Miles to Go Before It Improves…

air miles

Via your classmate Victor:

Air Miles has been in the news because it attempted to implement a policy in which loyalty points would expire after a certain period of time. Rather that gaining acceptance and increasing redemption rates, Air Miles angered their membership base. Eventually LoyaltyOne, the company that owns and operates customer loyalty programs, decided to cancel the new policy that would place an expiration date on reward miles but only after there was much resistance from customers and regulators. Not only did LoyaltyOne receive complaints about the new policy, they received feedback about extremely long wait times for customer service and regulation had to be put in place to ban the expiry of points in Ontario.

In an attempt to rebuild their brand equity and establish credibility amongst their user base, Air Miles is attempting to develop new points of differentiation by improving its customer service and expanding its reward offerings to non-elite members. Despite their best efforts, it appears as though consumers’ perception of the Air Miles brand has been severely tarnished. A customer may now perceive this brand to be less trustworthy, manipulative and unreliable. Even in LoyaltyOne’s attempts to rectify their damaged brand image, there was still consumer disapproval. If a potential customer is deciding which loyalty program to register, it will be difficult for Air Miles to establish itself as a better choice compared to the competition.

The brand now has a reputation of not being responsive to customer needs and having inadequate customer service. This signals to consumers that Air Miles is not dedicated to their needs and if a situation arises requiring support, Air Miles may not be available or willing to help them. In the future, to improve the damaged Air Miles brand, LoyaltyOne should reposition itself in the minds of its customers by better understanding the impact of its actions prior to launching new changes to their policies and services. Rather than taking a reactive approach and responding only to negative consumer feedback, LoyaltyOne now needs to be proactive in understanding how it can add value to its offerings within the market while improving its brand’s perception.


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