Why Copa Missed a Huge Opportunity when Launching Its New Loyalty Program
Copa, the Panama-based Star Alliance airline, released details of their new loyalty program as they are discontinuing their partnership with United’s MileagePlus.
And sadly, they missed a big opportunity.
The frequent flyer community response was “meh, it’s basically the same as United - nothing to see here”, which is unfortunate because so much could have been done with that announcement. But sadly, Copa will likely lose many of it’s frequent flyers to MileagePlus, because inaction (keeping their existing MileagePlus account) is easier for most people than changing their behavior.
Here’s what could have been done differently
(1) Drive awareness with an amazing value proposition that they can tone down later.
Carlson-Rezidor Hotels did this very well. When they launched their loyalty program in 2011, they offered considerable outsized value. Yes, this cost more, but it put their program on the map. Most bloggers and frequent travelers are now aware of their unique brand portfolio and geographic coverage and up until recently their credit card was touted as one of the best deals in the space.
Building an audience from scratch is hard, and this was a classic example in investing for the future. Now that Carlson has a healthy loyalty program, it can afford to ratchet down the value proposition. Sure they’ll lose a few customers, but likely the unprofitable ones. For most others, it drove them into their hotels and places they otherwise would have never stayed.
Surprisingly, if Copa had launched THE WORST program in history, so bad it makes even bad programs look good, they probably would have driven more awareness, even if people mentioned them as a joke. Stuck in mediocrity gets you no PR points.
(2) Propose something new or unorthodox that reflects the brand and its strengths.
ANA re-launched their program recently - going against industry trend and replacing its distance-based award chart with a region-based one. But that at least caused far more analysis and commentary amongst flyers that are part of their program — because it was quite different than before.
Not only is Panama halfway, but it has a compact airport, breaking up the journey for people that might have a hard time with 11-hour flights. Source: copaair.com
Copa and Panama are in a really unique geographic position — as a very logical connecting hub halfway between North and South America. Tocumen International Airport has a reputation as being an easy hub to transit and is building a brand new terminal opening next year. There are all sorts of promotions and value that would cost very little, but would achieve outsized value and engagement amongst flyers that otherwise choose their competitors.
Some Possibilities that Copa Overlooked:
- Since about an eighth of Panama’s economy is tourism-based (Source: World Travel and Tourism Council), why not allow for a free stopover in Panama City on any ticket that routes through there? Singapore and Emirates do and it brings tons of money in that would otherwise fly over.
- Similarly, why not offer some sort of “Caribbean hopper” ticket that brings people through the hub several times on a tour of various islands and Central American countries? Copa is in a much better position to do that than American - the most logical competitor in the region, hampered by Miami crowds and US immigration and transit policies.
- One of the best uses of my miles is to buy award tickets for others. Why not start with a buy-one-get-one free promotion or companion pass, so flyers could take a friend or family member with them. Southwest flyers rave about this perk and it’s one of the capstones of their program.
- This is even more unorthodox, but consider giving some flyers with a history with the airline a free award flight as part of the launch or if they reach status, with the requirement that has to be used by someone else. I imagine many people would be stoked if they could fly grandma in to see the grandkids and maybe now grandma starts looking at Copa for future travel because it was so easy to transit and the flight times are reasonable.
(3) The goal of airline loyalty marketing is to change behavior so customers choose one product over others.
Panama is not a large country and doesn’t have a massive base of frequent flyers that are loyal to its product or experience. So it has to look elsewhere, to bigger nearby countries like Brazil, Mexico and the US.
So it would make a ton of sense to tap into those markets and try to lure people away from their existing behavior to fly them, or at least engage with the program by earning and redeeming with them, even if its for a United or Avianca flight. One way this could easily be done is by offering a credit card, or some way to accrue miles without actually flying. Outcompete existing programs in that space with better earning rates or redemption rates that are higher or lower than the industry standards on various routes. With all the changes going on at US carriers, there are plenty of flyers looking around for new programs to build loyalty with.
They could even do something “crazy” with their value prop like offer a distance-based program themselves, something that is rare in Star Alliance (ANA just discontinued theirs and the rest are uncompetitive) and the western hemisphere (LAN is the only other nearby program with a distance-based chart, which in most cases is dominated by British Airways or American).
Other “crazy” things that would change behavior would be things like offering different award prices on weekdays vs weekends, having a slightly cheaper redemption rate for United flights in the US - say 5,000 or 10,000 for flights of a short distance, or partnering with a hotel chain and offering reciprocal benefits.
It goes without saying there are plenty of options they could have taken.
Conclusion
Most of the points above are to illustrate how great an opportunity a new program launch or revamp can be, and Copa blew it, by being unspecial in nearly every way. Airlines are conservative organizations, and too many changes too quickly can drive customers away. But a launch is a fantastic opportunity for innovation and market capture and starting from the beginning, you have nowhere to go but up. Sadly, most Copa flyers will probably stay with MileagePlus because no action is easier than some action, especially when that action doesn’t get you anything terribly different from what you had in the past.
For other travel providers considering their own programs, it’s important to really take inventory of what unique value proposition you can offer over your competitors, then design a narrative and scheme that gets people to take notice, engage with the brand and eventually change their behavior.
Building in experiences that customers can see themselves being a part of, while it certainly has upfront costs, pays in spades when done right - and you’ll be far more on their mind when they are shopping for their next flight.
Distance-based charts only work if you can get the flights cheap from a partner for fulfillment (i.e. Avios vis a vis AA/AS). That doesn’t work nearly as well when the only short flights are on your own metal.
Your views on credit card potential or hotel program partnerships miss terribly on the way those relationships and markets work outside of the USA. And the free stopover in Panama thing would be a fare issue, not a reward issue. Ditto the “hopper” ticket idea.
Remember that Copa is a very, very profitable airline without the massive loyalty costs. Why change that? There is no reason for Copa to want to be a huge player in the loyalty market. It should aim to provide good value to its core passengers, not to the whole alliance. That’s how a program remains profitable.
Put your pitchforks and torches away Seth
Valid point that distance-based is less useful if you’re providing the short flights, but the larger point I’m trying to make is that given it’s proximity and connectivity to large markets like the US, Brazil and Mexico, there are larger opportunities afield to compete against incumbent carriers and get citizens of those countries to take notice.
I’m pretty aware that credit cards are far less common in South America and in much of the rest of the world, but three other Latin American carriers offer a card to US citizens (Aeromexico, TACA/Avianca and LAN) and Brazil’s market is more credit card friendly than other countries in the region. There’s also no reason they couldn’t create special award ticket types (like a Caribbean Airpass) to entice people to switch from accruing in MileagePlus.
Rather than making ad hominem attacks, let’s be constructive. Seth, what would you propose they do instead? I can imagine that you weren’t too impressed with the program either and think there’s room for improvement?
Because loyalty program is a liability, and they don’t want to encourage people to accrue points on their own program when someone else can carry the liability.
Another dumb thing is they don’t allow people to join their new program until June. Why not capitalize on the “buzz” that drives people to visit your site and allow them to join the program?
Copa is a mediocre airline with a lousy business clas-why would you expect them to create a killer loyalty program? Their strengh is in the numbers. They connect the Americas and do it really well. In essense, it’s a big Central America no-thrill airline. Why’s the surprise?
“ANA re-launched their program recently – going against industry trend and replacing its distance-based award chart with a region-based one. But that at least caused far more analysis and commentary amongst flyers that are part of their program — because it was quite different than before.”
No! Not because “it was quite different”, because they took away some awesome features, but added other awesome features that have learning curve to figure out. That’s what causes “analysis and reviews”.
“Now that Carlson has a healthy loyalty program, it can afford to ratchet down the value proposition. Sure they’ll lose a few customers, but likely the unprofitable ones.”
Really? A poorly and deceitfully conveyed, horrific double-edged Club Carlson devaluation is the way to go? And they’ll only lose a few customers? If that’s what Club Carlson is hoping for, it’s a wishful thinking.
I would take a different approach than Eric on the Club Carlson comparison since I don’t think the point was to create a “healthy loyalty program.” An overly generous loyalty program created buzz. Devaluing that loyalty program also created buzz. There is no such thing as bad publicity. Look at Ryanair for an example of that. They promote some awful ideas (standing seats on planes) but it keeps their name in the press.
I’m not sure how their business class has any bearing on their marketing department. Yes, ANA made changes — and changes are pretty common in this hobby. You learn and you adapt, but creating no learning curve and putting your program in the ignore category isn’t exactly the best approach either right?
I’m also not sure if I agree with you about Carlson’s program. It got people to take notice. It probably wasn’t sustainable, but they are running a business, not a charity for our pleasure and they gave plenty of notice of changes. Yes, some people left, but other’s stayed. That’s better than zero.