Qantas: External partnerships crucial to customer loyalty growth

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A ‘coalition loyalty business’ is the driving force behind the high engagement of Qantas Frequent Flyers, according to its CMO.

Presenting at the Ad:Tech 2015 conference, Stephanie Tully, EM of brand and marketing/CMO for Qantas spoke about how the airline has turned a consumer loyalty program into a strong revenue stream with the help of business partners like Woolworths and Optus.

“People often ask us, how does a loyalty program make money? Today, Qantas’ biggest source of revenue for the rewards business is to sell points to our partners,” Tully said.

Qantas business partners, such as the major banks, Woolworths and Optus, purchase Frequent Flyer points as another service to customers as part of its overall rewards strategy, because “they can see that this shifts the way their customers in the market interact with their brands.”

Tully said Qantas refers to this arrangement as a “coalition loyalty business”, which leads to a “multitude effect”, as consumers engage in the program in multiple ways. For example, since being linked with Woolworths’ Everyday Rewards in 2009, the Frequent Flyers membership base has grown by more than 80 per cent.

Off the coalition loyalty strategy, Qantas has also born some new businesses. One example is the Qantas pre-paid travel card, released in 2013 as a joint offering between Qantas and major banks. The card was a means to engage customers by combining finance and travel, while also serving as another Frequent Flyers card.

“We launched it very conservatively because obviously people earning points with their [existing] Qantas credit cards are key to our business,” Tully said. “But we actually saw that people who had Qantas credit cards were starting to spend more with the Qantas cash card as well… it shows the more engaged you get someone, the more likely they are to participate with all partners.”

Qantas also began to set up customer communities such as the Qantas Golf Club and Qantas EpiQure, a wine retailer.

“The Qantas loyalty business as a strategy is really an innovation growth engine. A lot of the growth opportunities we've had are because of the continued investment in those other business,” Tully added.