Loyalty Truth

The practice of Loyalty Accounting has become increasingly important as programs have matured and the value of deferred financial liability on corporate balance sheets has grown.

The key offset to the balance sheet liability is breakage. It is the word used to describe the value of the accumulated points that go by the wayside and is controlled through published Terms and Conditions, the fine print that accompanies each program. The better executed programs explicitly share the rules of the game, i.e. how often you must shop, fly, or swipe to keep your points alive and available.

Every organization that operates a loyalty program should know by now that it is in the best interest of the customer and the brand to not only disclose the rules, but to provide ample warning of points reaching expiry. Explanation of the actions required to protect point value must be shared in an easy to understand manner.

Two recent personal examples illustrate the contrast in how brands handle breakage. You will see from the examples that there is also a contrasting impact on customer satisfaction and future disposition to repurchase.

I received an email from JetBlue advising me that:

“Your TrueBlue points won’t expire as long as you fly at least once a year. Unfortunately, it’s almost been a year since you’ve flown with us. To make sure you get to keep the points you’ve already earned, just fly with us again in the next 30 days.”

I knew that I had flown with JetBlue on several occasions during the year, but that I wasn’t receiving credit for my mileage due to the disconnect between the naming of my TrueBlue account and the new TSA requirements for passenger identification. I have written about this before and feel strongly that airlines have a golden opportunity to assist their valued frequent flyers in making this transition to TSA compliancy.

Knowing that the process is not easy and that the time needed to request, validate, and receive credit for past flights with reservations in different names would be a poor use of my time, I was resigned to sending an email to customer service.

To my surprise, I received a response within 24 hours informing me that past flights were being credited to me and that my expiration date was extended accordingly. In addition the email made clear how to get my account in sync with TSA requirements and to avoid future discrepancies.

This was a fantastic result and one that renewed my allegiance to the JetBlue brand.

Next, I received an email notice that my ATT wireless bill was due. Visiting the account online to pay the bill, I checked to make sure the recent changes to my wireless plan had been made and that the bill was correct. In a box shown as part of the billing statement I saw this:

Previous Rollover Balance – 10,592
Current Rollover Balance – 1,400
Bonus and Adjusted Rollover Minutes (10,157)

Translated, this was telling me that, in the process of making changes to my account, I forfeited 10,157 rollover minutes. I have been made aware of these rules in the past, but the reality of losing these minutes was never mentioned in my call to customer service to make changes to my account, nor was any gesture of value offered to me for *gasp* trying to adjust my plan to a more sensible and economical setup.

I would say that this transaction lessened my affinity for the ATT brand, but since they trade only on a contractual basis, I suppose it doesn’t matter. What ATT and the other carriers are missing is a huge opportunity to create goodwill across their customer base.

Treating the rollover balance like a rewards currency and proactively offering me something, anything, for losing this truck-load of minutes would have been a wonderful surprise.  Instead, the carrier reinforced my predisposed opinion that I am being held captive by my wireless carrier and, as a prisoner, my rights are non-existent.

Two approaches to breakage and two distinct outcomes on brand affinity, customer loyalty, and future disposition to purchase.

Can you hear me now?