Bill Hanifin
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I’ve had some interesting discussions of late about the effectiveness of loyalty programs. A recent post on LoyaltyTruth sparked a discussion on RetailWire regarding the efficacy of loyalty programs. One of the contributors, Liz Crawford, offered a comment that cuts to the heart of what makes loyalty programs work “The rewards need to be perceived to be greater than the effort required to get them. This subconscious shopper value equation is based on the amount of effort expended to earn and redeem value.”
After the opportunity to interview two of the founders of Rocketmiles, I think I’ve got a perfect example to share that illustrates Liz’s point-of-view. I spoke with Jay Hoffmann CEO and Bjorn Larsen COO of this direct to consumer hotel reservation site and found a reward structure that I haven’t seen before in this category.
Jay worked previously at United Mileage Plus and later became one of the people responsible for the creation of Groupon Rewards, a program that grew to include 2MM people and 6,000 merchants in only 6 months. Bjorn was previously CEO Edhance and was an early employee at StudentUniverse, the largest online travel agency for students in the United States. Rocketmiles was founded in 2012.
Rocketmiles breaks open the online travel reservation category composed of Expedia, Travelocity, Hotels.com, HotelTonight.com and others to allow frequent fliers the opportunity to earn massive quantities of frequent flier miles when booking rooms at their curated, high-quality list of hotels. The group has built technology to ensure prices are similar to those found on other online travel sites and states that “90% of the time, we offer equal or lower prices”.
But here’s the unique part of the Rocketmiles offer that creates a giant tie-breaker for frequent travelers and any other digital consumers shopping for hotel nights online. What if you could earn an average of 7,000 miles per night booked? What if you could effectively earn more miles staying at the hotel during your next business trip than flying there?
That is exactly what Rocketmiles is offering and my recent investigation into a trip to Atlanta provides evidence of this new travel reality. I searched for hotels last week in Atlanta and found rooms at the W, Loews, and Ritz Carlton. As you can see from the brands, Rocketmiles makes good on their promise to limit the paradox of choice and offer only highly rated properties. The rates for the nights I was travelling ranged between $199 – 229, very similar to a competing site that I checked on the same day. The difference was that by booking with Rocketmiles, I could have earned between 1,500 – 5,000 airmiles per night during my stay.
At the moment, Rocketmiles offers hotels in 15 cities including Atlanta, Boston, Chicago, Dallas, Denver, Honolulu, Houston, Las Vegas, Los Angeles, Miami, New York, Philadelphia, San Diego, San Francisco, and Washington DC. Airline FFP partners include United MileagePlus, AAdvantage, Delta SkyMiles, US Airways, and Hawaiian Miles. Both lists should expand quickly as Rocketmiles evolves.
For people who travel frequently and are tired of accumulating points for distant hotel stays or having to stay 10 times to earn 1 free night, the ability to earn a round trip domestic ticket by booking as few as 4-5 nights is highly motivating.
From a loyalty marketing perspective, the brilliance of the Rocketmiles model is that they shift consumer eyes from price and discount, instead offering value in the form of a reward. I suspect part of the magic here will be found in the technology developed behind the scenes and the algorithms used to balance hotel pricing and availability with the airmiles able to be rewarded.
For now, I’ll leave the math to the experts as the only number that matters to me, and to most frequent travelers, is getting to a free airline ticket more quickly.
