Details around the new Allegiant Allways Rewards program started to trickle out last month. That turned into a steady flow of information during the company’s earnings call two weeks ago.As the program officially launches tomorrow, the company is now sharing all the goods. And, as promised, the program aims to dramatically simplify the concept of loyalty, while also proving attractive to the carrier’s ever growing base of Millennial and Gen Z customers.
It is right for our customers. It is right for the ULCC models. But also, in a broader sense, we think the utility and ability to to use what you earn in any amount is better than waiting to some day hit some threshold, a “some day” that for many will never come. – Chief Marketing Officer Scott DeAngelo
The new program is, unsurprisingly, revenue-based. That helps keep the concept simple, both for the members and the airline. And while it may preclude the overwater bungalow or luxury airline suite aspirational rewards that legacy programs thrive on, Chief Marketing Officer Scott DeAngelo has a different view on what loyalty represents and how it should be executed. “The notion that you’re earning currency and can use it in any amount, at any time, for anything that is being sold really does seem to be where we’re most programs are going.”
Allegiant looked to the retail sector and other industries rather than modeling the program on other travel rewards offers. And instead of holding out for those major reward targets DeAngelo believes that frequent, smaller redemptions will be key to the success of Allways:
We want you to use points early and often. Because we know the more you benefit from it, the more engaged you get. And then we we’ve achieved that level of repeat behavior that that we’re looking for.
So, how does Allegiant plan to drive more repeat behavior and larger transactions through the new Allways Rewards program? Here are some of the key concepts as explained by DeAngelo.
Spend the money, bank the points
Points in the Allways Rewards program are earned by the person spending the money, not the traveler. This instantly creates (or forces, depending on your point of view) a family pooling option within the program. DeAngelo also acknowledges that in some cases that might not be ideal. Friends traveling together and sharing a room might book on a single reservation, for example. Eventually the program will allow those points to be split. But, to start, money talks.
Earn on EVERYTHING
Allways Rewards points will be earned on EVERYTHING sold at the allegiant.com site. Today that’s generally just travel. But by the end of the year the company expects to be able to sell concert tickets thanks to its partnership with LiveNation and Ticketmaster. Or for events at Allegiant Stadium in Las Vegas.
As DeAngelo sees it, customers will buy those tickets – maybe even for a local show – using its site. And once they have the points, the other offerings become compelling:
The ability to earn and burn on things that don’t involve air travel or even a hotel or rental car are great ways to introduce you to allegiant.com, to build that repetitive behavior of going to the site. And then I sure like my chances when it comes time to book travel, that you’re going to come at least check out allegiant.com for air, hotel, rentals and the rest of your trip needs.
Spend more, earn more
Earning in the program is very simple: Spend a dollar, get a point. But Allegiant can also use the program to encourage larger transactions. To that end, any transaction over $500 at the site earns double points.
Given the company’s typically low base airfares, DeAngelo explains, getting to that threshold “will require the attachment of a hotel, a rental car, or in the future, an NFL game at Allegiant stadium indoor, or a live event with LiveNation or a Ticketmaster concert.” Those higher margin items allow the company to hand out more points and still meet the marketing program budget goals.
DeAngelo is also clear, however, that those margin differences should not matter to consumers. And by keeping the earning rates steady regardless of product purchased (unlike the new FreeSpirit program that bonuses ancillary offerings), he expects to avoid confusion while still driving the bigger value purchases.
Looking back to attract future bookings
Allegiant has plenty of loyal customers today, even without a points program in place. DeAngelo says the customer database tops 10 million records, all of whom will be enrolled in the program on day one. About about a half million of those are what the company considers frequent travelers. And, even though the loyalty program did not exist when they flew, those travelers will be rewarded.
“We’re not going to sit here and say, ‘Too bad, so sad that we didn’t have a program when you flew’,” explains DeAngelo. “We’re going to start them off on day one with some credit in the program. We hope that will make them immediately realize the value of the Allways Rewards program and drive them to book that next that next travel experience.”
Allegiant expects to inject about $5 million in initial program credits as part of this move.
Consistent with the idea that repeat engagement matters most, the program is designed to offer multiple ways to trigger member interest. Moreover, DeAngelo is very, very keen to use promotions, points multipliers, and other triggers to gamify the process. He specifically suggests that the carrier “wants to embrace consumer nature, wants [members] to game it” when it comes to earning points.
This will play out in what he describes as “a very-customer friendly onslaught of value being shown that you can get from this program.”
This does create challenges for the company as it builds the promotions to ensure it gets the math right on the revenue management side of things. DeAngelo is confident it can strike that balance.
Residual value to drive repeat purchases
If the gaming aspect of the program doesn’t drive the repeat interactions Allegiant hopes for, maybe just knowing a small credit is in the account will.
Because the Allways Rewards points can be used on any transaction, in any amount, DeAngelo is banking on people wanting to make sure they aren’t leaving a credit with the airline. Similar to how small residual values on gift cards can trigger a larger transaction at a store, he expects that consumers won’t just let the value go to waste.
“We’re burning a hole in your pocket. And maybe it is only $5or $10. But remember, for many of our clients that could be anywhere from a third to half off if you’re shopping bargains. Really no amount is immaterial.”
So, will it work?
The program is so different from the others in the US market that it could take some time for consumers to get used to it. Or Allegiant will just ride the coat tails of the Apple Card success and its target market of under 40s will instantly understand.
And if it can trigger those repeat purchases through smaller incentives rather than teasing a major reward that remains out of reach, it stands a very good chance.
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