The higher a household’s income, the more likely its members are to join frequent flyer programs, according to a new survey published by Parago, a U.S.-based marketing services company.
In addition, most of those members are willing to pay more and endure more inconvenience in order to stick with their favorite airline.
Parago’s “2004/2005 Customer Loyalty Research Report” asked 1,150 consumers a series of questions that identified buying behaviors and overall attitudes toward loyalty programs. From these responses, the company uncovered a number of trends.
High-income households exhibit greater loyalty and are influenced more by loyalty programs, according to the report. Even more influential than age, gender or geography, household income proved to be most indicative of the strength and impact of customer loyalty. High-income households ($125,000 or more per year) are significantly more likely to participate in a customer loyalty program, make purchases based on brand loyalty, and be less impacted by price or discounting.
In total, 94 percent of high-income households said their membership in a loyalty, rewards or frequent customer program had a strong to moderate influence on their purchasing decisions, compared with 78 percent of all consumers overall. Further analysis showed a strong correlation between loyalty and income: As income increases, so does the importance and impact of loyalty programs.
Similarly, active participation in customer loyalty programs increases as household income rises. Among loyalty program members, 92 percent of high-income households are actively enrolled in a frequent flyer program, compared to 51 percent of loyalty program members overall. Hotel program membership showed similar income-dependent results, with 78 percent of high income households enrolled in a hotel frequent guest program (compared to 35 percent of the general population).
Consumers said they would gladly spend more time and money to participate in relevant loyalty programs. Frequent flyer programs are having their intended effect, and American consumers said they value the rewards these programs offer. Consumers are willing to fly at earlier times and pay premium prices for tickets on their frequent flyer airline rather than use an alternative airline.
According to the survey, 93 percent of consumers would be willing to depart one hour earlier than needed for a flight if it meant they could fly on their preferred frequent flyer airline. Moreover, 67 percent said they would pay $25 more (or 5 percent more) for a ticket on their frequent flyer airline rather than use a competitor.
But why are they willing to pay a premium for something as price-competitive as an airline ticket? According to Parago, it depends on whom you ask. Among females who travel mostly for leisure, 74 percent said they participate in the frequent flyer program primarily to receive free miles for travel. However, among most males – and especially those who travel primarily for business – the special treatment (such as upgrades, perks and faster check-ins and boarding) is more important to them than free travel. Among males aged 26-35 who travel mostly for business, 67 percent said the special treatment they receive was more important than free miles. Likewise, 54 percent of males aged 56-65 and 52 percent of males from high-income households said they prefer perks to miles.