A Is For Accounting


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“Thank you for flying with us,” intoned the flight attendant in her pre-takeoff instructions to us huddled passengers. “For those of you flying with children today . . . we’re sorry.”

This mock-serious pre-flight stand-up, heard years ago on a Southwest Airlines flight, has stuck with me as much for its truth as for its humor, as I’ve both sat next to and been the parent of a wailing child. I thought about it again as I read about Southwest’s new “EarlyBird” embarking for $10 per boarding. I admired the candor of Southwest’s press release: “An early boarding position provides Customers with the opportunity for a better seat selection and earlier access to overhead bin space, giving Customers the option to enhance their travel experience while creating incremental revenue opportunities for Southwest.”

That’s a rare what’s-in-it-for-us admission. And, as with the condolences for flying with children, it provides a bit of humor, unintended as it may have been. I had to laugh, grimly, at the true message Southwest was sending to its best customers. More on that in a moment.

The release continued: “Early boarding privileges are already included in the purchase of a Business Select fare and are a benefit of being on the Rapid Rewards A-List.” A-List is the cleverly named upper “tier” of Rapid Rewards membership. Southwest flights are boarded by zone—Zone A being the first. To become an A-Lister with guaranteed priority boarding (and no other stated benefit), you must fly 32 one-way trips in a 12-month period—basically, a round-tripper every three weeks or so.

And therein lies the grim comedy: Southwest has communicated something that perhaps they didn’t quite anticipate: They quantified the worth of achieving the Rapid Rewards upper tier. Ten bucks per early-boarding. Two fivers, and you get almost the same privilege as Southwest’s best customers.

Granted, I concede some logic that discredits my admittedly cynical calculation. Yes, the true A-List members are still taken just before the faux A-Listers. Yes, the A-Listers’ earned their privilege for a full year while the Hamiltons buy one-offs. Yes, the Rapid Rewards core value prop lies in free flights rather than preferential treatment. And no, the folk who bought $10 boarding privileges aren’t pointing at the A-Listers and snickering “neener.” But when has logic ever trumped emotional reaction, particularly to customers who feel that something has been taken from them?

But some might argue that nothing has been taken away. After all, isn’t this fee precisely like a second-bag checking fee—let’s say $10 for the sake of argument? Most frequent-flyer programs waive that fee for members, while non-members buy the service.

The analogy, however, doesn’t hold. A waived $10 fee is a privilege. It signals recognition and priority in the same ways that early boarding does. Charging a second-bag fee to nonmembers doesn’t negate the value of the waiver; it enhances it. That fee quantifies not the value of the privilege but of the functional need to take up extra space in a cargohold. It results from a commodity transaction. Yes, the member can perhaps look at the waiver as being worth $10, but the figurative wink at the member that says, “Oh, that doesn’t apply to you because you’re special” is worth far more.

On the other hand, a Rapid Rewards A-Lister can now quantify the value of a privilege, particularly one bought and not earned. Ten bucks gains the nonmember who may never have flown this airline before parity with a best customer.

Loyalty reward program members are aware of the value exchange we mutually engage in. For the consumer insight delivered to us, the value we return is often calculable. A free iPod, discounts or cashback have fixed value. Recognition and privilege has perceived value often far greater than the cost of delivery. In designing redemptions and in changing policies, consider value, both actual and perceived, as a customer would consider them. But don’t consider that value in a vacuum. How do those who aspire to redemptions and privilege perceive the value? How hard will they work to achieve that value? And how do those who have lost a privilege calculate lost value? By way of human nature, the value of lost privilege is greater than the value of gained privilege.’

Once again, I find myself picturing that wry flight attendant from years ago, microphone in hand. “For those of you who had to rack up 32 one-way flights to earn the privilege of early boarding . . . we’re sorry.”

Bill Brohaugh
As managing editor, Bill Brohaugh is responsible for the day-to-day management and editorial for the COLLOQUY magazine and colloquy.com, the most comprehensive loyalty marketing web site in the world. In addition to writing many of the feature articles, Bill develops the editorial calendar, hires and manages outside writers and researchers and oversees print and online production. He also contributes to COLLOQUY's weekly email Market Alert and the COLLOQUYTalk series of white papers.


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