Case Study: Lufthansa Maintains Customer Loyalty by Adding Redemption Option for Award Miles
Mile awards are always considered as a key element of airline’s loyalty program that creates personal ties and interactions with the brand. If miles are unredeemed, it represents the wastage of potentials because customer don’t get most of the advantages of loyalty scheme. And because of this situation, not only passengers lose their trust in getting descent value from the company’s mileage scheme but it also raises questions for them if it is worth of being a member. These unredeemed miles also shows up as a debt and liability in the balance sheet of airline’s frequent flyers program. To enable customers to redeem full miles—especially for the routes having high traffic or flight time—has become a very critical task for airlines.
One such German airline, Lufthansa was in search of the flexible redemption process so that it can encourage its loyalty program members to redeem award miles. At the same time, it was also seeking a way to revalue its customer’s frequent flyer Miles and More accounts. Instead of limiting customers to the remained availability of traditional redemption class, Lufthansa wanted to generate new revenue streams by encouraging customers to burn partial miles on regular revenue flights. The airline was also hoping to motivate its customers to book higher classes for flights having peak demands or high traffic route.
To fulfill the requirements, Lufthansa chose Amadeus’ Miles & Cash Slider solution. This solution is based on an advanced conversion technology (Amadeus Converter Engine) and it allows the conversion of cash fares into miles. It also provides airlines with a platform to build redemption booking experiences for awards customers.
With Miles & Cash Slider solution, Miles & More loyalty members are now able to choose the purchase payment option in the form of miles, cash or in the combination of both. For the purchase, now customers need to follow simple and easy steps. First they login on LH.com by adding their Miles & some credentials, and then select the flight and adjust the number of miles they wish to spend.
The flight fare is now split from standard currency into part cash or part miles with different ranks. Also, loyalty members can spend all collected award miles in a flexible way. Plus, they can earn new mileage after buying every ticket with a Miles and Cash payment. And it is available for all commercial classes and all revenue tickets.
After implementing the solution, Sebastian Riedle, Senior Director of Online Sales for Lufthansa, Swiss and Austrian Airlines said, “With Miles & Cash Slider, we are allowing our customers to spend their miles on whatever flight and whatever date they wish - thus solving one of the key pain-points with our loyalty program. So, in addition to delivering great commercial results it also delivers true customer benefit.’’
Since the Miles & Cash solution’s worldwide roll out within LH.com, Lufthansa’s revenue jumped to about 20€ higher but also the airline has witnessed the constant growth on volumes of miles and cash bookings and miles used. Plus this solution has increased the value of the airline’s loyalty program.
Neha writes articles on sectors including medicine, food, materials, and science & technology. A qualified statistician, she has the ability to observe and analyze the trends in global markets and write compelling articles that help CXOs in decision making. She is a bookworm and loves to read fiction, lifestyle, science and technology. Neha comes with 6 years of experience in content writing and editing that involves blog writing, preparation of study materials and OERs.