Delta recently sent an email to its Elite passengers telling them they must spend more money to remain in the company’s top-tier loyalty programs. Basic Elite members will need to spend $3,000 a year and fly 25,000 miles, but reaching Diamond status will require spending $15,000 on airfare and flying with Delta for at least 125,000 miles. The changes come months after the company decided to move away from a miles-based loyalty program to a dollar-based one, to encourage pricier, last minute buys instead of cheap tickets booked in advance.
Airline loyalty programs have grown by 34% from 277 to 371, and as loyalty programs proliferate brands are looking to distinguish theirs. The graph below from L2’s Insight Report on Loyalty Programs shows that all mass and luxury brands and almost all aspirational brands have transactional loyalty programs that base points on purchases rather activities. The report mentions that the penetration of transactional loyalty program is inverse to the price point of the retailer, which signals the pressure from thin margins, high fixed cost and price competition. Sounds like the airline industry, and experts predict others such as United will follow Delta’s lead.
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