The old saying goes that loyalty must be earned not bought. Lovely sentiment but one that is unfortunately not generally applicable these days.
Loyalty is a business, make no mistake about it, and one in which the travel industry very much leads the way.
How different it was back in 1987 when Qantas launched its Frequent Flyer rewards program.
It was a straightforward scheme that targeted business travellers, earning them points for flights.
Simple. But loyalty schemes rapidly became complicated – and big business for travel companies, particularly airlines.
Qantas for example made $372 million before tax from its Frequent Flyer program in the year to June 30, 2018, on a profit margin of 24%.
They did this mostly by selling its points to credit card companies and retailers at a healthy profit (which consumers then “earn” when making purchases or signing up).
And as membership grew (Qantas is now claiming almost 12 million Frequent Flyer members) the numbers of hard-core travellers became a tiny minority.
One Member Earns 30 Million Points in a Year
But for many it still came as a surprise today when Qantas Loyalty CEO Olivia Wirth revealed that the biggest points earners in the Qantas Frequent Flyer program are buyers not flyers.
“We started our loyalty program for frequent flyers, but as the number of partners has grown it’s actually frequent buyers who are now earning the most points,” Ms Wirth said.
“The top 1000 points balances are held by members who have maximised their points earn on everyday spend with our partners like Woolworths and Red Energy or by using Qantas Points-earning credit cards.
Wirth, who claims 35% of all credit card spend in Australia is now made on Qantas or Qantas Frequent Flyer co-branded credit cards, says “you can earn points buying wine or buying a car, so the potential for larger balances without flying is huge.”
“In the past 12 months one member earned more than 30 million Qantas Points on credit card spend.
“That’s equivalent of over 100 round the world trips in business class.”
Hey Big Spender, Spend a Little Time (and money) With Me
Which is why Qantas has now launched a new Premier Titanium Mastercard targetting this lucrative demographic.
It doesn’t come cheap with an annual fee of $1200 and benefits including Qantas First Class Lounge access, Status Credits, flight discounts, highest earn rate and 150,000 points on sign up – enough, it claims, for a business class flight from Sydney to London (that is if you can find one).
So who says loyalty can’t be bought? Not Qantas, Australia’s largest travel company, and there’s definitely something to be learned from that.