Part 1: Delta’s Simplified SkyMiles: A Case study in New Strategy Deployment
When transforming from one business strategy to the next, be sure to take your most loyal customers on the journey. This case study is divided into Part 1: Business strategy and Part 2: Customer Insights
Background:
An interesting development has occurred with Delta Airlines over the past couple of weeks with the largest change in their SkyMiles program since it was created 42 years ago. Delta’s announced changes with: “Simplified paths to Status, more ways to earn: Delta transforms its Skymiles loyalty program”,
The new changes go into effect January 1, 2024, with more changes to restrict SkyClub lounge access rolled out by 2025. Details and discussion of the changes are outlined here. Importantly, in the new “Simplified Skymiles program”, Delta is sharing what is most important to them in loyalty. They have simplified all of the metrics of loyalty and distilled it down to one common measurement of value to them—money. Of course, any company needs to look after its bottom-line and meet the demands of its shareholders. In this case, Delta has forgotten another part of the equation for success—their most loyal customers.
Full transparency is grounding the SkyMiles program.
The first part of the surprise in the new Simplified SkyMiles Program is what they are NOT saying; the Delta loyalty program is no longer a frequent flyer program. While you can still use SkyMiles to book ‘free’ flights, the program has little to do with flying. Effective January 1,2024, Delta will remove all the ‘in-process’ loyalty indicators in the equation; frequency of travel, duration of travel, class of service and number of flights segments no longer matter to Delta in determining their most highly valued customers. The only part of travel that matters in rewarding loyalty are the dollars spent with Delta and their co-branded partners.
Show me the Money (MQDs)
As announced earlier this month, these changes are only the beginning. “Delta is on a multi-year journey to transform our SkyMiles Program by building a portfolio of options for customers to grow their membership with Delta beginning as soon as they join the program,” said Dwight James, S.V.P. of Customer Engagement and Loyalty and CEO of Delta Vacations
With the new Simplified Skymiles program, Delta has revealed the importance of their partnership with American Express in their valuation of loyalty points. Here are ways to earn Medallion Qualifying Dollars (MQD) in the new program: A Delta Ticket yields one MQD for every dollar spent. Users of Co-Branded Delta SkyMiles Reserve AmEx Credit Card will earn one MQD for every $10 spent, while users of Co-Branded Delta SkyMiles Platinum AmEx Credit Card will earn one MQD for every $20 spent. In addition, Car Rentals and Hotels booked directly through Delta will earn one MQD for every dollar spent (they carry the same value as Delta flights).
Taking Travel to new Heights
With this announcement, Delta has opened the curtain to reveal their unspoken true ambition—to become a Travel Services & Credit company that runs an airline, rather than an airline that partners with travel and credit services. In other words, they “(just) want to be your everything” when it comes to travel. This is a clear departure from ‘Flying the Friendly Skies’, or ‘Keep Climbing’. Delta is redefining loyalty by requiring potential future elite customers to build their (travel and/or credit) world around SkyMiles. By removing the frequent flyer aspects of loyalty, Delta has redefined the relationship with their loyal customers who have attained status through earned equity in seats.
See Part 2 for Customer Insights.
