Our job is just to inspire and to take them through that, that sales funnel in a way that, as you say, really taps into their particular needs, their interests, and what they're looking for. And I mean this, this sort of role of loyalty, you mentioned ancillary products, the very beginning and the opportunity to earn additional revenue there and, and really drive the profit margins for travel businesses. What about the relationship then between revenue management and loyalty? Because that's not traditionally ne necessarily been a collaborative team effort within a lot of travel businesses. Why is that so important? And you know, what, how would you advise that they could work together and in what ways have you seen it work together most effectively?
Mark Ross-Smith:
So, there's a secret handshake that you need between management and loyalty once you know that. No, seriously, I think it's about internal education, right? So most traditionally people that work in the loyalty program or travel business have a marketing background, all their marketers and traditionally, people that work in revenue management, you know, like, like the numbers like structure, right? And these are typically two different types of personalities, which means they are less likely to hang out together. And so, I think there's a, there's a bit of education where loyalty needs to take the time to go around to revenue management to be fair, the whole company and educate them on the value that loyalty brings to the organization.
Mark Ross-Smith:
And then also talk about the numbers, speak their language as well. Not just speak the, you know the colouring in department's, marketing language, speak the number, speak the hard numbers, you know, when we do this, customers do this, they spend this and this is what, you know, a goal member as worth to the airline when they have these three different products, right? Revenue management then sees that and goes, ah, you're speaking my language. Now I can understand this. So, you mean if we give away this seat or we give this room away for this rate, we can kind of look at a holistic perspective and go as a company we can in theory lose money on the left with the left hand to make twice as much with the right.
Mark Ross-Smith:
And overall, that's a good thing for the business, right? The customer then also feels like they're getting a great deal. They're going to engage with the program or they're going to start buying more cash fairs or buy, you know, more room nights. So, you know, instead of each, which is pretty typical in a big organization like this, every department, you know, they've got their own KPIs very siloed off from everyone else. you know, I think once that education is the way to break down those barriers. And so once everyone's on the same page in terms of everyone understanding what everyone else is trying to do, you know, it sometimes you can sacrifice some KPIs over here to double, triple something on, on the other side.
Ryan Haynes:
Excellent. Thank you, Mark, thank you very much for those insights there. I think it's, you know, really incredibly interesting when you look at all those different dynamics and you know, you come from it from a personal perspective and I think it's really, as you say, it's essential that the industry puts themselves in the shoes of those customers to really understand the value that they're offering within their loyalty programs. So, thanks ever so much for joining me on the show today.
Mark Ross-Smith:
Thanks, Ryan. It's been a lot of fun having a chat with you.
Ryan Haynes:
So that was Mark Ross Smith, the CEO of Status Match. You can find out more about his thoughts and his activities across the loyalty program space at Travel Data Daily dot com where there is a lot of different articles for you to really better understand how you can apply some of this thinking that Mark shared on his, on our discussion today. You've been listening to Travel Market Life, thanks for joining us. Stay tuned for the next episode and look out for all the others on the regular podcast channels. I'm your host, Ryan Haynes.
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