retail news in context, analysis with attitude

by Kevin Coupe

The Chicago Tribune has an instructive story about George Lagen, who is suing United Airlines saying that in the aftermath of its merger with Continental Airlines, the company breached its contract with him be reducing his benefits as a million-mile flier.

According to the story, " Lagen claims he spent hundreds of thousands of dollars in becoming a Million Miler, which reaped such benefits as seating upgrades, early boarding privileges and bonus miles credited to his frequent-flier account. Million Milers had lifetime 'premier executive' flying status, the second-highest level.

"Under the new MileagePlus program, Million Milers belong to the third tier, called Premier Gold. 'The result is a severe cut in benefits including fewer bonus miles for flights, a reduced chance of upgrades and lower priorities in boarding and seating assignments,' the suit alleges.

"For example, Million Milers now receive a 50 percent bonus on the miles they fly with United, instead of 100 percent, the suit says."

Now, to be completely honest, I have a dog in this hunt. I also happen to be a United Airlines Million Mile flier ... though I am not so compulsive or obsessive about my status that I noticed any change in treatment. But what intrigues me - and what I think offers lessons to any marketer - is the following passage from the Tribune story:

The suit notes a recent comment by John Rainey, United's new chief financial officer during an investor conference this month. Rainey said some members of the frequent-flier program were "over-entitled," a comment that drew customer ire on frequent-flier message boards.

Whoa. Over-entitled?

I'm not quite sure what that means, but it doesn't sound like music to my ears. I also do not think it is ever what company executives should be saying - in public or private - about the people who are their most loyal customers.

Now, United takes the official position that the lawsuit is "without merit" and that its rewards for Million Milers are both "valuable and highly competitive."

But as was clear in the recent story that made the rounds about how American Airlines is trying to revoke a program that allowed customers to spend hundreds of thousands of dollars to obtain unlimited first-class tickets for life - believing that it was costing them millions of dollars in revenue - there are companies out there that are seeing the whole question of loyalty through a short-term rather than long-term prism.

For me, loyalty programs are mostly a joke. Too many of them have nothing to do with loyalty, and everything to do with offering short-term financial reasons to make immediate purchases. And that's it.

Companies - and this ranges from airlines to supermarkets - that want to engender loyalty ought to be spending their time a) identifying their best customers, and b) figuring out ways to demonstrate the company's loyalty to them.

What United and American are doing is an eye-opener. it is the difference between words and actions.

Perhaps it is not customers who are feeling over-entitled, but these airlines.

It is a virus that in times of economic constriction can spread.
KC's View: