Relationship marketing and airline loyalty schemes

The Impact of a Relationship Marketing Strategy on Customer Loyalty | Your Business

The goal of such programs is to enhance customer relationships by offering high value to profitable market segments [15]. Reward programs are also effective in. Request PDF on ResearchGate | Relationship marketing and airline loyalty schemes | This article examines the emerging concept of relationship marketing in. Marketing” is just a more impressive way of describing an airline's. Frequent Flyer Programme. This is fundamentally wrong. An FFP may well be part of a sound.

Customer can choose the e-service within the booking process. E-services are available to the customers who want to use e-service for check-in. This service is varied according to the bookers i. Desk check-in service is available for the customers who do not use the above services.

In this service, customer should be in time for the check-in so that he or she can have the boarding pass before the check-in deadline. Air Berlin has separate desk check-in facility for the business class passengers [28]. Most reward systems are based on volume e. To maintain the customer loyalty, top bonus program is a specific program adopted by Air Berlin. It is the program where the customers can collect the miles from their flights and can fly the next flight for free when the total miles travelled reaches a certain level [31].

As explained in airberlin. The topbonus partners can be categorized into six categories, they are: The example below explains how the customer can get the status and bonus miles: A customer who collected miles can order the one-way award flight [34].

However, the redemption of award miles depends upon flight destination [35]. The bonus miles received by each customer are valid for 36 months and the status miles are only valid for 12 consecutive months [36]. Status miles means the customer can get the exclusive benefits for example they can reserve the seat with free of cost, extra baggage allowance etc. Furthermore, according to the information available in airberlin.

Through this program, the status members can collect double miles from their favorite route within Europe [37]. As mentioned in airberlin. According to the information available in Air Berlin homepage, for a person there are special conditions to get membership in topbonus program.

The topbonus frequent flyer program in Air Berlin provides the bonus to its customers for their loyalty. Anyone whose age is 2 or more years of age and the resident of Germany or any country in which the topbonus program is available can apply for the membership in topbonus program [38]. The award miles or statue miles achieved by the member cannot be transferrable to another person or another member and is not possible to convert the miles into cash [38]. However, the topbonus member has the right to upgrade his or her flight ticket from economy class to business class through award miles [38].

Under the topbonus program the member can be facilitate by four types of cards: Services in Air Berlin vary according to the card owned by the member. Classic card will be provided to the costumer in free of cost with their membership, and currently there are 1. Building Foundation for Loyalty Customer Segmentation-Proper market segmentation is the basic for the success of any customer loyalty program.

Air Berlin has properly managed this issue.

Loyalty marketing

Focusing on the target customer, they have designed service structure. Its business model targets business customers, individuals and organizers of holiday package [10].

In this way, Air Berlin service plan reflects the principle of segmenting customers mentioned in Lovelock and Wirtz It has been successful in targeting customer based on price and comfort. Air Berlin has maintained the price gap between the full fare airlines and low cost carriers in a successful way [10].

Generating high profit from loyal customers by providing high value of service and maintaining low cost carriers with the limited service has increased its competitive strength at the international market. This has helped them to meet customer needs along with their capabilities as described by Lovelock and Wirtz They have been able to satisfy the need of all these categories of customer by high and customizing service.

Along with this, they have designed their Aircraft as well as Airbus in customized way i. This approaches resembles the customer pyramid illustrated Figure 1 by Zeithmal et al. Moreover, this segmentation of customer and targeting the high revenue-ge- Figure 2. The customer satisfaction-loyalty relationship.

This in the long run can increase the personal travelling rather than only business travel.

Do Customer Loyalty Programs Really Work in Airlines Business?—A Study on Air Berlin

According to Lovelock and Wirtzthe high frequency of repetitive service taker is always the best source of revenue for the organization, as there is no need of promotion or marketing for the repetitive customers. In case of Air Berlin, customer loyalty and providing repetitive service to them has helped to lower their operating cost. Reduced operating costs leads to higher capabilities to provide improved service and that is contributing to their competitive advantage as well.

Likewise, providing service as per the market demand is one of the features of effective tiring service. Planning of service as per the market demand, like changing frequency of routes, following flexible route system, etc. The flexible route system not only fulfills the short term or immediate demand of customers, it also increased value to the customer, as it reflects organization capability to deal with the unfavorable situation and helps to develop the deeper foundation for loyalty as mentioned by Lovelock and Wirtz Creation of Loyalty Bonds Air Berlin currently has 1.

The success of providing this benefit is proved by the recognition they got in in the loyalty award [13]. Air Berlin provides financial and non-financial rewards to its members through different features of its customer loyalty program.

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Flying next flight free can redeem the award that customers get from the topbonus program. Apart from this, as explained in the empirical study, it provides the status cards, classic card, service card, silver card and gold card, to its member as recognition and appreciation according to the services they consumed through its topbonus partners.

On board, it provides the meals according to the demand and choice of its customers, where they can select the menu immediately after they book the tickets [25]. All of these are the financial and non-financial benefits they are providing in forms of reduced price, recognition by cards and better service features. As described by Lovelock and Wirtzstructural bonds established the loyalty through structural relationship between the service provider and the service consumers. Air Berlin implies four types of structural bonds to its customers through-web check-in, e-services, quick check-in, and desk check-in.

Among these, web check-in is the most easy and convenient way [28]. These services are also contributing to better convenience to the customers. Air Berlin also provides the visa cards for shopping purposes so that whenever customers buy the things they also can collect the miles [31]. It has so many partners that are categorized into 6 categories so that wherever topbonus facilities available area the members go they can consume the services from topbonus partner and in return they can collect the miles [32].

Reducing Churn Drivers High and customized quality service, flexible route approach to meet customer demand, top bonus program etc. The repetitive customers might find it difficult to experience the same value from the other organizations. In case of service, switching of regular customer in this situation can result the company, high switching cost. This program has offered better pricing of customer service through double mile scheme, which has helped to decrease the possible inconvenience and increase its competitive strength.

Discussion Continuous product innovation made by Air Berlin has helped to make its customers more loyal. Top bonus program itself is not the single reason behind this huge success of Air Berlin; continuous qualitative service is equally helping it to grow. Safety and punctuality are the key qualitative features of Air Berlin. One example of innovation and improved customer value is expanding their range of network.

This is also one of the main qualitative features of Air Berlin. Access to the domestic route of Russia and Turkey has increased its presence in international air traffic by satisfying more customer need. Toh and Hu suggested that, scheduled convenience, on-time performance, low fare, and overall service by attendance plays important role while influencing the choice of airlines other than FFPs.

Along with these, Chin added frequency, network coverage, seat availability, airport access time, waiting time, boarding time and flight time are also influencing factors for customer. With these facts, we can say that FFPs are not the only success blueprint for airlines industry now a day.

Large numbers of customers are searching for cheap flight tickets. Klophaus also suggested that low cost air travel is the fastest growing segment in the case of European passenger segment. This fact is also supported by the case of Ryanair, one of the most successful airlines in the world. With a very simple business model of cheapest fare, it has provided service to Without any FFP it has just focused on lowest fares, safety and punctuality.

InIATA ranked it as a largest international airline by passenger number [39]. This shows that current market demand is shifting towards cheaper flight with quality service rather than common FFPs, which are mainly targeted towards business travelers. The above fact can also be supported by linking it to satisfaction-loyalty relationship described by Lovelock and Wirtz As all the airlines are having certain types of FFP and most of them are really hard to distinguish, it can be said that these FFP programs are in the zone of indifference Lovelock and Wirtzand to get the customer satisfaction level to the zone of affection, airlines must respond to the increasing demand of cheap price and better timing.

Last but not the least, the firms always need to have closer looks to the customer purchasing behavior and the moves by the competitors.

Otherwise, it will not be possible to differentiate their offerings from the others. Though Airberlin has been very successful to implement their customer loyalty program, there is no significant example of cross selling or bundling in their customer loyalty program.

Introducing this service may help them have some more business. A bundle-selling program can be designed by introducing the option of transferring the bonus miles within a specific group e. That may open up some opportunities to do some more business with a group of customers instead of an individual one. This would result in a continual game of one-upmanship, which is increasingly costly. From her argument, these schemes should be considered to be just one element of a coherent value proposition; they begin to play an integral role in developing sustainable loyalty [2].

Conclusion We can conclude from the above discussion that, though Air Berlin has been successful so far to implement their customer loyalty programs, the market trend shows increasing purchasing behavior of customers on the basis of the basic services e.

In this situation, retaining the customer loyalty can only be possible by being competitive over the other players in the market. Because, in a situation like this, customers will look for alternatives based on the basic services and that reduces the influence of the drivers that keeps the customers loyal to one single company. The recent trend requires the airlines to be cost worthy and all the cheap airlines are generating more profits.

In a situation like this, it is hard to design some special services for the targeted customer segment. Airlines like Ryanair or Southwest in US are targeting to large customer base and not really emphasizing on the loyalty programs. This approach is proved most effective right now. This is necessary because, that will let them be in competition in the fierce marketplace. However, without targeting specific market segments and designing strong loyalty programs with some real distinguished values, it will be difficult to think of a sustainable customer base.

Furthermore, Air Berlin can adopt strategies implemented by airlines like Ryanair in order to gain popularity amongst its customers. Conflicts of Interest The authors declare no conflicts of interest.

Mutual Benefit The two main components of relationship marketing -- personalization and regular, periodic communication -- strive to increase customer satisfaction. One of the effects of relationship marketing is mutual benefit. The customer receives something of value through regular, personalized communication.

A business hopefully increases long-term sales and profitability. For example, a grocery store discount card tracks purchase behavior. In exchange for allowing the grocery store access to his spending habits, a customer may receive volume discounts and individual pricing on frequently purchased items. The additional savings may prompt the customer to shop at the store more often.

Retention A satisfied customer is more likely to remain loyal to a company. According to the "European Journal of Economics, Finance and Administrative Sciences," companies are able to make more money from customers who take advantage of a loyalty program's perks. Higher customer satisfaction levels tend to increase the cost efficiency of the relationship.

Some long-term relationships are not beneficial to a company, regardless of customer satisfaction level. A business should not continue relationships that cost too much to maintain. Customer Gratitude Customer gratitude plays a key role in the development of long-term relationships and loyalty.