Roman's miles

Flaws of frequent flyer programs. Part two - going extreme.

Richard commented in his blog to my previous post that to make the programs really working they should be more aggressive. Being totally agreed with the point I want to propose a few directions on making practical steps. Since we don’t plan a weighted program but rather brainstorm different ideas I decided to make the cases more extreme and dream about possible directions of the changes.

As Richard pointed out there is a problem of “over-flying” in the business traveling: "I am sure there are lots of people who take extra business trips, with questionable value to the business, in order to win or retain some privileged status with the airline." He claims that a portion of the business travelers takes flights for the sake of miles. Not possessing the numbers and having difficulties to agree on how significant these numbers are I nevertheless have to confess in general with the point. There is a certain conflict of interests between employers (sponsoring the travels) and employees (flying and struggling in the travels). The employers establish travel policies and try to balance between minimizing travel costs and maximizing convenience of travelers. For instance, it’s quite a common practice to allow booking a business flight on international routes longer than 6-7 hours after a few flights flown in coach. The idea behind it is to provide “humane” conditions to frequent fliers and at the same time not to make such an expensive gift to employees flying just a couple of times a year. 

The problem is although a big part of “seldom” fliers is filtered by this rule from taking expensive business it doesn’t repel frequent fliers collecting miles from odd flights (especially in business). This is relevant to odd nights in hotel as well. So the conflict is present – ones want to save money others want to gain from struggling for the job. 

I think the solution may come from the travel industry. They can together via new offering, new services, new models create a win-win-win situation (a win for them, a win for employees, and a win for travelers). As Richard suggested by decoupling the services, mileage calculation, and actual booking they can stimulate new services and new offering from third-party companies. Let me clarify.

If the airline companies remove most of the standard restrictions for changing, returning, replacing tickets and make the system of requesting, quoting, booking much more open and public (not merely to travel agencies but to the fliers as well) they can beget new services. If my company after I got a ticket (according to its travel policy) allows me to play with my itinerary and change the ticket to save money on it we can split the profit between us. Let’s say instead of taking an international business flight (I’m eligible to take) I’m ready to struggle and fly in a cheaper economy class. A profit of 3000 bucks can be split between me and company. Isn’t it a win-win?

Where is the win of the airline companies you’ll ask? Let’s keep dreaming. An offer for flier of taking a longer connection flight instead of a direct one with money or award miles compensation is a direct gain for airline companies. They already do it today for virtual money at the checking counters. Why not to expose this option farther and involve all the customers in advance? Promote postponed or connection flights to better utilize your fleet and divide the dividends with the fliers. Why not to offer new services for booking, requesting, quoting, holding, and replacing tickets to customers? Create new tools generating more options and making fliers’ life more flexible. Allow them to convert virtual dollars to miles, allow them to convert miles to actual dollars, allow them to transfer and borrow miles for free, and allow them to sell and buy miles and tickets on auctions, allow them to make a mile exchange if you will! Provide mechanisms for fliers to play with THEIR itineraries, create monitoring and tracking systems, and make it safe for the business.

I suggest the airline companies (and it’s true in regards to the hotels as well) to stop trying to earn money on award miles and using miles for fictitious attraction. Make it just a means of your business and offer additional flexibility to make your company really attractive. Like money is used by the banks as a means (to use real money) use the miles as virtual money for the travel ecosystem (to attract customers, increase efficiency of your business, and eventually earn real money). Create new affiliate programs around it but let fliers, agencies and third party companies partake in processes and business flows - you’ll be surprised how they all will be creative in building new offers on top of it.

Unfortunately without exposing a number of new services all of the above is only a dream. The positive side of this misfortune is the first company implementing it can get a significant advantage of “the first in the market”.

As I said the post may seem too extreme and it doesn’t propose a concrete business plan. But at the same time I’m sure there is a plenty of opportunities in generating new money and making a big joint win for the travel industry, companies, their employees, and just private travelers. They simply have to change the rules.

Technorati tags: miles, travel, frequent flier

Flaws of frequent flyer programs and sensitivity to customer needs

There is no company today in the tourist business (passenger transportation, hotels, rental cars, credit cards,  and so on) not offering either its own mileage program or being a member of a big affiliate network. I think the reason is simple - typical middle-class road-worriers won't use their service without award miles or points. Those companies made a very smart observation many years ago and built new channels of attracting new customers and sustaining customer loyalty. They found that though frequent fliers have some travel policy from the management regulating their choice the choice limits them to yet a few competitors in a niche. Those smart companies found a way to influence on that choice and it was the award points programs.

Hertz vs. Avis, Marriott vs. Hilton, Delta vs. Continental - just a few examples. A traveler's company may restrict him in budget or make a subset of business partners he can choose from but typically there is still a choice. The smart companies from the travel industry understood that the company will pay for tickets, car, and hotel, but it's up to the traveler to choose what particular provider to go every time.

What I found though is that not all of them are executing this idea to really differentiate and attract picky customers rather quite formally just to check a V in their program list.

An example is Hilton and Marriott require you to spend 70 and 75 nights per year to achieve the highest status in their network (diamond and platinum correspondingly). But Hilton allows you to do it in any continuous 12 month span though Marrriott only in a calendar year. A new customer choosing a network in the middle of a year will likely go to Hilton since in Marriot he has missed already half of the qualifying period.

 

There are flaws in almost every program. Hertz doesn't let you use your its miles anywhere but in North America (making collecting internal miles meaningless for international vacations). Delta doesn't let you borrow miles (as Lufthansa for instance does). United doesn't let you transfer miles from account to account that precludes from aggregating miles.

Another very obvious step each program can do (and almost none does) is to offer miles/points as a compensation means. They easily can distinguish frequent fliers/travelers from private ones and offer the former miles as a first option to compensate for any inconvenience. It doesn't make sense for problems with the Internet in a room to offer exclude it from the bill - the less bill the less point the traveler gets.

I'm saying a simple thing. If all the companies are hunting for new customers and increasing existing customer loyalty and have made a huge step for that with the miles/points programs why not to do it right and really attract new customers? Most of travelers still have options. Why not to please them with a program that does what the travelers expect from it and makes them very consistent clients?

Technorati tags: miles, travel, frequent flier

Your current job - "a time to kill, and a time to heal"

Wanted to share with you this time my thoughts about changing your job. It may be as simple as leaving your company and as complex as moving to another department inside your big company (which from your boss' perspective may unfortunately be a similar thing - she looses you). I had numberless conversations with my friends and colleagues being asked to advise on such a question and though in each situation the case was special the overall background and principles were quite the same. Here I want to sum up different driving forces shaping a decision to leave or to stay and share my outlook on it.

1. My boss is a freak - I'm leaving!
   Not as seldom situation as each would like it to be. Sad and demotivating. But I'm far from an idea that the solution is only to part with the boss (as Stalin said "no person - no problem"). Let me rephrase: I think to leave the company is not always the right decision (though to leave the boss might be). My advice is to weight all pros and cons and it may very likely be  that though that boss is a heavy "con" there are many other "pros" yet to stay. Don't let your emotions to rule the decision. Try to find positive elements in the position (or the company as a whole) to stay. Sometimes  boss' position is less "lasting" that it may appear.
2. I know the company and it knows me - I'm staying!
   An opposite emotional driver. People tend to like the current and usually are afraid to change anything. They may have a boring job, bad team, crazy boss, miserable wage, and no prospects but find this last argument to stay. They're afraid of changes and ready to struggle for the sake of insubstantial "comfort". Estimate the overall picture and be honest with yourself. If the job is bad then confess to yourself and seek for another one. You'll build new comfort on the new place.
3. They have free lunch and a gym - I'm leaving!
   Money is important - no question. But it's impractical and even not pragmatic to found the decision solely on the financial aspect. Unless you get a double-salary offer don't count only on money. At the same time if you've been taking this position for a long time, the conditions are bad, and you've got no promotions look at the problem through a wider prism: why don't you get improvements of the conditions? Is it the company situation or your own issue? Maybe you don't get a salary increase but others got fired? Maybe your salary is not fairly high comparing to others in your team and the market? I simply want to warn against a situation when money is the only factor leading to the decision.
4. Here I'm a CTO but there "just" a team leader - I'm staying!
   Be the first among the worst or the last among the best is a hard dilemma. It's akin to the fear of leaving an accustomed team from the above but a bit different. People don't want to loose a title or a salary they "accidentally" got. Either by a pick of demand on the market in the past or by a personal promotion or anyhow else - the idea is they know they don't cost so much on the market today. I'm saying that sometimes having too good conditions is more harm than good: you may be stagnating on your job and temporary financial advantages will bring disenchantment in the future.

The above examples don't cover all possible clauses in a leave-stay verdict but they're representative enough to emphasize the point - don't let one aspect build a decision. Make a complex analysis and look at the entire picture and most importantly - know what you want,  have a long-term strategy and a dream position.  Here are a few criteria to weight pros and cons.

• Do you like and believe in what you're doing (professionally, personally)?
• Does it advance you on your way (what have you achieved in last 3, 6 months, a year)?
• Do you learn from your workmates?
• Do you learn from your boss (would you like to work for him on another position)?
• Is your position challenging (have you failed at all)?
• Does the company appreciate your work?
• Do you respect your colleagues (not if they respect you)?
• Is the company's situation stable (or stable enough to fulfill your family obligations)?

I'd say if you gave a negative answer more than twice start thinking about "killing" your job and if it's two or less you may hopefully still "heal" it.

Technorati tags: career, job, salary