Inside Information

Inside Information

Virgin America

Brett Billick is the Director of CRM at Virgin America, primarily overseeing the Elevate frequent flyer program, partnership marketing, customer segmentation and consumer insights. Brett has been working at Virgin America since its infancy. The airline was launched in 2007 and he joined the Elevate team in 2008.

In just a few years Elevate has grown to 1.8 million members. The airline currently flies to 14 destinations in the U.S. and Mexico and with 60 planes on order, and new airline redemption partners on the horizon, members of Elevate will soon have more options when they’re ready to spend their points. We recently caught up with Brett at the company’s headquarters near SFO.

InsideFlyer
What’s new with Elevate?

Brett Billick
We are only a few years old now and we have been growing dramatically–our membership base has grown 40 percent year over year. We have added a lot of partnerships in the last 12 months. We just announced one today, but essentially, we have launched 15 direct partnerships over the last 12 months across all categories–hotel, car, lifestyle, mobile categories and airline partnerships so we’ve really been filling out the partnership side of things. Today we just launched Gilt City and Jetsetter as accrual partners which is a little bit in the social commerce space. So we’ve made a lot of improvements on that front as we move into the second phase of the program.

We compete against a lot of airlines in our markets but we’re unique in the way we’ve utilized social media quite a bit and the “Virgin-esque” nature of our launch parties and events like that have really brought a unique value to our members. Whether that is having Elevate members in Dallas when we first launched service there, invited to a launch party with Sir Richard Branson and Willie Nelson or the way we utilize some of our partners with special promotions, it’s been a steady diet of additions to the program.

IF
How do you decide who to partner with when you’re looking for a new partner?

Billick
As a program, we’ve decided to have some traditional partnerships and some non-traditional partnerships. A good example would be in the hotel space. Hilton was our first hotel partnership that we launched, but we have also launched Morgans Hotel Group and Joie de Vivre. Joie de Vivre is getting a more national presence now but has very much been rooted in California. Morgans is a great brand fit for us. We like to find a good brand fit that we feel would benefit our members with the right levels of cache, brand, customer service and things of that nature where it’s unique–they’re not a large partner, but a unique partner.

We always explore these two routes when we think about partnerships. But to put it simply, we want to provide more utility for our members to earn points and to engage with us. We feel our customers are unique, very tech savvy–we call them the creative class–so we will go with some partners that may be a little bit different. A good example is that we were the first airline to earn points by checking in through Facebook Places and foursquare. We found that members who engage with us in that way are highly valuable members and it’s a nice channel in which to engage with us. So we are always looking for innovative partners. Gilt Group, another example, is not a traditional airline partner but knowing our guest space, and what our Elevate members are like, and how passionate they are and how much time they spend on social media, we’ve gone down the path with some partners that are unique … and just a little bit different.

IF
Is there an elite level in the works for Elevate? Anything at all you can tell us about that?

Billick
Certainly, it’s not something we’ve done yet as a program. We are looking at a variety of ways for what the next phase of Elevate will be. Looking at a tier-type program is certainly something that we’re investigating — and we’re beta testing some ideas right now. I can’t yet share with you exactly when it might be or what the plans are, but absolutely, we want to recognize our highest value members. That said, we do it in a variety of ways already. We don’t have a tier program but it’s definitely something that we’re working on and investigating if this is the right thing for us to do–and we’re looking to solicit input of our top flyers to help shape anything we do in that space.

IF
So far, the award schedule features free flights. Do you plan to introduce other awards like hotel stays and merchandise?

Billick
It’s part of our long-term road map to investigate other ways to use points. We have a very generous program. We have no blackout dates, and launched with no blackout dates, so our members have really taken advantage of that aspect of our program. We haven’t been in some of the award availability studies that are out there but our awards are 100 percent available–if you have the points, you can book a ticket. We are looking at possibilities for non-air rewards, but right now, what we are finding is that as our network gets larger–with more leisure destinations like Cancun and Cabo–it’s providing more value for our members. We’re definitely weighing it and looking at the possibility long-term of non-air rewards.

IF
Elevate members can now earn points when flying the other Virgin carriers. When will members be able to redeem points for flights on these airlines?

Billick
Yes, we definitely will allow our members to redeem for flights on Virgin Atlantic and V Australia and Virgin Australia, domestically in Australia. We are in the midst of a system changeover right now, which is public information–we are changing our reservations system to Sabre. That has certainly taken priority for us as an airline but what it will also do is allow more options for us down the road for more ways for our members to redeem their points on other airlines. The Virgin airlines are one of our main priorities–a realistic timing for us is to have awards available on the other Virgin airlines by early next year–I’d like to get that done as soon as possible. But it definitely is in the works and we are firmly committed to it. We have a great relationship with the other Virgin airlines as sister airlines. It’s an important piece for us and will definitely provide good value for our members.

IF
We also heard that Elevate plans to introduce cash plus points awards. Is this true, and if it is, when can members expect them to be introduced?

Billick
We’ve been discussing that possibility but honestly, at this point, it’s not going to happen in the near term. From the beginning, we’ve allowed one-way point redemption and our redemption levels can be very low. We’ve seen our members redeem for as little as 1,800 points for some of our flights. So right now, we already allow the flexibility of booking one way in points and the other way in dollars. For us, this ability isn’t as important as it might be with other carriers where there are set award levels and potentially less availability than what we see for our members. It would be a long-term thing if we were to introduce them.

IF
What’s Elevate’s biggest priority at the moment?

Billick
The biggest priority for us is the airline partnerships with the other Virgin airlines that we talked about–the redemption piece of it. We also just want to provide members with more ways to earn and redeem their points. Other priorities we are working on are some enhancements for the program over the next 12 months for key pieces of our program. We think this will really benefit our membership base, with partners in some cases and just continuing to provide really good offers for our members–whether that’s unique sweepstakes type offers or discount offers or things of that nature for a very engaged membership base.

IF
When the program was created, why did Virgin America go toward a revenue-based, point-based system instead of the typical mileage system?

Billick
We went with a points-based system because we wanted to have an innovative way for our members to earn and redeem points–we really wanted no blackout dates or restrictions on availability and part of doing that was that we needed to have a points-based system, kind of like a retailer type of system, that rewards spend. A business traveler who travels in first class or main cabin select or higher fare classes can redeem for a roundtrip main cabin flight after only a few flights. So it’s a very generous program that we felt meets the needs of our company and our guests.

The earmark has definitely been that people can book when they want and we’re certainly happy with the way the program has grown and we’ve noticed other airlines have adopted this model. So there’s definitely value in this type of program and it allows us to do some innovative and cool things that we want to do as a Virgin company, which we might not have been able to do if we’d started three years ago as a mileage program. It just made a lot of sense for us to launch a points-based system.

One of the things we had to do was to educate people about a points-based system. It’s not a credit model or a mileage model, and after 30 years of mileage programs, we’ve had to educate our members about the value of our type of program. Our membership base is truly engaged and appreciates the program and likes the fact that they can use the points when they want them–it just takes time to build that relationship.

IF
What flight routes are the most popular when Elevate members spend their points?

Billick
Because our network is growing so fast, it tends to change dramatically but we definitely see people redeeming for trips across the country to New York from San Francisco and LA or visa versa. And now that we have added, in the last 12 months, Orlando, Fort Lauderdale, Cancun and Cabo, we really have some true leisure sunny destinations and we’ve definitely seen a shift where people are redeeming for those markets too.

IF
Elevate has seemed to have had a slow start, it was just “earn” for a long time, and now an elite level is not in place. Can you speak to that?

Billick
Yeah, I’d say initially when the airline was first launched, we had to work out the kinks with some of our systems so Elevate didn’t move as fast as we would have liked. We launched our credit card in 2008, we launched the ability to redeem in October 2008, and then we needed to work through some issues with our systems to make sure that everything was 100 percent ready and that took a little bit of time. But once we hit the green light, especially on the partnership side of things, we really escalated and have moved very rapidly to add new partners and to make the program more robust.

Certainly, right now in the midst of a reservations system change there are a lot of projects the company has been looking at that have had to be on hold in some form or fashion because we want to provide a world class, stable reservations system and to lay the ground work for our future growth plans.
We’ve mirrored the airline in some ways as to how we’ve grown–we’ve grown to a lot of cities, about one city over a six to nine month period, and Elevate has grown in a similar pace as we’ve moved along. So, we’re a teenager at this stage.

We’re excited. We have a lot of things that we think members are really going to appreciate over the next six months. We’re going to be doing more promotions, we’re going to be adding even more partnerships, and in the long term, there will be truly valuable benefits added to the program.
An example is that we just launched a triple points promotion for Dallas and Chicago, two of our newest markets, which is the most competitive promotion out there on these routes. There are a lot of things that we will be doing in our new and existing markets that I think members will really be excited about. We’ll keep hitting the gas.

IF
When you were a child, what did you want to be when you grew up?

Billick
Baseball player. And then it was a football player. Yeah, that’s what I would have said when I was growing up. But I was an investment banker and also worked with retailer GAP (at GAP corporate) before I came to Virgin America. I have always loved travel and I think the frequent flyer space is a fascinating area. People are emotional and passionate about it and it’s just a fun, fast-paced place to be–it’s complex and we really enjoy it. With the larger Virgin brand and Virgin America as a company, we always like to make some news and do some things that are out of the ordinary, which is great for our program because it allows us the ability to do that. I can’t imagine working for a more fun brand than this one. I really enjoy it. So, I guess if you asked me that question 10 years ago, I’d say this would be great. But when I was eight … it was different.

IF
Anything more you’d like to say?

Billick
Just stay tuned, and if you’re not a member, join to see what we’re up to and to understand our program. We will be very busy in the next six months.

Swift Exchange

Swift Exchange is setting out to help you use your miles and points. We spoke with Chief Operating Officer, Nancy Gordon, to find out more about this new tool coming soon for frequent travelers. Nancy is responsible for developing and implementing the company’s partner approach, business planning and go-to-market strategy. Earlier in her career, she was Executive Vice President of Consumer Loyalty at Citi where she led core loyalty programs and customer satisfaction efforts. Nancy was the driving force behind the launch of Citi’s enterprise reward program in 2004, ThankYou Rewards Network, managing its design, marketing strategy and development efforts. Before joining Citi, Nancy led account management efforts at Ogilvy & Mather Worldwide Advertising for American Express and Kraft Foods.

InsideFlyer
How did the idea of Swift Exchange come about?

Nancy Gordon
Back in the late 1990s the rapid expansion of frequent flyer, credit card and hospitality reward programs attracted the close attention of Swift Exchange’s founder, Richard Postrel. A prolific inventor with a history of breakthrough innovations in areas such as finance, commerce, technology and the arts and sciences, he quickly surmised that the accumulation of frequent flyer miles and loyalty points was growing exponentially. Postrel’s analysis revealed the structural flaws already materializing in the rewards industry. Namely, that a lack of redemption options, limited availability, expiring miles, insufficient point balances and other issues were already creating substantial obstacles to usage, severely hampering consumers in their efforts to actually use their rewards and derive real value. Based on this assessment, Postrel formulated a vision for an open market for rewards currency in which points and miles from virtually any reward program could be combined and spent just as easily as spending cash.

IF
Can you tell us when the program will debut for everyone and what travelers can expect when it does?

Gordon
Swift Exchange expects its rewards marketplace to be available for consumer use in 2012. Building out an entire operating system for the loyalty market is a huge undertaking that has never before been attempted. Once the program is live, consumers will for the first time have a comprehensive dashboard containing all the reward programs they participate in, the value of each rewards account and the total value of all their reward accounts in aggregate –what we call the consumer’s “Promotional Wallet”. Consumers will be able to immediately shop for virtually any product or service and use points and miles to complete their purchase. Consumers can use points or miles from a single program, combine multiple programs or use a blend of points or miles plus cash/credit. Swift Exchange will revolutionize the reward redemption process and in so doing will align rewards currency utilization and customer expectations in today’s digital age in ways never before achieved.

IF
How will members of frequent flyer programs benefit from using your service, and will there be fees involved?

Gordon
Swift Exchange provides frequent flyers and frequent guests unprecedented utility of their rewards programs and essentially enables them to spend their rewards just as easily as cash. Users of Swift Exchange will combine their points and miles from one program with points and miles from others, significantly enhancing their buying power and accelerating the pace at which they are able to redeem. It will no longer be necessary to top off accounts, transfer miles from one program into another or sit idly by watching points or miles expire. Loyalty program members will finally be able to find true value in the rewards that they’ve diligently worked to accumulate. And there are no fees associated with the use of Swift Exchange.

IF
What types of loyalty programs will Swift Exchange support? (Airline, hotel, credit card, car rental, etc.?)

Gordon
The Swift Exchange platform supports any loyalty program that issues points or miles or another unit of loyalty currency. This includes credit card programs, airline frequent flyer programs, hotel frequent guest programs, car rental programs, retailer or restaurant programs and others that may not have even been created yet. Swift Exchange will operate globally.

IF
You recently released a report with Colloquy called, “Buried Treasure, The 2011 Forecast of U.S. Consumer Loyalty Program Points Value.” Can you give us a few key points that you discovered?

Gordon
As a natural extension of the 2011 Colloquy Loyalty Census, Swift Exchange partnered with Colloquy in a separate collaborative forecasting exercise to determine the value of all the miles and points issued by loyalty marketers on an annual basis in the United States. The findings revealed that the perceived value of rewards issued to consumers annually is $48 billion. Interestingly enough, nearly one-third–a full $15.9 billion–of those rewards earned in a given year end up going unused. The message is clear: while the average American household participates in over 18 loyalty programs, they are not realizing the full value that they have accumulated across all those programs. Unlocking the full value greatly enhances consumer-buying power and provides a jolt to merchants and retailers who have just come out of a tough economic period. In addition, program issuers have an opportunity to further differentiate their programs and make them more valuable in the eyes of consumers.

IF
How does what Swift Exchange offer relate to the findings of the report?

Gordon
The $48 billion figure uncovered by Swift Exchange translates into a material economic force waiting to be unlocked. Swift Exchange offers a way to translate disparate points and miles into a unified form of spending power that can be used globally–a Rosetta Stone for loyalty program dollars that currently lie scattered across multiple programs and systems.

IF
How do you intend to get the message out about Swift Exchange?

Gordon
Swift Exchange is working closely with its strategic partners on the communication plan to customers. We expect social, viral and word-of-mouth marketing efforts to be a large driver of getting the message out. We openly invite all [InsideFlyer] readers who would like to be involved with our product design and/or user testing to contact us at info@swiftexchange.com

IF
How will Swift Exchange differ from sites such as points.com that offer points exchanges?

Gordon
Similar to points.com, Swift Exchange will offer consumers a simple and convenient way of seeing and tracking the programs they belong to. However, Swift Exchange goes well beyond that to let the consumer know the total value they have across all programs or the total value of their Promotional Wallet. In addition, customers will be able to use their combined reward balances immediately across a large variety of goods and services. Consumers will no longer need to transfer points and miles from one program to another program in order to get the reward they want. Consumers will no longer need to sacrifice value or time for the transfer process to complete.

IF
Is there anything else you’d like our readers to know about Swift Exchange?

Gordon
The key to understanding Swift Exchange is realizing that it isn’t merely an enhancement or improvement to the existing system. Swift Exchange completely transforms the existing loyalty ecosystem, unlocking value for all players in the value chain. A win-win-win approach ensures that tangible benefits are realized by all to create a more balanced environment where customers are truly rewarded for the loyalty they demonstrate to their favorite businesses.

IF
And finally, when you were a child, what did you want to be when you grew up?

Gordon
The guidance and advice of my family, mentors and teachers were important guides for me growing up. My earliest recollection is wanting to become a teacher when I grew up. When I look back at my career thus far, it’s been all about marketing, strategy and business development, which seems the farthest thing from teaching. But when I think about teachers who made the greatest impressions on me, it’s because they genuinely enjoyed engaging and enlightening their students. They also had taken the time to develop a firm command of the information they were sharing. They were passionate about the work they were doing and were energized by expanding the boundaries of their students’ minds. And that really describes my attitude to the work I’ve been doing. It’s what attracted me to Swift Exchange, which is all about resetting the accepted boundaries of knowledge and fostering growth.

InterContinental Hotels Group

Amy Ceriani-Nelson has been working at InterContinental Hotels Group for more than six years having come from America West Airlines. Priority Club Rewards has recently introduced a new award option for members where they can spend their points on last-minute hotel stays. We asked Amy about this new award option along with a few other questions of interest to Priority Club Rewards members.

InsideFlyer
In March, a press release mentioned a new positioning and refreshed look for Priority Club Rewards. The press release mentioned a new Priority Club Rewards logo and a new website among other changes. How is this coming along?

Amy Ceriani-Nelson
IHG announced the global brand re-launch of Priority Club Rewards on March 29th unveiling a refreshed brand logo and new look to membership materials in Club, Gold and Platinum membership levels. The re-launch translates to even greater flexibility for our members when they redeem points for Reward Nights and non-hotel rewards.

The new website is a key component of the Priority Club Rewards redesign because it gives us a platform to engage with our members. It is especially important as our members typically prefer to book direct at IHG.com including priorityclub.com, the only way they can earn Priority Club points with online hotel bookings. The new website is not only a portal for making reservations, but an essential tool for point redemptions and account management.

The new website was revealed during the re-launch of Priority Club Rewards and continues to roll out globally. The new website was developed with ease of use in mind and a platform that will offer even more ways members can redeem for rewards such as the newly launched Last Minute Rewards Nights and upcoming redemption options such as downloadable media rewards.

IF
Another new development from Priority Club Rewards is Last Minute Reward Nights. Can you tell us how these work and how often they will be offered? How have your members responded to this new award option? Why offer them?

Ceriani-Nelson
Last Minute Reward Nights is a first-in-kind program for the hotel industry that is available to IHG’s Priority Club members globally. It is a new redemption choice for reward bookings within a short window. A rotation of selected hotels will be available for booking at a 50 percent reduction from the standard number of points required for a Reward Night stay.

For example, a Crowne Plaza standard redemption is 25,000 points a night. A Crowne Plaza redemption with Last Minute Reward Nights is 12,500 points a night. Currently, we are offering Last Minute Reward Nights for the first full weekend of each month and members can visit www.priorityclub.com/lastminute for details.

Despite Priority Club Rewards’ wealth of redemption options, getting hotel rooms without spending money remains the most popular choice among members. Frequent guests who demonstrate their loyalty to the IHG family of brands by joining Priority Club Rewards continue to stay more (than non-members) for their business or leisure travel.

We want to maintain our strong track record (on average Priority Club fulfilled nine out of every 10 requests in 2010) for granting members a Reward Night stay.

In addition to our “no point expiration” and “no blackout dates” policies, Last Minute Reward Nights is another useful program feature that gives Priority Club members control over when they travel.

IF
Many members we’ve talked to have mentioned that they are concerned that PointsBreaks awards might be going away, or changed in some way. What can you tell us about this?

Ceriani-Nelson
Currently, we are still offering PointBreaks promotions where select hotels from InterContinental Hotels to Holiday Inns are available for 5,000 points per night redemption and we have no immediate plans to change the program. In fact, PointBreaks are currently available. We have received very clear feedback from members regarding how much they value this program–and have won awards around the globe over the past several years as a ‘best redemption promotion’ in addition to being a factor in having been recognized as Program of the Year by several industry publications.

IF
In the six plus years that you’ve worked at Priority Club Rewards, what do you see as one of the biggest challenges the program faces in keeping your members loyal and happy?

Ceriani-Nelson
We have an ongoing challenge to remain a relevant, driving force for consumers in today’s marketplace, working to ensure we offer an attractive and competitive set of features, benefits and rewards, reaching members in a way that is memorable and meaningful.

In the past six years we have expanded our reward offerings to include new and first-in-kind offerings, including Hotels Anywhere, allowing members to redeem their points for stays with our competitors. We realize we can’t be everywhere even with 4,400 hotels globally but we want our members to have the opportunity to redeem their points for stays at virtually any hotel in the world.

IF
You also worked on the airline side of loyalty at America West. What do you see as some of the fundamental differences between airline and hotel loyalty (other than the obvious airlines vs. hotels)?

Ceriani-Nelson
Frequent travelers are well versed in the mechanics of loyalty programs, both airline and hotel, and savvy members are adept at leveraging each for the strengths they offer. Of course, the fundamental difference resides in the fact that there is generally much greater choice and variety for hotel accommodations than air transportation.

Choosing where to stay when visiting the Big Apple is far more complex than figuring out how to get there, making the challenge a bit loftier for hotel programs to have their brands remain top of mind for travelers by ensuring they provide strong value proposition and differentiation.

IF
Can you share with our readers some of your personal favorite IHG properties? And why they are your favorite?

Ceriani-Nelson
One of my favorite hotels to visit is the InterContinental Times Square in New York City. It’s a serene hotel in the middle of one of America’s most exciting cities. And, I love CaVa, Todd English’s restaurant inside the hotel.

Leave a Reply

Your email address will not be published. Required fields are marked *