Let's Talk Loyalty

This is my favourite podcast so far in 2022. Let’s Talk Loyalty host, Paula Thomas, has a powerful conversation with loyalty industry heavyweight Mark Ross-Smith.

While Mark currently heads up StatusMatch.com, a global status management firm that works with some of the worlds largest airline brands, Mark remains one of the top industry thought-leaders and this podcast perfectly summarizes the state of airline loyalty in 2022.

The conversation centers around the value that airline loyalty businesses deliver to the airline, and how new value can be created by the loyalty program in ways that the airline can’t achieve.

Today, airline loyalty businesses are worth 2-3x more on the market than the entire airline group itself. Yet, most airlines treat loyalty like a bolt-on internal division where it’s job is to serve the airline and passengers.

The reality in 2022 is that the exact opposite is true.

Airlines must continue to fly, expand and operate and serve the loyalty business. The loyalty business, which is a quasi-financial services marketing company, derives its value from earning high-margin revenue from lucrative banking and third-party miles agreements.

In the podcast, Mark talks about how airline loyalty businesses are valued on the market like technology or marketing companies (which they are, versus what the airline is), and typical valuations of these types of companies are not unrealistic at 30-40x profit.

Compare that multiple to a well-run airline that, at best, on a good day in a stable market, trades 6-8x profit.

It, therefore, makes more economic sense to shift some of the focus away from trying to become a better airline, and instead put that effort into becoming a better loyalty business. The return on capital investment in airline vs loyalty business is therefore 3x higher in loyalty.

Mark makes the argument that ‘traditional airline’ management should step back, and instead let ‘loyalty management’ step in to take more control of the direction of the group, even suggesting that loyalty should sit on the board of directors given the tremendous value it brings to the group relative to other departments of the airline.

There are other gems in this podcast, like how airlines can track customers that fly with competing airlines – making it one of my favourite podcasts of the year.

The full podcast episode, along with transcript and notes, are available directly at LetsTalkLoyalty.com

Publisher and global speaker on hotel & airline loyalty programs, David is focused on developing strategic solutions for loyalty programs and is passionate about the critical link between loyalty strategy and the customer experience