From love to breakup: Is Delta's loyalty program transformation a recipe for disaster?

I often compare luxury to a romantic relationship. When brands create extreme value for clients, the reaction is often: “I am in love with that brand.” When brands do things right, people develop a strong desire and emotional connection. And importantly, because they are now in love with the brand, they will show loyalty, advocacy, and a willingness to pay higher prices. However, the rule of any romantic relationship also applies: Clients expect to be loved back. If the love is just one-sided and they feel that the brand is just treating them in a transactional fashion, then a breakup is imminent. Extensive “breakup research” at Équité and Pepperdine University has shown that, first, the best and most loyal clients are the first to end things if they feel mistreated. Second, like a romantic breakup, the best clients don’t just leave quietly but they leave frustrated, disappointed, and willing to let everyone know how horrible the brand was treating them. This is what is happening right now to Delta. Delta Air Lines recently announced a major overhaul of its SkyMiles loyalty program, effective March 1, 2024. The changes have sparked outrage among flyers, with many accusing the airline of alienating its most loyal customers. In blogs, forums, the comments section of articles and on social media, clients are venting their anger about the latest change in Delta’s loyalty program, which they feel is a significant devaluation. One of the most significant changes is the increase in the dollar requirement for Diamond status, from 15,000 in qualifying mileage spending (MQDs) to 35,000. This means that flyers will now need to spend more than twice as much money on Delta flights in order to achieve the highest status tier. Another controversial change is the restriction of lounge access for all Medallion members. Under the new program, lounge access is restricted to a few visits per year, which could mean that one domestic round trip with several connections already exhausts the annual allowance. Previously, an American Express Platinum Card Member had unrestricted access to the lounge. This will likely also create significant collateral damage to American Express’ highest ranked card (except the by-invitation-only Centurion Card), as access to the Delta lounge was one of the most valuable perks for many members. To retain unlimited access, members now have to spend at least 75,000 on the card annually, which will be out of reach for many. This comes as the airline has increased prices significantly over the last two years while — in the opinion of many Delta frequent flyers including myself, a Delta Million Miler and Diamond Medallion Member for almost a decade — significantly reducing in-flight service and quality of the product. Compared to European or Asian airlines, the quality of wines, food and services is at a dramatically lower level. For example, the lounge at the Atlanta hub of Delta did not have any premium champagne available and the bar tender said that many travelers are sad that Dom Pérignon is no longer available for purchase. Lowering the product quality while raising prices and then doubling the dollar requirements needed to keep membership status on top of restricting lounge access — this is a fatal combination that may dramatically backfire. In some blogs, commentators call it the Delta Medallion Massacre. Delta has defended the changes, arguing that they are necessary to simplify the program and reward its most valuable customers. However, many flyers are skeptical of this explanation. They point out that the changes will make it much more difficult for ordinary people to achieve elite status and enjoy the associated perks, even those who commute weekly and have several overseas flights. The changes to the SkyMiles program are likely to have a number of negative consequences for Delta. First, they are likely to lead to a loss of customers. Many flyers will now be more likely to choose other airlines, such as United or American, which offer more generous loyalty programs, or switch on international routes to airlines that offer a significantly better product, often at lower prices. In many blogs, travelers describe their new attitude towards Delta as “loyalists” to “free agents.” Second, the changes are likely to damage Delta's reputation. Flyers are already angry and frustrated about lower service at higher prices, and many are vowing to boycott the airline. This negative publicity could hurt Delta's bottom line in the long run. It will certainly breach trust for many of their loyal clients and is a catastrophic move in terms of brand equity. Finally, the changes to the SkyMiles program could give Delta's competitors a significant advantage. United and American have already announced that they will not be making any major changes to their loyalty programs in the near future. This means that flyers will have a clear incentive to choose these airlines over Delta, especially for clients that live in cities that are not Delta hubs like Los Angeles, New York City, Austin, or Chicago. Overall, Delta's decision to alienate its most loyal customers by upheaving its loyalty program is a puzzling one. It is unclear what the airline hopes to achieve with these changes, but it is likely that they will result in a number of negative consequences in the long run. Some commentators suggested that Delta is making these changes simply because it can. Competition in the US is limited and Delta may feel that clients won’t leave anyway. But this is not how a brand creates desirability, fosters community, and makes people advocates. It is a cautionary tale for all premium and luxury brands. When clients feel that they are being taken advantage of — when they feel that what a brand is doing is not in their best interest — a breakup is imminent. There may be significant headwinds ahead for Delta and repairing the likely reputational damage could take years. This is an opinion piece where all views expressed belong to the author. Named one of the “Global Top Five Luxury Key Opinion Leaders to Watch,” Daniel Langer is the CEO of the luxury, lifestyle and consumer brand strategy firm Équité, and the executive professor of luxury strategy and pricing at Pepperdine University in Malibu, California. He consults many of the leading luxury brands in the world, is the author of several best-selling luxury management books, a global keynote speaker, and holds luxury masterclasses on the future of luxury, disruption, and the luxury metaverse in Europe, the USA, and Asia. Follow him: LinkedIn: https://www.linkedin.com/in/drlanger, Instagram: @equitebrands /@thedaniellanger

From love to breakup: Is Delta's loyalty program transformation a recipe for disaster?

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Published September 25, 2023

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From love to breakup: Is Delta's loyalty program transformation a recipe for disaster?