Qantas invests $25m in customer loyalty program overhaul

Airline says the changes to its Frequent Flyer membership program are the biggest in its 32-year history and aimed at retaining value in the face of a rapidly expanded offering

Qantas will offer more than 1 million extra rewards seats, a new lifetime qualification and tiered Points Club for non-flying spenders as part of a $25 million investment into its Frequent Flyer loyalty program.

The ASX-listed airline said changes announced today to its customer loyalty program represent the biggest overhaul in its 32-year history and are about shaking up the way members are recognised and rewarded.

Among the new offerings, which will be rolled out over the 12 months, are 1 million additional rewards seats available annually on Qantas and new partner airlines, as well as up to a 10 per cent reduction in the number of points required for international economy Classic Rewards seats.

Qantas is also cutting back additional costs associated with flights booked with points, which it says will bring down return flight costs by an average of $200. At the same time, the airline is hiking up the points required for upgrades in premium cabins.

Another key change is a new tiered Points Club program, aimed at better rewarding members who earn the majority of their points off a plane and on non-flight transactions. Notably, 35 per cent of all credit card transactions in Australia are made on a Qantas or Qantas Frequent Flyer co-branded credit card.

Called ‘Points Club’, the initiative includes two tiers, with entry gained based on a member passing an annual points-earned criteria of 150,000 points earnt on the ground. Due to launch later this year, the Points Club will provide access to member-exclusive offers and discounts across Qantas as its partners.

Qantas is also introducing a new Lifetime Platinum Status, a means by which of recognising its most loyal flyers over and above existing Lifetime Gold and Silver tiers. To get there, members will need to accrue 75,000 status credits. The new Lifetime tier will be introduced in September.

Qantas Group CEO, Alan Joyce, said the ambition is to strengthen the value for its 12.7 million Frequent Flyer members. The group expects the $25m invested into the program will be paid back through stronger engagement with the loyalty offering.

“The Qantas Frequent Flyer program has always been about rewarding customers for their loyalty. These changes are about making it easier for members to access those rewards and help to keep them highly engaged, which in turn is good news for our business as whole,” he said.

“We know the majority of our members want to use their points to take a dream trip overseas, so we are adding more reward seats including First, business and Premium Economy, to places like London, Los Angeles, Tokyo and Singapore as well as slashing carrier charges.”

Joyce justified the increase in points required for business class seats on all flights, noting it was the first increase in 15 years and based on product improvements.

Qantas Loyalty CEO, Olivia Wirth, said extensive research into the habits and behaviours of loyalty program members informed the latest changes.

“There’s a lot about the Qantas Frequent Flyer program that our members tell us they love. But there are also areas of the program that have increasingly come under pressure as a result of rapid expansion,” she commented.

Over recent years, Qantas has extended out from its core Frequent Flyer offering through a host of adjunct programs such as

“What we’re announcing today is all about investing more into the heart of our program, the member experience.”

Over recent years, Qantas has extended the reach of its loyalty program platform, launching new offerings like the Acquire program for small and media businesses, as well as Qantas Golf Club. It’s also now boasts of more than 300 affiliate partners, as well as a growing ecommerce portal.

“Australians love earning Qantas Points and that momentum has seen us expand our number of retail partners and extend into new areas like financial services and insurance. The result is that people have lots of opportunities to earn points, so this overhaul is about making sure they have more opportunities to use them,” Joyce added.

Commenting on the overhaul, customer loyalty consultant, Adam Posner, noted valuable and substantial changes in response to many of the pain points members have been experiencing, such as accessing rewards seats.

“It’s fascinating to see that they are now overtly rewarding ‘frequent buyers’ in addition to ‘frequent flyers’ with the introduction of their new ‘Points Club’,” the CEO and founder of Directivity and The Point of Loyalty author told CMO. “This is brings to life a visible recognition of where many members earn points - on transactions not travel.   

“It will also motivate members to spend more with credit cards linked to Qantas Frequent Flyer and if you have a QFF credit card, I am sure that means more revenue.”   

Posner rated the changes looking from the outside in as “a solid revamp”.  

“With 12.7 million members and Australia’s second currency, there are sure to be a fair few delighted members,” he added. 

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia. 

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