Qantas to diversify as loyalty crunch looms

By Brendan Coyne | 24 June 2015

Qantas, the national carrier turned media agency and wine club, has signalled further diversification is on the cards.

Joanna Boundy, head of digital and entertainment at Qantas, said customers will dictate its next moves.

“Yes we will always be in aviation. But we will diversify as well and we have already seen that with our loyalty business. Loyalty was originally about earning points for travel and loyalty with travel,” Boundy said.

“But now we have a dedicated wine club, a dedicated golf club, a dedicated small business element, a dedicated cash part... So already we are starting to diversify into the spaces that [customers] are telling us they want us to be. You have to innovate constantly.”

Boundy was speaking as part of a virtual panel at a Cannes presentation by Razorfish and Contagious.

The provocative session was designed to grab headlines, with one prediction made that creative agencies will be replaced by algorithms within the next decade.

Another headline-grabber was Razorfish's prediction that brand loyalty would soon cease to exist.

Razorfish tech honcho Ray Velez cited Accenture estimates that the switching economy was worth $6.2 trillion as “proof that brand loyalty is becoming extinct”.

But if brand loyalty is to survive, those with the “willingness to innovate around experiences” would set apart winners from losers, reckoned Contagious strategy and content director Will Sansom.

45 billion compelling reasons

Amazon Prime’s shapeshifting money machine was testament to that theory, he said. Estimates suggest the Bezos behemoth is raking in $1100 a year on average from each of its 41 million Prime members.

That equates to $45bn a year. Members pay the platform for everything from films and music on demand to same day grocery delivery.

“You cannot think of Prime as a loyalty platform where they just herd their most valuable consumers. It is not that at all,” said Sansom. “It is better thought of as a customer experience lab. The more valuable the experience they create, the more people give them trust, give them data. The more data Amazon has, the more personal the experience it can create. It’s exponential.”

Diversify or die

Brands must diversify and strike strategic alliances, said Velez and Samson, or go the same way as they predict loyalty is headed. But in a way that sweats unique brand assets and creates new value.

Volvo, for example, would probably win a Lion for its high visibility spray-on Life Paint, said Sansom. Volvo makes cars, Life Paint is for cyclists, but the automaker’s organising principle is safety.

“If it does win it will be so significant,” said Sansom. “Because it will be an automotive brand winning for a product that isn’t a car, but a product that is still consistent and relevant with that brand’s reason for existing in the wider world.”

Link online and offline

Equally, brands that can link offline and online worlds could uncover new business models.

Sansom cited Japan’s postal service as an example. In a world where fewer people send physical mail, the postal carrier is morphing into a social service.

Japan Post’s Watch Over service is offered to the elderly for a small fee, whereby the postmen check customers are ok when delivering the mail. Now it has struck a deal with IBM and Apple so that customers are offered the option of an iPad pre-loaded with three simple categories of apps: effectively big red buttons to contact family, use health services, or use community services.

“It is delivered by postmen – who can show people how to use it, ensure they keep using it and get the most value possible,” said Sansom.

“It’s a fascinating example of a brand sweating its own unique assets of delivery infrastructure and the trust placed in it by people,” added Velez. “They are creating whole new kind of value. But Japan Post would not have got there if they had not asked one simple question: How can they connect the unconnected and create value in people’s lives?”

You can watch the video below:

Speaking to AdNews in March, Qantas Loyalty’s emerging data powerhouse, Red Planet, said the media campaigns it trialled so far for Qantas, via the new hub, were four times more effective than traditional campaigns it had run.

The airline was Red Planet’s guinea pig originally, following its launch in September 2014. However, campaigns for other non-Qantas clients had also seen significant improvements in ROI, thanks to the data it can draw on, according to executive manager of insights and innovation at Qantas Loyalty, Vaughan Chandler.

Chandler added that a major financial institution saw reductions in cost-per-acquisition of up to two thirds and another client saw triple the conversion rates compared with previous campaigns. See the full story here.


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