Does your business offer miles as an incentive to customers?

Discussion in 'General Discussion | Travel' started by KenInEscazu, Oct 17, 2012.  |  Print Topic

  1. KenInEscazu

    KenInEscazu Gold Member

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    My company sells business to business products, and we are considering offering miles as a loyalty incentive program. It is not a small investment if we try to include all (or even the most popular) airline programs.

    We would appreciate feedback from other business owners who have tried a similar incentive program. Our primary goal is to get some advice on whether we should start with just one airline, or if that would give us enough of a trial to make a determination of efficacy. If one airline is your recommendation, which one would you try?

    We have seen many business to consumer businesses succeed with such offerings, but it doesn't seem to be offered by B2B companies - at least not in our market. It seems that it might tip the scale in our favor for many buyers, especially those who own their own small businesses. Our average sale is about $200, but it isn't all that rare that we get orders of five figures, too.

    We are a price-leading wholesaler, but we have sufficient margins to support such a program if it results in measurable increased volume. We don't want to give the appearance that we build the cost of this program into our prices (perception: prices too high) or that employed purchasing agents might be abusing their position for personal gain. OTOH, it might allow us to raise prices enough to cover it, as many buyers wouldn't use it, and monitoring the decision-making practices of purchasing agents isn't really our job.

    Anyone in a purchasing position is also invited to comment about how such an offer might impact your decision-making process. Thanks in advance for your input!
     
  2. wrxmom

    wrxmom Gold Member

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    It would definitely impact my purchase decisions especially if pricing were the same. While it will mean a higher cost offering miles on the big 3: AA, UA, and DL would garner more business.
     
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  3. KenInEscazu

    KenInEscazu Gold Member

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    Thanks for your input. The cost per mile can be absorbed (not EVERY customer is going to opt-in) as an advertising expense, but the huge number of miles required by each airline totals up to a real gamble. It's the initial cash outlay that gives cause for pause. We're in the grey area of growing from small to mid-size. While this might push us up the hill, the extra weight could also slow us down. It's a tough decision.
     
  4. Mapsmith
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    Mapsmith Gold Member

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    As a small business owner, I would possibly lean toward a wholesaler that did this.

    However, you cannot be everything to everybody. Don't try to offer in all the airlines. Pick one to see what works. Maybe even go with AMEX Ultimate Rewards? Check the airlines for the one that has the best ROI. Maybe even one in your area that allows transfer to other airlines in an alliance?
     
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  5. KenInEscazu

    KenInEscazu Gold Member

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    We talked to points.com today, and they have a points program that converts to 8 airlines, one hotel or one electronics store. Our customer would be able to pick the program to which they want their points credited. It costs more per mile, but offers a variety of options, so we are giving that serious consideration.

    The downside of points.com is that we can't advertise on the airlines' shopping pages, but I don't think that many people look there for industrial products (yet). I'm thinking that we would have to promote it ourselves no matter what, so that may not be such a big loss in the B2B world. The big benefit, of course, is that the initial investment isn't much of a gamble.
     
  6. LarryInNYC

    LarryInNYC Gold Member

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    Here are a few random thoughts:
    1. What would you do to "protect" yourself against people like us who would be trying to figure out how to maximize their miles while minimizing their benefit to you. That would involve doing things like returning the product after their miles have cleared and become unrecoverable, and probably other, more devious things that I'm not smart enough to think up.
    2. Have you conducted any kind of research with your customer base (or your competitor's customer base) to learn what percentage of them even have mileage accounts?
    3. Is your product the type that is available from a variety of sources at more-or-less the same price point such that a non-price incentive such as miles might make a difference?
    4. If I understand, the barrier to doing this is that airlines require you to purchase a very large number of miles up front. Is there any scope for a third-party company that would essentially act as a miles jobber -- buying up the requisite number of miles and then doling them out to member companies as needed?
     
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  7. KenInEscazu

    KenInEscazu Gold Member

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    1. Terms and conditions will spell out that points would be credited 6 weeks after shipment. Our return policy specifies that returns must be requested within 30 days of shipment. Any exceptions for which we might grant authorization after six weeks which are not the result of product defect would be charged a 15% restocking fee. That fee would more than cover the cost of the points, plus the added paperwork processing. The customer would keep the points.
    2. We have over 25,000 customers and are adding 65 per week more on average this year. That's just too many people to NOT have an interest in bonuses. Further, we have in place many promotional methods which go out to customers and prospects alike which will give us opportunities to promote this to FF prospects.
    3. Although we are usually the price leader, we do have many competitors. None that we have found are currently offering such a program. We would be the lone vendor with this benefit until and unless others recognize our succcess or the the potential value in such an offering.
    4. See my points.com post just above yours for details on that option.

    These are all good points, and GMTA, as we have already considered them in our brainstorming sessions regarding the potential benefit. Thanks for the input.
     
  8. Steven Schwartz
    Original Member

    Steven Schwartz Gold Member

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    Still trying to convince a patient to spend $100,000 on their credit card for a big implant case so they can get a Business Class seat to Europe but so far no takes!:D
     
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  9. Steven Schwartz
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    Steven Schwartz Gold Member

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    Just reread my post. Just so you all know - I'm talking about teeth, not boobs (altho I WOULD love to see the $100,000 boob job!).
     
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  10. Mapsmith
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    Mapsmith Gold Member

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    Just watch the Red Carpet at the Academy Awards.
     
  11. KenInEscazu

    KenInEscazu Gold Member

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    Visit Colombia. They may not cost $100,000 there, but they would be worth it if they did!
     
  12. effseeoh

    effseeoh Gold Member

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    Can you say how much these points cost to buy?
     
  13. KenInEscazu

    KenInEscazu Gold Member

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    They start at $0.0415/ea. with a minimum of 50,000. You can find the pricing info on their web site, along with the other details. I think it's an affordable option for a small business to buy an advantage over competitors. We are going to do it.
     
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  14. effseeoh

    effseeoh Gold Member

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    Thanks. That's expensive though! Surely there must be cheaper ways to buy points?
     
  15. KenInEscazu

    KenInEscazu Gold Member

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    There is. Buy more. points.com goes down in price when you buy more - as much as $0.01/point less. The airline programs we have found which sell direct to businesses like ours have large minimums.

    Administration costs are another consideration. Points.com has an easy interface where we can credit the customers' accounts through their site. If we get to the level of participation where we can buy directly from the airlines (hotels, electronics stores, etc.), then we will also have multiple tasks to deal with each week, each with its own learning curve. Using one provider keeps that process simple, thus less costly in man hours.
     
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  16. effseeoh

    effseeoh Gold Member

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    Thanks for the info. Really interesting.
     

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