"Customers versus profits". Now there's a headline to grab your attention. But this isn't anything new. The balance between giving customers what they want at a low price and giving them what you have at a high price is as old as commerce itself. It is the backbone of open and free markets in which the vast majority of us do our business.
But look underneath the surface and a secret battle between customers and profits is taking place. A battle they most probably don't even know is going on. A battle which customers are currently loosing. It is going in the reservation and booking systems of the world's airlines, train operators and hotels. It is the battle between Customer Loyalty Programmes and Yield Management Systems.
You are all members of your airline's Frequent Flyer Programme. The more you fly, the more benefits you get. You know the long list of benefits as well as I do. And these benefits do influence customers loyalty much more than you think. But don't think that your loyalty means much to the airline when you book your next flight. There you are at the mercy of the Yield Management System [1], whose only goal is to get the maximum revenue from each seat available on a flight as possible. It doesn't know that you are a Lufthansa Senator nor does it care. Don't think for a minute that being a Senator entitles you to any preferential pricing. Not a chance. You, like all those other customers booking at the same time are entitled to the highest price that the Yield Management System can charge you at that moment in time. Sure you get priority of a non-Senator customer if there is only one seat left, but you probably ended up paying more for the privilege precisely because there was only one seat left.
Yield Management Systems have been around much longer than Frequent Flyer Programmes. And despite all the public attention lavished on customers and their loyalty, it is the Yield Management Systems that really calls the shots. And what goes for airlines now goes for train operators. And for hotels too.
So next time that you go online to book a flight with your favourite airline, don't forget that to the booking system you are just a wallet to be emptied as fast as possible. Loyalty to the customer be damned. It is profits that keep airline flying, and trains running and hotels open too. Or so they think.
What do you think? Do you get short changed by your airline loyalty? Or did you really think your loyalty really mattered?
Post a response and get the conversation going.
Graham Hill
Independent CRM Consultant
Interim CRM Manager