Loyalty in Turbulence: Delta’s Loyalty Gamble and the Risk of Losing Fans
Delta’s recent change to their Skymiles program is a case study in how they enraged their most loyal fans while simultaneously devaluing the benefits of flying with the airline. For years they have maintained a competitive edge with both on-time arrival and customer experience, fostering robust connections with its most dedicated patrons, creating a loyal fan base. However, recent alterations to the SkyMiles loyalty program and Sky Club access, long cherished by these very customers, pose a significant challenge to the resilience of these relationships.
Just this morning as we are about to send this to your inbox, Delta CEO announced that they have gone too far and will be reworking the program again. While they might now be listening to their fans, the question still looms: how will these changes and the gaff they made, impact the loyalty SkyMiles members show the airline going forward?
Our 10,000 foot view of how we would have approached a big change to a loyalty program would have been too:
- Grandfathered in the most loyal members and rolled-out new terms for those who don’t have the status or are recent sign ups.
- Avoid using money spent as a metric for loyalty. It will always service the most fortunate people who aren’t necessarily your biggest and most loyal fans. Loyalty and brand advocacy, important aspects of being a fan, are metrics you can’t measure from looking at credit card spending which the new program encourages.
- Update the rules for co-branded credit card users who rely on credit cards for lounge access and are not regular flyers with the airline. It’s understandable for the need to change lounge rules when the service and experience is suffering, but replace it with other perks and offers frequent travelers may want.
- Make program changes easy to understand and easily available across all of the places your fans show up, not just a single email or news articles pumped out by a disingenuous PR team.
- Show empathy to your fans who may be affected by changes. Their customers and fans are more savvy to these changes than Delta gave them credit for.
Delta Shifted Their Loyalty Metrics From Flying To Spending, Benefiting A Small Few Who May Not Be Your Biggest Fans.
This change has left passengers frustrated because of the loss of their hard-earned airline status, particularly amidst the challenges of crowded flights, constant delays, and limited lounge access. Delta’s elite flyers, who achieve Diamond, Platinum, Gold, or Silver Medallion status, enjoy perks like complimentary upgrades, Sky Lounge access, priority check-in, waived baggage fees, and the ability to roll over Medallion Qualifying Miles. So obtaining Silver status has now doubled from a direct ticket spend of $3,000 to $6,000, while the requirement for Diamond status is increasing by 75%, from $20,000 to $35,000 on direct ticket spend.
These changes mostly affect the middle class because the requirements Amex Delta Card holders need to spend on their credit cards to earn status now requires a spend higher than middle class salaries. Earning Gold status will require $120K-240K in spending, in addition to a premium card’s annual fee, and in return, fliers will get the occasional last minute space available upgrade to extra legroom to premium economy seating, and a first class upgrade when it’s available, which is not often now that 74% of domestic First Class seats are booked at full fares. Earning Delta SkyMiles Diamond status will require a minimum $350K in spending, in addition to a premium card’s annual fee, earning them a chance for an upgrade some percentage of the time, and… well, what else, really?
Edward Pizzarello, a writer from The Points Guy, recently quoted some of the reactions he saw online. Damon Jacobs has a 21-year tenure as a Delta SkyMiles member and has achieved Platinum Medallion status for the previous eight years. He said, “Delta may encourage us to ‘connect the world,’ but their recent decisions are instructing us to disconnect from their airline. They have dismembered their loyalty program in a way that makes affiliation essentially useless. No longer will our flight miles be counted toward rewards … That renders their tier system, and my 21 years of membership, irrelevant. It’s a slap in the face to those of us who have loyally and enthusiastically supported Delta over the years. No more.”
Is it all about the money? Delta’s loyalty program and lounge access changes seem entirely focused on getting people to spend more on American Express credit cards instead of flying the airline. Per WSJ, reps for Delta said they expect to earn $6.5 billion from its AMEX credit card agreement in 2023, and hopes to grow that by roughly 50%, to $10 billion per year, by 2028.
Could These Changes Have The Potential To Decrease Spending On Co-Branded Credit Cards?
Delta’s changes dissuade loyalty, as attaining status or meeting credit card spending requirements seems unachievable for many customers and they may give up on using their co-branded cards altogether. Basic math tells us that shifting those purchases to cash back cards or other airlines will create more value for customers.
Clay W Cone, posted online that, “We have been loyal Delta frequent fliers for more than 30 years (my wife is a Million Miler). These new rules will make it impossible for us to achieve any kind of meaningful status, thus no ability for upgrades and/or lounge access. Since this is the only reason I use An AMEX card for my business, I will likely cancel the card and search for a more attractive offer (and NOT fly Delta exclusively).”
Some believe Delta’s premium reputation stems from Amex Platinum cardholders getting lounge access on Delta flights. However, more loyal Delta customers may not get consistent lounge access going forward. This is because Delta’s Sky Club access requires meeting a high minimum annual spending threshold, while the Amex Platinum grants lounge access to infrequent Delta flyers. This creates a perplexing incentive structure that undermines true loyalty.
The business road warriors are kinda getting run over here. They don’t necessarily spend $75K+ per year on their Amex Delta credit card, but fly consistently, with reasonably high fares during peak times, so what’s the incentive for their loyalty?
A Disingenuous Roll Out Through Narrow Channels Adds To The Friction
If all of this sounds complicated, it’s because it is. No matter how you break it down, status under the new program is much harder to earn, and to add insult to injury, they have sent just one, single communication to SkyMiles members about these changes via email, describing them as:
“As SkyMiles Membership continues to grow, we are committed to preserving the exclusivity and experience you anticipate and deserve. We have heard your feedback about the complexity of the SkyMiles Program and for the first time since 2015, we are making changes to simplify the way you qualify for Medallion Status while also rewarding you with more ways to earn Status.
We are dedicated to earning and maintaining your trust with every choice we make. We genuinely hope our commitment to a simplified program with more opportunities to earn Status will enhance your unique Member experience.”
Delta’s approach to these changes is honestly tone def. What’s notably missing from the email, is any level of empathy or acknowledgment that not all members may welcome these changes or that the company understands the potential challenges they pose – mainly making it more challenging for some to attain status. Instead, the company appears to arrogantly assume that we should be thrilled by these changes as if their most loyal customers lack any sort of savviness. The program seems to emphasize that these modifications are a response to feedback from SkyMiles members who found the program too complex. In fact, the company goes as far as stating that it hopes to gain our trust with each decision it makes.
This approach falls short when we consider the significant devaluation of the program. It’s evident that Delta has significantly shifted the requirements while progressively offering loyal members less and less value which is a concerning trend that deserves scrutiny.
This is a great opportunity for a competing airline to come in and steal Delta’s loyal customers. Competitors should take a page from Pete’s Coffee who launched a “disloyalty program” where they are accepting loyalty points from other coffee brands in an attempt to create new, loyal fans. We’ll be keeping an eye out on Delta’s earnings over the next couple years to see how this all shakes out.
This opens up the question – how should brands reward their most loyal fans?
- Posted In