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Loyalty programs - worse than cigarettes or crack cocaine.

juddles

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Hi all,

I would like to open some discussion on the issue of Loyalty programs. These have a massive influence on the modern world, and in particular to people such as we members of this forum. At the moment there is, in my opinion, a timely window to really discuss this topic. The ACCC has just released a scathing opinion of such programs, and although most members within this community are aware in a general sense of the dangers and opportunities, I thought it could help start a fresh debate by highlighting my own thoughts and experiences.

In advance, I welcome and will delight in those members who I have engaged in endless debates - it is normal for people to have differences, but perhaps I am rare in actually respecting and delighting in those contrary positions that come from certain members with whom I hold almost perfectly opposite views. But I do sincerely contemplate and HEAR those views, even if I fight them :)

To set the background of my "journey", I was someone who travelled as a kid due to parents international jobs, but overall we came from humble beginnings. So I had travelled internationally a lot, but as is the case for "normal" people in the 70's and 80's, the sheer fact of international travel was a special thing. I never dreamt of ever doing it in "Business" !!

Turn the clock forward to the early 2000's, and I started to travel internationally for work. It was a small "family" company, not some big multi-national where travel budgets (or anything else) were not essentially out of my own pocket. So pennies counted. I ended up starting what became my norm for many many years - effectively working FIFO from Australia to a workplace in Colombia. Started out in economy class. And it really really HURT. I am 6'7". Imagine the pain of constant travel on super-long haul in Y.

It was in this painful existence that I stumbled across AFF. Suddenly I had found a source of information from real people on how to get better travel. I found myself learning, and devoting much time to study this whole art. Because I needed to. I did not have the economic capacity to just buy the best tickets, but I was truly suffering. I joined QFF, and the Latam and Lifemiles programs. I learnt how to not just get great value tickets in J, but also how to maximise the side benefits of SC and points. This went on and on. I reached a point where I was max elite status with all three programs. I was earning a gazzillion points each year. By burning these points on such things as F EK redemptions I got to truly taste international long haul travel at its finest.

All very very addictive.

But I was also spending over a third of my entire income on flights. Not really so bizarre when you think I was doing an average of 10 return trips Australia-Sth America each year, with many being round the world trips as this was the best deal. For many of those years I was PHYSICALLY IN THE AIR for over a month a year. This is without taking ground time at airports into account. I literally lived on airplanes.

I did this because I had to, but I use this experience here to highlight some of the traps that loyalty programs bring.....

Once I had flown in PE, Y seemed horrid. Once I flew in J, PE seemed mediocre. And of course, once I tasted F long haul, now J was a let down. It got to the point one day when I was about to do a long haul F flight (JFK to DXB on Emirates) that I realized very fundamentally that the whole flying game is making the best out of something that is actually painful. I actually looked forward to that flight, as I knew I would enjoy it. All the trappings. But I also realized that I would be even happier if those 14 hours could be sitting at a bar in a marina somewhere having a nice meal then sleeping on a simple real bed. It awakened me to the reality.

Likewise with lounge access. I could not dream of not having access to the best lounges at any airport now. But it is the same thing, the same progression - it is all about having slightly better experiences in a painful situation. And it is just not real. People pay $20 or $50 dollars to sit in a lounge with a few cans of "free beer". AAARRRGGGHHH!!!

In any case, through my whole life experience I became immersed in frequent flyer programs. "Loyalty". Because you have to as you aspire to improve the hardship of travel. I loved the first day I managed Gold status with QF. It was an amazing thing for me, to be able to enter a lounge. And likewise when I reached WP status, I started to enjoy the "luxury" of F lounges in Australia and in LAX, etc.

I am sure when I express now my disdain or lack of appreciation of these things, many AFF members could perceive that I am somehow an entitled or jaded tosser. I get that. But what I am trying in this extremely lengthy intro is to say that all these things we aspire for in the travelling world, status and lounge access and so forth, are just not really satisfying in the long run.

And so I got to a point where I realised this and sat back and contemplated it all. I must for clarity and openness also include that such high travel is bad for one's self in a physical and family sense. Stealing two comments from other posters, one is "If you enjoy travelling you haven't done it enough". The other is "The higher your flyer status, the lesser is your quality of life". I get and agree with both of these.

I decided to change. Take a new direction in life where I would minimize travel. It is now almost five months since I have set foot on an aircraft - very different from doing 200+ flights / 500,000km a year. And it has been amazing the improvement in my family life, in my health. But this is about loyalty schemes....

I will lose my exalted P1 status at the end of the year. And this will hurt me. And this feeling of hurt is what truly reveals to me the power of loyalty programs. Because when I rationally think of what I will "Lose", it is absolutely trivial! Yes, I got a few upgrades. Very nice as a one-off thing, but at the end of the day, when you consider the sheer cash you have spent with the company, and what extra you get from the upgrade, these things are trifles. Sometimes a CSM will come and say hello, and try to make you feel important. The times that they fail to do this just makes the whole concept worse than zero. And travelling as a pleb in Y, when you "connect" with a good staff member, that then felt twenty times as good as the shallow CSM-greet thing. I will no longer get invited to a special P1 event every couple of years. Yes, they were fun, in that I met fellow travellers, and even met good old AJ at one. But seriously, if this is the absolute "pointy end" of extreme loyalty, then it really doesn't amount to much....

So I finally realized that the whole concept is crap. I think I would have realized much sooner, but due to my main Aust-Sth America route, there was not much competition. I cannot believe now that people who travel on all the other routes would not have jumped ship a long time ago...

I was in a special case where I had sufficient needed travel to be able to justify preferring QF to maintain P1 status. But even then I could have sought alternatives if I was not pressured by the addiction of status and loyalty. I look at others here and the discussions on doing status runs to get or maintain WP. That is a much more sane level than P1, but at the end of the day, is it really worth it?

Maybe it is. If you can work the system to gain benefits at a very low cost. But be aware, all the goal posts are set by the company, who is far more expert in this, and who design everything for their bottom line. If you can beat their system, good for you, but just as someone playing the pokies, it is a game stacked completely in favour of the company. If you manage to get value for money, it is because twenty others lose money. Your small win is at the loss of many others. The house always wins.

I am trying to go the other way - complete freedom. But it is, as per the title of this thread, an incredibly hard process. It seems that all of society now is governed by these loyalty programs. And as such I suffer the conundrum - do I give it all away, or continue thinking that somehow I am more savvy and thus beating the system? I suspect that even when I have thought i was winning, I was not.

Today i was at Southport, on the Gold Coast in SE Queensland. I went to a Woolworths. Got some basics at the supermarket which we would use to make dinner at the holiday apartment we are renting this weekend for a mini family holiday.

I paid with my credit card, but did not enter a Woolies reward thing. Even so, I am sure that somewhere out there in the web, these small details have been seen and recorded and added to my file.

1.- Juddle's is on holiday at the Gold Coast
2.- someone in his family drinks lactose free milk
3.- Juddles bought a "marked-down" potato salad - so is a consumer who will buy discounted things
4.- Juddle's bought both sausages and a vegan bun - so there are both meat eaters and vegans in his family group.

Anyone who does not think this data is not collected is insane in this day and age. When you wand your loyalty card thinking you will gain a few trivial points, do you also realise that you are marrying your entire spend habits and history to your "file"?

We earn points through loyalty things, but at the expense of furnishing info. We make decisions based on loyalty programs, that give us some rewards. But be serious, be sensible. The whole process is more rewarding for the business.

I know all this. But it has still been a struggle to get out of the trap. As someone who has quit smoking, and who can compare the two processes, I think this is actually harder.
 

wandering_fred

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You can't play the game unless you know and understand the "rules".
In any loyalty program I join, I want to be considered the one who gets the most benefits for the least monetary contribution. Especially true since I have had very little corporate support for flying in the last 27 years. And alas before that the loyalty programs didn't exist (Anyone wish to know my PanAm membershp number?)

Grocery stores know I will only consider a visit useful if the "savings" from specials is at least 25% of the paid total.

Happy studying before you start wandering
Fred

PS Likely my last year (ever) as a WP(QFx2) or EXP(AAx3)
 
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Archipelago

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@juddles - nicely written, thoughtful post. Looking forward to seeing the discussion as it unfolds.
Given I am out of Australia, I don't have the current or recent experiences to contribute, but I still follow the Oz loyalty in's and out's regardless
 

Scarlett

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As usual when you're in thoughtful mode Juddles, an excellent post: considered, reasoned and backed up with examples. (are you sure this is on the internet?)

Corporations are playing people, for sure, and many users get only some very minor benefit here and there. This is the basis for the ACCC ranting I believe. However, there are also those of us who partially/mostly understand the game and manipulate it for some more of our own benefit. Or can ignore the more pointless lures and choose freely.

I will however disagree with your title: I'm not likely to rob someone's house to feed the SC's addiction... (but I'll damn sure jump on a mistake fare if I can)
 

drron

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I have had a great run with loyalty schemes over the last 13 years but things are changing as I will be giving up working some time before the end of 2021.
However Bonvoy have got me to consider hotel loyalty programs.I do have Bonvoy LTP but that isn't worth what it had been in the past.It will be a useful back up but I have broken the shackles and now am not limited to the one program.It has been easy to break this addiction.
So on this trip we are spending 19 nights with Bonvoy,15 unaligned,9 IHG and 5 hilton.In the past this would have been 35-40 with SPG.It really has been liberating.

A bit different with airline programs.At present we will still be sticking with OW for probably 2-5 years whilst at least 1 of us will get to OWE but with SQ and Life miles awards as well.Life miles will die out as we use up the points we have as just getting more difficult.SQ will continue to be fed with Amex points.

But juddles using your Woollies reward card makes little difference to what they know about you.I sometimes shop at Woollies in Tasmania and no point using my rewards card but when I get my weekly specials there are the products I have only bought in Tassie.They obviously tie in my Amex number.So if you really want privacy you will have to go back to cash.
 

cove

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Often Mrscove pays cash so she isn’t tracked. I don’t do that at all and cash in my pocket lasts a long time.
I did get a message from Kogan addressed to Cove so yes we are being tracked and watched. The offers of Twisties or equivalent don’t really worry me when they come from Coles or Woolies.
 

trooper

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My only quibble with that (it is an opinion piece largely after all and well and clearly written) is the assumption that "society is governed by these loyalty programs"... I think your (our) experiences might colour our views on just HOW MANY people play these games... or even know or care about such schemes...
 
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Thanks, Juddles, enjoyed reading your thoughts. I think for most punters you are right, the benefits of these schemes are negligible. On the other hand, there are a small number of players who can make the game work in their favour, but it can be very time consuming and one needs to be able to plan months in advance and be flexible. AFF has certainly taught us a few tricks, but unfortunately I often feel like I am just a member of a rebel alliance battling an increasingly sophisticated Dark Side....
 

pauly7

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It’s pretty simple really, you are selling companies (everywhere) data that helps them (and other affiliates) sell better to you.

The ones in the know either accept or reject this and the value of the offer (which can be maximised if you know a few tricks).

The real question is if the ACCC et all stick their noses into this data vacuum cleaner machine dressed up as a ‘loyalty programme’ and decide that it’s not ‘fair’ or ‘unbalanced’ or not ‘transparent’ enough - what will they do to anyone who operates a loyalty programme.... and then what does that mean for the end users.

I suspect for us ‘advanced’ users they will just end up meaning diluted benefits and access in the end to accommodate for the masses.
 

tgh

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The schemes do offer tangible rewards though , it's just that the reality is a long way from the sales pitch.
Harvesting qff "everyday" points costs almost nothing , and over time can deliver a j or F long haul ticket.
Just t'other day when discussing a long haul option with Delta , the ta said but what about the points ( actually ,as a ta that sells roo she said something like you don't want to miss out on qff points though do you ?
My reply was , who cares…. bfod always for me.
 

MEL_Traveller

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I think there's a fundamental difference between chasing status, or saving for a particular flight, and maximising the benefits of a loyalty scheme.

Take the recent 9000 avios per booked flight with Iberia. You didn't even need to take the flight! For a few Euros you had 2 x return business class tickets across the Atlantic. Take Accor's current loyalty offer if you stay 3 x 2 nights you get 6000 bonus points (120 Euros rebate). Accrue those nights when you happen to be in Thailand and you actually make a profit (free accommodation AND they give you money on top). Similar scheme with Hilton a couple years ago, racked up mountains of avios. And there have been countless other promotions over the years (like return first class from Europe to Australia for £260).
 

Forg

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My only quibble with that (it is an opinion piece largely after all and well and clearly written) is the assumption that "society is governed by these loyalty programs"... I think your (our) experiences might colour our views on just HOW MANY people play these games... or even know or care about such schemes...
There are definitely HEAPS of people, go shopping a Colesworths & watch other shoppers, very few people fail to swipe their scheme card ... and they’re the ones that don’t have it linked to their credit card.

And that allows the Colesworths better leveraging for squeezing out the smaller guys, and then upping prices in a particular store once all nearby smaller guys have been shut down. It’s an unpleasant blight on retail prices & (even more so) choices.
 

pauly7

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And that allows the Colesworths better leveraging for squeezing out the smaller guys, and then upping prices in a particular store once all nearby smaller guys have been shut down. It’s an unpleasant blight on retail prices & (even more so) choices
(Luckily) your fears are unfounded as Coles and Woolworths are not able to price by store except in exceptional circumstances and it requires so many approval levels it barely ever happens (I’ve seen it once or twice I think and I work in close proximity to the big retailers).
 

Forg

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When did they stop being able to price by store?
Admittedly it’s probably been at least 5 years since the info I have, but back then they had around 15 pricing levels multiplied by about 20-25 categories. So when they shut the butcher down near a specific store, the meat category would go up a few pricing levels.

Has there been an ACCC action to stop that pricing model?
 

MEL_Traveller

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Has there been an ACCC action to stop that pricing model?
To stop what? Competition? There are laws about predatory pricing and stuff like that.

I suppose there might be cases where a sole operator could raise prices. But many suburbs these days will have a Coles, Woollies, Aldi and IGA in reasonable proximity.
 
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