Revenue based loyalty programs

[HUNKY]

As of today all major United States airlines' frequent flyer programs are now revenue based. To maintain elite flyer status annual spending must be above a certain level. As you may know, Holland America awards additional Cruise Day credit based on onboard spending.

 

Do you think any cruise line would go to an entirely revenue based model to reward their frequent cruisers?

 

In the future, do you think you will have to meet certain spending levels every year to maintain high Mariner status?

[DaveOKC]

As of today all major United States airlines' frequent flyer programs are now revenue based. To maintain elite flyer status annual spending must be above a certain level. As you may know, Holland America awards additional Cruise Day credit based on onboard spending.

 

Do you think any cruise line would go to an entirely revenue based model to reward their frequent cruisers?

 

In the future, do you think you will have to meet certain spending levels every year to maintain high Mariner status?

 

While it is difficult to understand what companies are thinking, I do not foresee an annual spending requirement, as many people do not cruise every year. This would cause some major complaints IMO.

[Sequim88]

do you think you will have to meet certain spending levels every year to maintain high Mariner status?

 

This would completely negate any incentive to continue cruising with any line that did this. It can take many years of loyalty to achieve a high status. Eroding that with an annual requirement would definitely be a disincentive. Case in point that past couple years we have not cruised due to job changes and low starting vacation accrual rate. Illness, injury, family issues are all (hopefully temporary) show stoppers for cruise vacations. Losing hard earned status level would be one more blow.

[kazu]

As of today all major United States airlines' frequent flyer programs are now revenue based. To maintain elite flyer status annual spending must be above a certain level. As you may know, Holland America awards additional Cruise Day credit based on onboard spending.

 

Do you think any cruise line would go to an entirely revenue based model to reward their frequent cruisers?

 

In the future, do you think you will have to meet certain spending levels every year to maintain high Mariner status?

 

I might be a little stoopid today (deliberate typo ;)), but HAL isn't HAl already awarding by revenue? Double Mariner points for suites and Mariner points for every $300 in spending.

 

I'm not sure how a further revenue based model would look or if would make sense? It took years (for most of us) to reach our Mariner status. I can't fathom it being taken away if you don't cruise x times within x years.

 

I can imagine the irate letters/emails and threads here if it ever happened.

[seapointer]

To some extent they do that now by giving greater credits for suites, which cost more. The most important thing is not how they determine the "points"given, but how they structure the awards given.

 

We have 4 cruises with both HAL and Celebrity. Frankly, I see most cruise loyalty programs as pretty inconsequential. Unless you do a really large number of cruises, all you get is a special lunch, or small discount on select merchandise, or similar "tokens." Perhaps if I get up to 10 or 12 cruises with HAL or Celebrity, I might feel differently. But that is several years away.

[RJ2002]

I don't see HAL moving toward a 100% revenue based loyalty program. The hybrid model they use now does offer an incentive to those who spend more (i.e., onboard spend, suite bookings), which still recognizing passengers who don't book suites and don't spend a lot onboard.

[Gail & Marty sailing away]

They might go to tier level rewards more you spend higher amount of points

[SilvertoGold]

This would completely negate any incentive to continue cruising with any line that did this. It can take many years of loyalty to achieve a high status. Eroding that with an annual requirement would definitely be a disincentive. Case in point that past couple years we have not cruised due to job changes and low starting vacation accrual rate. Illness, injury, family issues are all (hopefully temporary) show stoppers for cruise vacations. Losing hard earned status level would be one more blow.

 

Excellent post, covering many points.

Thanks for spelling out my thoughts, much better than I would have!

[SilvertoGold]

I might be a little stoopid today (deliberate typo ;)), but HAL isn't HAl already awarding by revenue? Double Mariner points for suites and Mariner points for every $300 in spending.

 

I'm not sure how a further revenue based model would look or if would make sense? It took years (for most of us) to reach our Mariner status. I can't fathom it being taken away if you don't cruise x times within x years.

 

I can imagine the irate letters/emails and threads here if it ever happened.

 

Based on the airline model I guess that would translate to HAL as: if you didn't spend $x in 2016 overall on HAL, then you would not be maintaining your status (5 star) and would not get those rewards in 2017.

 

In thinking about this, I would expect it would be way too complicated for HAL's computers to handle. C-r-a-s-h!

 

Some credit cards loyalty programs work this way. Spend $x in a year and get the "Gold" rewards the following year.

Edited August 1, 2016 by SilvertoGold

[TTFromSommersTown]

As of today all major United States airlines' frequent flyer programs are now revenue based. To maintain elite flyer status annual spending must be above a certain level. As you may know, Holland America awards additional Cruise Day credit based on onboard spending.

 

Do you think any cruise line would go to an entirely revenue based model to reward their frequent cruisers?

 

In the future, do you think you will have to meet certain spending levels every year to maintain high Mariner status?

 

I think that the difference between Airline loyalty programs and Cruise Line ones are that in the main, the Airlines are after the business traveler and therefore their loyalty is worth a lot of money to them in the short term. If the business traveler moves to a new job that no longer requires them travelling on the firms dime, then why would the Airlines wish to give them perks forever.

 

Cruise Lines are after keeping a cruiser happy over many years, they need them to keep coming back but at the same time to a lot of people a cruise is still a very special holliday and not something that they will do multiple times a year or even every other year.

[HUNKY]

Elite hotel status works the same way. Keep spending or your level drops.

[DaveOKC]

I agree that cruise line situations are much different than airlines and hotels, thus they need a different type of loyalty program.

 

As to these annual programs, these can backfire on a company, as when somewhere misses the renewal period for a one time situation (like illness) and afterwards decides that there is no need to be loyal to one chain any longer and tries out different ones.

[SilvertoGold]

I agree that cruise line situations are much different than airlines and hotels, thus they need a different type of loyalty program.

 

As to these annual programs, these can backfire on a company, as when somewhere misses the renewal period for a one time situation (like illness) and afterwards decides that there is no need to be loyal to one chain any longer and tries out different ones.

 

A very good point.

[kazu]

I agree that cruise line situations are much different than airlines and hotels, thus they need a different type of loyalty program.

 

As to these annual programs, these can backfire on a company, as when somewhere misses the renewal period for a one time situation (like illness) and afterwards decides that there is no need to be loyal to one chain any longer and tries out different ones.

 

so agree. Some hotel programmes are flexible. I called the one DH uses. He's not platinum or anything fancy but explained we had a hotel room booked two months after the one year and timing was off. They carried the points :)

 

Cruises are a whole different kettle of fish to me. And I hope it remains so :)

[POA1]

Hotels, airlines, and rental cars have loyalty programs designed for the business traveler. If you are on the road 3 or 4 days a week for half the year, it's easy to be in the top tier of most loyalty schemes. They want you to keep coming back, so the annual renewal makes sense.

 

I don't know of any company that sends people on cruises for 4 - 6 months a year. If there were one, I'd bet they'd be handsomely rewarded.

 

I hope they're hiring. :)

[cbr663]

An interesting and timely topic, considering today we find a thread advising of the increase in speciality dining prices.

 

Customer loyalty programs are in place to increase revenue. It makes no sense to have a rewards program that exists only as a cost centre.

 

The challenge for HAL is how to increase profits when profits are earned by on-board spending. Providing revenue producing amenities to passengers free simply increases costs and adds nothing to the profit side.

 

This is especially so to those passengers who would have previously purchased these amenities at full price anyway. Take those passengers who have a history of dining in specialty restaurants on every cruise. It makes no sense profit wise to suddenly start providing these passengers with a discount.

 

The current practice of deeply discounting speciality dining prices as a reward ultimately affects the quality of the product that is provided. The cruise line offers the product at the net revenue received - not the price that is advertised. So while the PG might be advertised at $29, the actual revenue received after discounting might be $12 per person, and the offering reflects this lower cost.

 

This type of pricing model is very damaging to first time and relatively new passengers who are in essence over paying for the product. Hence, new passengers tend to avoid these areas which make it very difficult for the cruise lines to increase their profits. A sudden increase in pricing in these areas like we are now seeing only compound this problem.

 

If I were in charge of the Mariner Program, I would be seriously considering changing it so there were less discounts for on-board spending and more rewards centred on getting people on board.

 

I realize that many CC posters will not like this. I am thinking that those who sail for the HAL experience would adjust. Those (and apparently from previous threads these are a small number) who sail for the reward program may leave. But new passengers would not be penalized for having never sailed.

[avian777]

... Customer loyalty programs are in place to increase revenue. It makes no sense to have a rewards program that exists only as a cost centre.

 

The challenge for HAL is how to increase profits when profits are earned by on-board spending. Providing revenue producing amenities to passengers free simply increases costs and adds nothing to the profit side.

 

This is especially so to those passengers who would have previously purchased these amenities at full price anyway. Take those passengers who have a history of dining in specialty restaurants on every cruise. It makes no sense profit wise to suddenly start providing these passengers with a discount.

 

...

 

If I were in charge of the Mariner Program, I would be seriously considering changing it so there were less discounts for on-board spending and more rewards centred on getting people on board...

 

How refreshing to see a Post from someone who "gets it"! Your comments are spot on from a business point of view. As a Carnival Corporation shareholder, it's nice to see that some CCers actually understand that HAL's need to be profitable must be part of the Mariner Society rewards calculus.

 

Smooth sailing ...

[SilvertoGold]

 

If I were in charge of the Mariner Program, I would be seriously considering changing it so there were less discounts for on-board spending and more rewards centred on getting people on board.

 

 

Interesting take on the rewards program.

 

What I would like you to address is the "more rewards centered on getting people on board".

 

You are obviously well-versed in business and profit. Do you have a list of suggestions on how HAL could change the program?

[avian777]

... What I would like you to address is the "more rewards centered on getting people on board"... Do you have a list of suggestions on how HAL could change the program?

 

Not cbr663, but IMO the one major change HAL could/should make to get big spenders on board would be to give deep fare discounts (for Suite accommodations only) to Mariners, with the amount of discount increasing along with the Star level. In other words, give the big spenders incentives (discounts) to book cruises instead of giving them high-profit "freebies" that they have demonstrated (by their HAL spending history) a willingness to purchase at full price.

Edited August 2, 2016 by avian777

[blizzardboy]

As of today all major United States airlines' frequent flyer programs are now revenue based. To maintain elite flyer status annual spending must be above a certain level. As you may know, Holland America awards additional Cruise Day credit based on onboard spending.

 

Do you think any cruise line would go to an entirely revenue based model to reward their frequent cruisers?

 

In the future, do you think you will have to meet certain spending levels every year to maintain high Mariner status?

 

HAL gives 2 days Mariner credit for each day in a Suite which would qualify as revenue based in my book.

[blizzardboy]

Spending bonus is limited to number of days of your cruise. If you average $600 a day, you're still only going to get 7 bonus days on a 7 day cruise, not 14.

[SilvertoGold]

Not cbr663, but IMO the one major change HAL could/should make to get big spenders on board would be to give deep fare discounts (for Suite accommodations only) to Mariners, with the amount of discount increasing along with the Star level. In other words, give the big spenders incentives (discounts) to book cruises instead of giving them high-profit "freebies" that they have demonstrated (by their HAL spending history) a willingness to purchase at full price.

 

What happens if you give Mariners a (big) discount on Suites and then they spend next to nothing on board?

What a win-win situation for the pax: cheap suite, minimal spending. HAL loses.

 

Your proposition will work only if a Mariner in a suite spends a lot and that is not a sure thing. As to "suites": there aren't that many SA, SB, SC on the ships, so the aggregate profit to HAL wouldn't add up to much, even if all these cheap suite pax spent like mad.

 

Whereas, the Mariner in a any non-suite gets no discount, no rewards: lose-lose situation that gives no incentive at all.

[geoherb]

We have 4 cruises with both HAL and Celebrity. Frankly, I see most cruise loyalty programs as pretty inconsequential. Unless you do a really large number of cruises, all you get is a special lunch, or small discount on select merchandise, or similar "tokens." Perhaps if I get up to 10 or 12 cruises with HAL or Celebrity, I might feel differently. But that is several years away.

The numbers can add up quickly. We did not take our first Princess cruise until 2001 and reached Elite a couple of years ago, much sooner than I thought we would. I'm sure that in retirement we'll take more HAL cruises and will eventually work our way up to 3* in a few years and maybe even 4* eventually. That's where my favorite benefit--free laundry--starts on HAL.

[avian777]

What happens if you give Mariners a (big) discount on Suites and then they spend next to nothing on board?

What a win-win situation for the pax: cheap suite, minimal spending. HAL loses.

 

Your proposition will work only if a Mariner in a suite spends a lot and that is not a sure thing. As to "suites": there aren't that many SA, SB, SC on the ships, so the aggregate profit to HAL wouldn't add up to much, even if all these cheap suite pax spent like mad.

 

Whereas, the Mariner in a any non-suite gets no discount, no rewards: lose-lose situation that gives no incentive at all.

 

Sure there are lots of details that my summary did not cover, but that's why it's called a "summary". Suffice to say, what I propose is very similar to what gambling casinos (and occasionally even HAL) do for their "High Rollers" - they "comp" them their rooms, meals, food, and sometimes even their air fare, believing that the casino will make enough off their gambling to more than offset the comp costs. (You also have to keep in mind that casinos also have to factor in the cost associated with winnings of the HR.) But based on your keen analysis of this type of incentive program, I guess we'll start a steady stream of casinos filing for bankruptcy.

[cbr663]

What happens if you give Mariners a (big) discount on Suites and then they spend next to nothing on board?

What a win-win situation for the pax: cheap suite, minimal spending. HAL loses.

 

Your proposition will work only if a Mariner in a suite spends a lot and that is not a sure thing. As to "suites": there aren't that many SA, SB, SC on the ships, so the aggregate profit to HAL wouldn't add up to much, even if all these cheap suite pax spent like mad.

 

Whereas, the Mariner in a any non-suite gets no discount, no rewards: lose-lose situation that gives no incentive at all.

 

I think that you are missing the point. You would only offer discounts to those passengers that you know with a high degree of certainty that they would spend a lot on-board based on their previous sailing history.

 

I would go so far as to only offer complimentary upgrades to those passengers in the top-tier of on-board spending. Some would automatically receive Neptune Suites. I would also look at the possibility of providing free cruises to those in the top tier.

 

The goal is to determine the average spending on-board and then segment. Much like the 80/20 rule, you want to spend your most efforts on the 20%.