RETAILERS WITH WINGS:

CAN RETAIL AND TRAVEL

PROGRAMMES CO-EXIST?
29.02.12

Sandra Diem

PROPRIETARY STATEMENT
The information contained in this document is confidential and proprietary to Aimia. Aimia
has shared this document with the understanding that it will be held in strict confidence, and
will not be disclosed, duplicated or used in whole or part, without the prior knowledge and
approval of Aimia.

QUESTIONS TO PONDER
Are broad-based frequent flyer programmes attractive to retailers?
Can retail programmes help deliver incremental value to travel companies?
Are retail programmes a threat to travel programmes?
Can travel programmes learn anything from retail programmes in terms
of data mining and CRM?

AIMIA UPDATE
AND CREDENTIALS

A WORLD LEADER IN LOYALTY MANAGEMENT

We design, build and operate some
of the worlds best loyalty
management solutions.
We do this for ourselves
and for some of the worlds
top brands.

A FULL SUITE OF LOYALTY MANAGEMENT SERVICES

We are the only company offering a full suite of loyalty management services
on a worldwide scale.

PROPRIETARY
LOYALTY

LOYALTY
ANALYTICS

COALITION
LOYALTY

MANY OF THE WORLDS LEADING BRANDS

CHOOSE TO WORK WITH US

COALITION LOYALTY

LEVERAGES FULL SUITE OF LOYALTY

SERVICES FOR COALITION PARTNERS

WORD-CLASS,
MULTI-PARTNER
LOYALTY
PROGRAMMES
WITH PROVEN ROI

LAUNCHES GREENFIELD COALITIONS

BUILDS VALUE FOR EXISTING PARTNERS

GUIDES LEGACY PROGRAMMES INTO

STAND-ALONE BUSINESS UNITS AND
COALITIONS

ARE BROAD-BASED
FFPS ATTRACTIVE
TO RETAILERS?

BRAND ASSOCIATION AND HIGH-INCOME MEMBERS

BENEFIT BOTH PARTIES
Retailers benefit from halo effect of the FFP brand
Top-tier members generally fall in HH income bracket and therefore are
attractive to retailers in terms of average transaction frequency (ATF) and
average transaction value (ATV)
Travel remains a strong carrot as a reward offering
Allows retailers to have direct communication access to a premium segment
of customers

10

PROGRAMME POSITIONING DEPENDS ON

THE TARGET AUDIENCE
Best served by:

Frequent travellers
&/or high spenders

Less frequent
travellers and/or
spenders

Infrequent
(leisure) travellers

Travel-based coalition
programme
airlines
hotel/car
financial partners
Travel or Retail based
coalition programme
airlines/hotel/car
financial partners
non-travel partners

Retail coalition
programme
grocery & other retail
petrol
Telco

11

THE FREQUENT FLYER CORE VS.

COALITION OPPORTUNITY
TRADITIONAL FFPS

COALITION OPPORTUNITY

Product and marketing focused on

high-value frequent flyer segment

Increased engagement of infrequent

flyer base from:

Majority of members are infrequent

travellers or earning points through
non-air partners

Increased earning opportunities to

more member spend categories

Lack of earning and redemption for

the majority leads to disengagement
and high inactivity rates
Missing the opportunity to leverage
purchasing power of large infrequent
flyer base

Increased reward opportunities in

travel and non travel rewards
Increased attainability and flexibility
of rewards both air and non-air
Greater engagement better leverages
purchasing power
Attracts members from other sources
than airline

12

TWO MODELS TO LEVERAGE BENEFITS

OF A COALITION
1. FFP EXPANSION MODEL AIR
CANADA, QANTAS,TAM,
AEROMEXICO
Evolve FFP to a coalition programme
attracting & engaging more members:
A better reward value proposition
More places to earn beyond travel
Attract retail partners
Access to high value demographic
segments
Superiour data analytics, campaign
management

2. CO-EXISTENCE MODEL BA/AIR

MILES UK, IBERIA & TRAVEL
CLUB, LUFTHANSA & PAYBACK
FFP maintains focus on attracting and
maintaining loyalty of frequent travellers
Retail coalition program access broadbased consumer spending categories
with required marketing & analytics
capabilities required in high frequency,
low-value transaction environment
FFP attracts infrequent travellers through
partnership in a major coalition
programme

More communication channels

13

IN A CO-EXISTENCE MODEL HAVING AN EARN & BURN

PARTNERSHIP MAXIMIZES THE VALUE TO AN AIRLINE
Access to a very large
base of engaged
customers
Often representing
50%+ of households

1 3 5 6 6 8 8 8

Airline

Direct communication
channels

FFP Program
CURRENCY

PARTNERS

convert

Superiour data
insights

at customer request

Incremental marketshare
Increased pax revenue
from sale of rewards to
mass program

OAL Alliance

MASS Program

PARTNERS

0 0 0 5 6 8 8 8

Earn
Burn

14

QANTAS FREQUENT FLYER COALITION EXPANSION

THROUGH AUTO CONVERSION PROVIDES CUSTOMER CHOICE

Earn miles on spend

in Woolworths and
other brands
Over 3M cardholders
have linked their
Woolworths and Qantas
Frequent Flyer accounts

15

AEROPLAN MODEL COALITION EXPANSION TO PROVIDE

MORE EARNING OPPORTUNITIES FOR TRAVELLERS & CC
SPENDERS

16

AVIOS MODEL: RETAIL & FFP CO-EXISTENCE

WITH A SINGLE CURRENCY
Avios Retail Program

Combine my Avios

17

MULTIPLUS MODEL EXPANSION BY LEVERAGING

APPEAL OF AIR TRAVEL REWARDS TO A BROAD RANGE
OF CONVERSION PARTNERS
Multiplus allows its members to accrue and redeem points
in several different market segments
Today it consists of more than 160 commercial partners
connecting approximately 9 million members
Members can earn Multiplus points directly or indirectly in more than 12,500
merchant locations and redeem those points for more than 30,000 products and
services
Strategic non-travel partnerships include Ipiranga and Texaco (gas stations),
Livraria Cultura (bookstore), Oi (telecom), Editora Globo (publisher), SKY (payTV), Luigi Bertolli (apparel), Microlins and Wizard (education), Drogaria Rosrio,
Extrafarma and Droga Raia (drugstores), BM&FBOVESPA (stock exchange),
PontoFrio.com (e-commerce), Unicasa (furniture), Icatu Seguros (insurance),
Ofertas.com.br, Groupon (collective buying)

18

EXAMPLE OF A RETAILER BENEFITING FROM A

PARTNERHSHIP WITH A TRAVEL BASED COALITION
Gas Market Share of Aeroplan Members

Market research indicates an increase in Esso

share of Aeroplan customer petrol spend, at
the expense of other retailers

Esso revenue (millions of C$). 3 year CAGR: 28%

Members accumulating at Esso. 3 year CAGR: 33%

19

AIRLINES ALSO BENEFIT FROM BEING ABLE

TO TAP INTO A NEW MARKET SEGMENT
Higher leisure market share from
FFP infrequent flyers

INCREASED
AIRLINE MARKET
SHARE

IMPORTANT
DISTRIBUTION
CHANNEL

Reward availability
locks in leisure share

AC

Westjet

Non-members

23%

50%

New members

39%

15.5%

Infrequent flyer
members

71%

12%

Airlines biggest customer

Guaranteed distribution channel
No marketing or distribution costs

Share gain from

25% who would
book on
another airline if
reward seat not
available

No competitive pressure on
10% -15% of airline RPMs
Opaque pricing channel

20

HOWEVER, A FEW CONSIDERATIONS IN DEVELOPING

RETAIL PARTNERSHIPS
Cost/Value of FFP currency
With smaller margins retailers are often looking to provide .7% - 1.2% back
to customers vs. typical 2% + of an FFP currency
Frequency of communications
Frequent (weekly) shopping behaviour requires the ability for an FFP
to provide frequent communication channels with short lead times
Data insights
FFP must be able to provide deep insights on a retailers customer
including data from outside travel

21

ARE RETAIL
PROGRAMMES A THREAT
TO TRAVEL
PROGRAMMES?
DO THEY HELP
TRAVEL COMPANIES?

ARE RETAIL PROGRAMMES A THREAT TO TRAVEL

PROGRAMMES AND TRAVEL COMPANIES?
Serve a purpose and can be complimentary in nature
Provide access to a large database for acquisition and trial
Revenue generator for travel companies through redemption and
conversion partnerships
Enable airlines and other travel partners to target infrequent travellers
and leisure market
Increases brand presence and can be a USP versus competitors
Can provide sole loyalty solution for a travel company or airline

23

RETAIL PROGRAMMES PROVIDE A REVENUE

OPPORTUNITY FOR AIRLINES: EASYJET EXAMPLE

24

AS WELL AS INCREMENTAL VISIBILITY THROUGH

PROGRAMME COMMUNICATIONS: EASYJET LAUNCH

25

ANOTHER EXAMPLE OF A RETAIL PROGRAMME

PROVIDING A REVENUE OPPORTUNITY FOR AIRLINES

26

SOME AIRLINES PREFER A CONVERSION

RELATIONSHIP WITH RETAIL COALITION PROGRAM

27

CONVERSION GIVES RETAIL PROGRAMS AN EASY

MECHANISM TO OFFER ASPIRATIONAL REWARDS

28

HOWEVER CONVERSION ALONE DOES NOT MAXIMIZE THE

BENEFITS OF A RETAIL PROGRAM PARTNERSHIP: EXPEDIA
RELATIONSHIP WITH NECTAR ILLUSTRATES POTENTIAL

29

BOOKINGS FROM ALMOST A QUARTER OF RESPONDENTS

WOULD NOT HAVE BEEN MADE THROUGH EXPEDIA IF
NECTAR POINTS WERE NOT AVAILABLE
Q14 Had you not been able to collect Nectar points, would you have
still chosen to book through Expedia anyway, or would you have booked through
another company?
Had you not been able to collect
Nectar points

Almost a quarter of respondents were

incremental acquisition i.e. would have
chosen another travel company had
Nectar points not been on offer (slightly
higher among the male respondents)

30

NECTAR SHIFTS CUSTOMER TO HIGHER MARGIN

PRODUCTS AT EXPEDIA
Acquired Nectar collectors are
more likely to book highermargin products for first and
repeat purchases
50% of acquired Nectar
customers have booked hotels
versus 48% of Non-Nectar
customers and 24% have booked
packages versus 18%

31

NECTAR TRAVEL IS NOW BECOMING ONE OF THE

MOST SUCCESSFUL NECTAR CHANNELS FOR EXPEDIA
Nectar Travel informs collectors of all the places
they can collect and spend points on travel
It is supported by 6 eNewsletters per year with
open rates between 3 and 5 times greater than
Expedias standard emails
Up to 50%
open rates

32

IN SUMMARY
Ability for retail and travel programmes to happily co-exist
Retailers gain perceived value from association with programmes targeting
frequent flyers which can translate into higher margin sales, larger basket size
and increased frequency
Travel companies can use retail programmes to tap into leisure market and
infrequent flyers to generate trial, acquisition and an ongoing revenue stream
through the sales of miles or product

33

WHAT CAN TRAVEL

PROGRAMMES LEARN
FROM RETAIL PROGRAMMES
WHEN IT COMES
TO DATA AND CRM?
WHAT WILL THE
FUTURE BRING?

DATA IS THE NEW OIL

Personal data is the new oil

of the Internet and the new
currency of the digital world.
Meglena Kuneva, European Consumer Commissioner

35

SOME PERSPECTIVE

50
47
30
10
95

36

CONNECTING THE DOTS

Foursquare: Knows where you are,
but not what you like
Google: Knows what you want to do,
but not what youve done
Facebook: Knows what you like,
but not what you buy
Television: Knows what ads you see,
but not what you buy

37

LOYALTY MANAGEMENT TODAY

IDENTIFY

UNDERSTAND

INFLUENCE

38

LOYALTY MANAGEMENT TOMORROW

EXTEND
THE LOYALTY
CYCLE

CONNECT
THE DOTS

DELIVER VALUE
AND RELEVANCE

39

RETAILERS INCREASINGLY UNDERSTAND & USE

INTERACTIONS AS DATA POINTS

40

THE LOYALTY CYCLE YESTERDAY

41

THE LOYALTY CYCLE TODAY

42

THE NEW DATA VALUES

TRANSPARENCY
ADDED VALUE
CONTROL
TRUST

43

CONCLUSIONS
Customer data is a
renewable resource
Interactions are becoming
as important as transactions
Connect the dots to
keep building relationships
Deliver relevance, value
and trust
Airlines can have a head start
by capturing multiple customer
interactions during the travel
journey

44

THANK YOU
sandra.diem@aimia.com
evert.deboer@aimia.com