Do loyalty programs really work? Lessons from airlines for SMEs

Do loyalty programs really work? Lessons from airlines for SMEs

We all know that it's cheaper to retain an existing customer than to secure a new one, but what often gets ignored is how much extra value retaining customers can bring to a business. Fostering real loyalty translates not just to continued business, but more of it, and often at the expense of your competitors. The organisations that build the best customer loyalty can even find their customers taking on the role of walking advertisement, convincing friends and family that other brands just won't do. 

With all of these benefits, it's easy to see why customer loyalty is so highly valued in the airline industry. Airlines boast some of the most successful customer loyalty programs in the world, but that doesn't mean smaller businesses, regardless of industry, can't learn some truly valuable lessons from these big brands. 

Passengers will fly an airline with which they have the most points, even if it means paying more.

Lessons from airline loyalty programs

So, what makes airline loyalty programs so successful? A recent Forbes article pinpoints the secret as going "beyond rewards," hinting at psychological components that can have a tremendous impact on customer behaviour. This doesn't mean that there aren't rewards for loyal customers, simply that the rewards are slightly different. This is best exemplified by the 'tier' system Qantas and other airlines offer, which rewards frequent flyers with points, and eventually the ability to progress through the tiers, often with a special card that identifies them as a silver, gold or even platinum customer. 

But do customer loyalty programs increase sales? The answer is a resounding yes, and Forbes explains that it's the points themselves that really drive this.

"Human nature kicks in and the 'member' of the loyalty program becomes fixated on earning points. That's why passengers will fly an airline with which they have the most points, even if it means paying more for a ticket. The bottom line is that these customer loyalty programs do work to drive sales and create repeat customers." 

Customer loyalty programs for small businesses

You might be thinking that these sorts of points-based programs only work for big businesses, but you'd actually be wrong!

In fact, one of the most successful airline loyalty plans belongs to the relatively small Alaska Airlines, according to Bloomberg. This isn't because they have the most cash to splash, but because they understand what customers want, providing a wide variety of ways to earn points, from flying to shopping at certain outlets. 

The exact same principal applies to any business, and you can get started on your program today!

Do loyalty programs really work? Lessons from airlines for SMEs