Guest Post: The turbulence of navigating loyalty programme changes

Lina Tonk, CMO of Recurly, walks us through balancing profitability and customer satisfaction

Loyalty programmes have long been the secret weapon of customer retention, offering rewards and perks that keep consumers engaged, committed, and, hopefully, ‘loyal’. In the air travel sector concepts like frequent fliers and air miles have been successful at keeping travellers faithful to one airline for years. But, as businesses face rising operational costs, changing consumer habits, and an increasingly competitive marketplace, these programmes are facing some turbulence. The challenge? Updating loyalty schemes in a way that boosts profitability, without making long-serving customers feel like they’re losing out.

British Airways recently announced a major overhaul of its Executive Club, rebranding it as The British Airways Club and shifting to a spending-based tier points system. The century-old airline, known for Concorde and its "Made by Britain" legacy, has faced criticism over the rollout. While some frequent flyers welcome the changes, others see them as an abrupt and unwelcome downgrade to their travel perks. Loyalty members expect meaningful rewards - when a revamp falls short, it can feel like being bumped from business to economy.

The power of personalisation 

The good news? Data is the best tool in crafting a loyalty programme that delivers value to both businesses and customers. Personalisation is no longer a luxury - it’s an expectation. Recent data from our State of Subscriptions report highlights the importance of tailoring loyalty experiences, particularly in industries like travel and hospitality, where the Return Acquisition Percentage (RAP) sits at an impressive 22.9%. In other words, when done right, a personalised approach keeps users on board for longer.

Customers today don’t just want generic discounts or one-size-fits-all promotions. They want offers that align with their preferences, spending habits, and lifestyles. Much like an upgrade to business class - it’s unexpected, but highly appreciated. Whether it’s offering birthday rewards, personalised travel perks, or targeted discounts based on purchase history, loyalty programmes that prioritise individualisation are more likely to succeed.

Communication is key

Nobody likes a surprise cancellation, and the same goes for sudden loyalty programme changes. One of the biggest pitfalls in updating a loyalty programme is failing to communicate changes effectively. If customers suddenly find out that their favourite rewards have been devalued, or that they now need to jump through more hoops to earn the same benefits, frustration is inevitable.

BA’s recent loyalty programme update serves as a case study in mixed messaging. While the airline insists the new system better aligns with customer needs, many travellers feel blindsided by the overhaul. 

British Airways, for its part, maintains that the update simply brings its loyalty scheme in line with global airline standards, arguing that a spending-based model is more transparent and reflective of customer value. However, many long-time members see it as a fundamental shift that disadvantages those who strategically maximise rewards through frequent travel rather than high spending. This may be a sensible goal for the airline, but with poor communication the reception has left them on the backfoot. Regardless of perspective, the impact on customer sentiment has been significant, and the response from BA’s most loyal customers suggests that the landing has not been entirely smooth.

The broader implications for the industry

For consumers, this shift reflects a broader trend in the travel industry: the prioritisation of high-value customers over casual travelers. As discretionary spending tightens in uncertain economic times, brands are increasingly focusing on maximising revenue per customer rather than simply increasing foot traffic. This approach, however, risks alienating a key segment of loyal, budget-conscious travelers. Frequent flyers who relied on strategically earning tier points through long-haul economy flights are now seeing their status take a nosedive, unless they’re willing to open their wallets wider.

With traditional points-based systems facing scrutiny, airlines may need to explore new ways to engage their customer base. Airlines could explore innovative loyalty models to keep customers engaged and add value beyond traditional points systems. Subscription-based programmes, similar to Amazon Prime, could offer premium tiers with annual fees that unlock perks like lounge access, seat upgrades, and priority boarding. Sustainability-linked rewards may appeal to environmentally conscious travelers by awarding points for carbon offset purchases or contributions to sustainable aviation fuel (SAF). Additionally, dynamic earning models could replace rigid point structures with promotions that adjust based on travel seasons, spending behavior, or frequency, ensuring continued engagement and incentivisation throughout the year.

Achieving takeoff in 2025 

As technology continues to evolve, loyalty programmes must do the same. AI-driven recommendations, real-time rewards tracking, and seamless omnichannel experiences are no longer futuristic concepts - they’re the new standard. Airlines that fail to innovate risk losing altitude in customer satisfaction and engagement.

BA may be weathering a storm of criticism, but it’s also setting the stage for broader industry trends. Whether passengers will adapt or book a one-way ticket to a competitor remains to be seen. Airlines must be cautious when redesigning loyalty programs, as regaining the trust of frequent flyers is no easy task. 

As airlines rethink their loyalty strategies, the key question isn’t just how to retain high-value customers, but how to make every traveler feel like a high-value customer. The brands that master this balance will lead the future of airline loyalty.