Analytics of QF LOYALTY

[trippin_the_rift]

The reality of the FF Points world in Australia is that QFF do not need to offer a competitve FF program. If they were based in the USA, then with a FF program such as theirs, their program would be "dead meat".

Quite the opposite I think the QFF model would thrive in USA (ignoring branding issues around the name).
You need to look at QFF purely as a coalition program (that is - they want non-air partners to buy points for their own customers QFF accounts). You can earn QFF points from daily activities in Australia - and if this was rolled out in USA QFF (or a US carrier did similar) they'd generate even higher$ per member.

However I'm thinking about QFF in terms of a loyalty/points generation business and not as a frequent flyer program (where it would crash and burn).

There are essentially 4 major components to QF loyalty as I see it:
The Airline that generates revenue (anyone that flys is a customer)
The Frequent Flyer Program (Air partners)
The Loyalty Program (Generate all revenues from b2b: ie: banks buying points for customers)
The Ancillary program (designed to synergise with other areas of the business and leverage off existing customer base : ie: epiqure, golf club, hooroo etc... these are the fun ones!).


Consumer loyalty to each one of these is different. For example you can be loyal to the airline but not loyal to the FF or loyalty program.
You can spend millions exclusively on first class flights annually yet hold zero status and be treated like a once a year traveller.
You can generate QFF $100,000's in annual revenues through credit card points but still hold Bronze status and be treated like a nobody.
You might never fly yet hold top-tier status with the Airline.

Connecting these major areas of the overall business is what big data is all about and in doing so the profitability of the group significantly increases once they crack the magic code.

 

[AustraliaPoochie]

Does that mean apart from Red Roo there are QF spies on here.
If only eh?

 

[CaptJCool]

I like what tripping_the_rift wrote
QF explicitly reward single entitlement flying regardless of who's paying. So if you take along your family and you pay, there's no reward for that. If your business pays you get the rewards. I'd like to see what their post employment retention rate looks like ?
QF MAY implicitly reward your 'personal' spend on yourself and family members directly on 'their' product. At least with the EK coalition they give out their credits but only on their codeshare flight number. And if you are wanting lowest price you wouldn't necessarily book their codeshare especially if you're paying for J or F but I haven't found any EK OFFERINGS that combine QF metal long-haul with EK flights only with QF domestic connections)
connected loyalty doesn't mean QF REWARD you for your spend at Woolies or Optus or .... However depending on how you look at it you could argue that using reward points on "free J or F" is a form of delayed reward for loyalty because it's a largish discount on what you'd need to spend if you paid in full.
As example. 4-6 paid J or F trips results in one free one. (Add credit card payment points + cabin bonus + status level bonus + loyalty bonus + actual flight zone points "based on simpler & cheaper booking class code").
So the idea is as a consumer is to pay the least to receive the highest value. Other people's money.....or if it's your own you definitely want to pay less to receive more. Investment is all about spending some to make a lot more

So how you manoeuvre the mix of status credits v points earn ....


Well that's a discussion for another time but there's only 4 options
so will u buy anyway or buy if we make you an offer ( are you a viewer or buyer)

1. high credits and high points - fly QF Longhaul J or F
Sure Things but split into personal commitment for their lifetime, or if dependant on employment committed while the boss is paying (OP$) and the level of personally paid flights OR accumulated points (see 4) would show if theirs a likely use-by date (risk of defection) or not.)

2. high credits and low points
(eg USA STATUS RUNS you get the credits but not necessarily the FF POINTS (DIYs or SLeeping Dogs))

3. low credits and low points - fly elsewhere or don't fly and buy elsewhere
(Lost Causes - these people can't afford it or rusted onto another brand - they buy Ford but never Holden they buy Coke but never Pepsi)

4. low credits and high points - fly elsewhere or don't fly but do buy with QF coalition partners
(I'm not sure if flying QR or CX would go in this category ? Persuadables to swap to our brand ?
use accumulated points to fly QF)

That's the power of big data
attain, maintain, retain, sustain, re-gain, breakage, conversion short-term, long-term
build confidence and commitment especially amongst those in business flying on OP$ (other peoples money) because once they stop working for QF COMMITTED EMPLOYERS.they do want you to "come fly with us" and spend your own money but remember when it's $ out of your personal cash people often take quite a different view.

knowing their strategy helps you as an informed consumer to work out your strategy.
Trouble is they want you to spend more to receive a certain value while you want to spend less to receive that same certain value (since all Business class or Economy class seats receive the same amenities even if the pricing can be quite different)

never confuse price and value - they aren't the same - price is the $ you pay, value is what you receive

 

[amaroo]

Interesting topic/posts.

QF explicitly reward single entitlement flying regardless of who's paying. So if you take along your family and you pay, there's no reward for that. If your business pays you get the rewards. I'd like to see what their post employment retention rate looks like ?

IMO QF use family flying as mechanism to capture members at a young age. Dishing out membership cards/luggage tags/status/points/LT SC is all part of the longterm play to entrench behaviour from the first flight.

 

[CaptJCool]

ah 56 minutes ago the Fin Review ran this piece as reported on msn.com

Qantas invests in new technology to maximise its ticket prices
looks like loyalty is going to become costly...the airline moves to deploy new systems to maximise revenue by calculating the most it can charge each customer for a plane ticket.

The seat pricing system, which is being acquired from a specialist supplier called PROS, is used to assess numerous variables in an individual ticket purchase, such as a customer's broader travel plans, whether they are likely to book further trips in a journey, how many seats are spare on a particular flight and what rival airlines are charging....

 

[Mr_Orange]

ah 56 minutes ago the Fin Review ran this piece as reported on msn.com

Qantas invests in new technology to maximise its ticket prices
looks like loyalty is going to become costly...the airline moves to deploy new systems to maximise revenue by calculating the most it can charge each customer for a plane ticket.

The seat pricing system, which is being acquired from a specialist supplier called PROS, is used to assess numerous variables in an individual ticket purchase, such as a customer's broader travel plans, whether they are likely to book further trips in a journey, how many seats are spare on a particular flight and what rival airlines are charging....

Doesn't Qantas already maximise its ticket prices by being much more expensive than just about all of its rivals?

 

[wooley]

ah 56 minutes ago the Fin Review ran this piece as reported on msn.com

Qantas invests in new technology to maximise its ticket prices
looks like loyalty is going to become costly...the airline moves to deploy new systems to maximise revenue by calculating the most it can charge each customer for a plane ticket.

The seat pricing system, which is being acquired from a specialist supplier called PROS, is used to assess numerous variables in an individual ticket purchase, such as a customer's broader travel plans, whether they are likely to book further trips in a journey, how many seats are spare on a particular flight and what rival airlines are charging....

They don't do this already!?

 

[MEL_Traveller]

ah 56 minutes ago the Fin Review ran this piece as reported on msn.com

Qantas invests in new technology to maximise its ticket prices
looks like loyalty is going to become costly...the airline moves to deploy new systems to maximise revenue by calculating the most it can charge each customer for a plane ticket.

The seat pricing system, which is being acquired from a specialist supplier called PROS, is used to assess numerous variables in an individual ticket purchase, such as a customer's broader travel plans, whether they are likely to book further trips in a journey, how many seats are spare on a particular flight and what rival airlines are charging....

I guess the question is how passengers can best manage the system to make sure they don't pay any more than need be?

Does it mean booking 'anonymously' and then adding your FF number later - so the system has no idea whether you are likely to add future journeys? Or is the system not going to drill down to that level (although it does appear to be looking at individual travel patterns)?

'Whether they are likely to book further trips in a journey'... what does that mean? Is it trying to say they want to stamp out nested and throw-away ticketing?

 

[michaele]

I guess the question is how passengers can best manage the system to make sure they don't pay any more than need be?

Does it mean booking 'anonymously' and then adding your FF number later - so the system has no idea whether you are likely to add future journeys? Or is the system not going to drill down to that level (although it does appear to be looking at individual travel patterns)?

'Whether they are likely to book further trips in a journey'... what does that mean? Is it trying to say they want to stamp out nested and throw-away ticketing?

Or conversely, if they know competitors pricing on a specific day, and they see FF123 log in and search for flights but not book on that day, maybe consider competing?

While in my line of work I rarely suggest discounting as a form of achieving long term profitability, there may be some % of people who you can get their business by lowering the price a small amount. The important thing to remember is to not drop it for everyone - particularly those who are willing to pay your full price to maximise profit.

That logic is the reason last minute business class tickets (particularly on highly corporate routes) are hardly ever discounted, even for a perishable good (eg airline tickets).

 

[BD1959]

So, the proof of the pudding etc etc.

From the article:

"Whereas cloud has typically been lauded for the cost savings associated with running technology on the infrastructure of an external provider, Mr Hennekens said the powerful systems were increasingly aiding in crucial decisions,


For example, when Qantas decided to add flights to Vancouver during winter months, it was extensive modelling of numerous factors including demand, weather patterns and fuel burn rates, which drove the airline's decision-making.

"The process of working through that, including all the simulation and analysis that goes with it used to take us two or three months, but by using cloud computing we have been able to bring that down to just hours, Mr Hennekens said.

So there you have it. The airframe decision, timing and fares of the soon to be resurrected PER-SIN was most probably the result of a $2b investment in cloud computing - so it must be right and all the armchair critics will all be proven wrong.

Long Live the Algorithm!!

Regards,

BD

 

[trippin_the_rift]

This is similar to how hotels adjust pricing - they look at what competing hotels in the area are Charging and adjust rates accordingly.

There is an analytics company out there that looks at how much an individual passenger pays for a flight/route over time (pax xx pays $15k to Europe vs pax xb never pying more than $10k for the same route) I wonder how long til a FF program snaps that up and we see custom pricing for everyone based on what they think you will pay rather than set pricing.

 

[michaele]

The problem with that is what happens when a high paying, valued customer sees they were charged $20k instead of $10k for their F SYD-LAX flight, all because they are rich/QF thought they'd pay more?

I know you should always think that if you were happy at the time to pay $x, you cant complain when its cheaper.. however the average consumer doesn't see it that way. They will feel they were 'had'.

That being said.. maximise the profit you can make off each customer

 

[trippin_the_rift]

The problem with that is what happens when a high paying, valued customer sees they were charged $20k instead of $10k for their F SYD-LAX flight, all because they are rich/QF thought they'd pay more?

I know you should always think that if you were happy at the time to pay $x, you cant complain when its cheaper.. however the average consumer doesn't see it that way. They will feel they were 'had'.

That being said.. maximise the profit you can make off each customer

It also works the other way. A customer that only buys $89 red e deals won't be pushed hard into a $489 fully flexible and the price is likely to be lower or offer some extra benefit the customer may see as valuable.

Hotels, car rental, insurance and retailers do this all the time but you've probably never noticed. It's smart and makes $sense$

 

[moa999]

This is similar to how hotels adjust pricing - they look at what competing hotels in the area are Charging and adjust rates accordingly.

There is an analytics company out there that looks at how much an individual passenger pays for a flight/route over time (pax xx pays $15k to Europe vs pax xb never pying more than $10k for the same route) I wonder how long til a FF program snaps that up and we see custom pricing for everyone based on what they think you will pay rather than set pricing.

While that is possibly the case - it would suddenly mean then say for a 'perceived loyal flyer' that qantas.com is pricing higher than a similar search on zuji/webjet etc...
Start pricing like this and all of a sudden people will stop booking on qantas.com (which ultimately costs them more thru commissions etc)

I think it more means that we will say more rapid shifts in fare availability on a given date or time, with the same fare being offered to all pax.

 

[MEL_Traveller]

It also works the other way. A customer that only buys $89 red e deals won't be pushed hard into a $489 fully flexible and the price is likely to be lower or offer some extra benefit the customer may see as valuable.

bring it on!!! based on my spend with Qantas they'll actually be offering to pay me to just to fly!

 

[Supersonic Swinger]

How would that system of pricing sit with this?

Price Promise | Qantas
"If, on the same day after you purchase (or, in the case of cars, book) any of these products at qantas.com, and you find that same identical product available to purchase on any Australian website for a lower publicly available price, we'll match it."

Or do they think they've hoodwinked enough FF members that they'll log in and book without checking?

 

[wooley]

How would that system of pricing sit with this?

Price Promise | Qantas
"If, on the same day after you purchase (or, in the case of cars, book) any of these products at qantas.com, and you find that same identical product available to purchase on any Australian website for a lower publicly available price, we'll match it."

Or do they think they've hoodwinked enough FF members that they'll log in and book without checking?

Personally, I've never bothered to check... Do people really have enough time to do this? Haha