Written by Marisa Garcia – Flightchic.com
Airline loyalty programs are great revenue generators, but the administration of these programs can be burdensome both for airlines and consumers.
It is in an airline’s best interest to get consumers to spend their miles or points, and digital tools can lend a helping hand.
While frequent-flyer programs help gather consumer data that can support personalization for better retailing, passengers who fly less often may not sign up.
The Latvian airline airBaltic has introduced a new way for customers to earn credit for their spending with stamps, as part of their PINS loyalty program. This encourages customers to sign up even if they only fly a few times a year. AirBaltic also introduced a new digital PINS platform to help customers manage their accounts and spend their credits.
When the airline’s customers first join the airBaltic club, they collect both PINS and digital stamps—including two stamps for signing up and one stamp for each one-way flight with airBaltic. Stamps can be traded-in for ancillary services like free checked baggage, and advanced seat reservations. After collecting 12 stamps, members can also earn a free flight. More frequent travelers can also accumulate PINS towards Executive and VIP level status, which offers other travel perks like lounge access and upgrades.
“The PINS loyalty program has been well appreciated in the Baltics and Finland, where in total over 2.4 million users have joined it. The PINS mobile app aims to make your travel and shopping even more convenient,” Jouni Juhani Oksanen, SVP e-Commerce, Sales and Marketing of airBaltic explains. “From now on members can collect digital stamps, check in for flights, and redeem numerous additional bonuses even if they fly only few times a year.”
The new PINS app, available for iOS and Android devices, will let customers keep track of the PINS and stamps they have earned and where they are along the path to rewards.
“The new service is a major improvement in how we reward our customers of different flying habits compared to traditional loyalty programs. It is a truly innovative approach as currently there is no similar loyalty platform available elsewhere,” Oksanen added.
Blockchain Solutions
Another way to boost program participation, and to turn-over accrued points or miles, is to make loyalty currency easier to use.
Earlier this year, Singapore Airlines introduced a blockchain-enabled digital wallet for its frequent flyer program: KrisFlyer. The app helps convert KrisFlyer points into a dedicated KrisPay cryptocurrency which the airline’s customers can use to pay for goods, either in part or in full, at point-of sale at participating retail outlets.
“By creating a miles-based digital wallet which integrates the use of miles into their daily lives, KrisFlyer members have yet another way to use miles instantly on everyday transactions,” said Singapore Airlines CEO, Mr Goh Choon Phong.
Members can use as little as 15 KrisPay miles (equivalent to about S$0.10) to pay for their purchases at 18 partner merchants in categories of beauty services, food and beverage, petrol and retail. To complete the transaction, customers scan the KrisPay QR code from their app at the merchant and key-in the amount that they want to pay.
The KrisPay app is available for iOS or Android devices. It allows KrisFlyer members to convert whatever share of their accrued miles they want to the KrisPay cryptocurrency which they can then use for purchase. Miles converted to KrisPay currency are good for a period of six months. The airline also sends out in-app promotions to encourage use of miles accrued.
Digital Wallets as Marketing Tools
Besides the convenience of using digital wallets to manage and transact accrued credit from loyalty programs, Forrester Research suggests that digital wallets themselves will become useful marketing tools.
Just as Singapore Airlines sends out alerts to its customers that remind them to spend their KrisPay cryptocurrency, airlines can use digital wallet alerts to remind customers that they have the credit to “buy-up” on experiences or services. Imagine an airline’s digital wallet sending an alert that offers a mileage discount for a seat upgrade prior to boarding, or selling a lounge pass at the airport terminal.
A study conducted by Forrester on behalf of JPMorgan found:
- 46% of power digital wallet users and 43% of light digital wallet users are incentivized to use their wallets for VIP experiences.
- 40% of power users and 34% of light users are incentivized by personalized notifications made through the digital wallet.
- 72% of power users said they would be more concerned about leaving home without their mobile phones than without their physical wallets
- 56% of light users were more concerned to leave their mobile phones behind
- Interestingly, 34% of those who said they do not use digital wallets were still more concerned over leaving their phones behind than their physical wallet
“Respondents in the consumer survey are interested in using digital wallets to improve their shopping experience, and their top areas of interest, especially for Power Users and Light Users, are ones for which digital wallets are well suited — improved security, order ahead and pay or self-service, and the ability to store and use coupons/rewards directly within the digital wallet,” the JPMorgan report’s authors wrote. “There is still a need for both merchants and providers to incorporate features that make it worthwhile for consumers on the fence to leave their physical wallet in their pocket and move to digital wallets. And when they do, like Power Users, they will have a hard time leaving their homes without their digital wallet on their smartphone.”
As consumers become more comfortable with mobile transactions and digital currencies, we can expect the usefulness and appeal of digital wallets to grow.
