Interview: The future of loyalty programmes at airports

thumbnail_ICLP logoWhat 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.

The Moodie Davitt Report: How big an untapped opportunity for airports is building loyalty among consumers?

Mignon Buckingham: 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 sector is a long way behind its airline, hotel and retail counterparts, where gathering and analysis of customer data as part of a loyalty programme is normal. On the whole, this is because traditional airports have not seen themselves as ‘retailers’. They have been operations-driven rather than marketing-led, and they have historically left developing a relationship with their customers to airlines.

There is indeed much more that can be done, and the opportunity is fourfold. There is scope to better identify customers, increase spend, drive loyalty (including influencing frequency), and understand needs to inform future investment.

mignonbuckingham
“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?

The key is to understand the business objectives, commercial opportunities and customer profiles and design a programme accordingly.

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?

Looking at some of the programmes that airports are running, it’s difficult to see where they add commercial value, and unless they do, they may not be viable in the longer term.

A considerable amount of data needs to be assessed to ensure that the programme ticks all the boxes.

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.

Similarly, airports looking to attract transfer passengers need to carefully assess what their passengers might need. An airport serving mainly leisure flights might consider offering spa facilities as part of their loyalty programme, while business travellers will be keener on benefits that speed them through the airport or provide them with access to showers or meeting facilities.

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.

Our surveys have found that customers want a relationship with the airport, and they value information such as details on how to get to the airport, parking facilities or queue times. If the airport knows a customer is coming, they can provide that information digitally.

Airports could also be more imaginative with open source data that is available. For example, there is plenty of data such as weather information, traffic information and even an app based on crime statistics that tells you in real time how safe your destination is. This could all be used to enhance the passenger offer, but it can’t be communicated unless a dialogue is open. The opportunity for airports to communicate with its customers in meaningful, personalised ways in real time exists in the form of big data technologies that have evolved over the recent past.

The ‘mashing’ together of various data sources ranging from weather, traffic, operational, marketing to other sources can provide airport customers with a uniquely relevant experience in line with those increasingly delivered in other sectors. But first the airport needs to establish a relationship and open a dialogue with its consumers; something best delivered by an effective loyalty programme.

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 they need to be able to say: ‘We will deliver X from a marketing programme if you can supply Y in terms of data’. Of course data sharing does only make sense if all partners involved (retailer, airport and airline) benefit and that depends on how the airports’ commercial operations are structured and the relationships they have with their commercial partners. Some airports, for example, might have nothing to gain if airport retail sales don’t increase, but will be keen to see more sales of parking.

However, 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. Loyalty programmes can certainly facilitate this, and in putting passengers at the heart of a loyalty strategy, all entities are able to add value to the passenger journey and overall customer experience at the airport.

 

 

Food & Beverage The Magazine eZine