Episode #55: Building Loyalty In Micro-Moments With Your Customers With Mark Ross-Smith

Meet Mark Ross-Smith, CEO and Co-Founder of StatusMatch.com. Mark joins Betsy and Tony on the podcast from Malaysia. As a self-proclaimed professional frequent flyer, Mark racked up more airline points than you can imagine as he built his former businesses. After he decided to move across the world, he asked the area’s major airline for a status match in their frequent flyer program. He was denied, but it led the way for his idea to create StatusMatch.com.

Tony, Betsy, and Mark dive into emotional loyalty to big brands and discuss how those micro-moments can be replicated in any size business to get a leg up on the competition.

Watch the episode here:

Listen to the Podcast here:

About Mark Ross-Smith

Mark ‘Mr Loyalty’ Ross-Smith, is an award-winning global airline loyalty industry leader. As the Founder of Travel Data Daily – Mark has published dozen of papers and articles on airline loyalty, which dive deep into airline economics and thought leadership. Currently, Mark is CEO & Co-founder at Loyalty Data Co, the parent brand of StatusMatch.com. Mark’s experience in airlines runs deep as he previously headed up the Malaysia Airlines Enrich Loyalty Program, delivering consecutive year record financial success to the airline.

Mark held roles in several high-tech start-ups, including the largest Australian owned mobile social network, where he was CEO for 7 years, spearheaded big-data opportunities with Optus, Vodafone and Telstra. Generating an incremental $35M annually for the telcos through data-driven loyalty initiatives. Building on the business success, the business was acquired through a trade sale in 2013, with over 800,000 registered members.

Mark is a highly sought after speaker at airline and loyalty industry events, known for cutting through the noise and delivering content that isn’t seen or spoken about in public forums. Mark’s unique approach to loyalty has received industry acclaim and his work is referenced in major media including CNN, BBC, South China Morning Post, The Star, The Economist, Financial Times, Executive Traveler, Skift and many more. Recently a winner of Loyalty Magazine’s ‘Loyalty Royalty’ 30 under 40 Award.

Read Mark’s industry leading content at www.traveldatadaily.com.

Building Loyalty In Micro-Moments With Your Customers With Mark Ross-Smith

Generating Value Through Emotional Drivers

I’m excited to talk to Mark. It was such a great conversation both in our prep and also when we recorded the episode. One of the points that he brought out toward the end of the show, but we build until we get there, is what he calls these small moments. I don’t think he realized it, but we talked about micro-moments in our first book, ProphetAbility. We wrote this book in 2018. We talk about these micro-moments, these short 3 to 5-second moments where you do something for a customer. It puts your brand in their mind in a way that they are emotionally connected with it, and it changes how they see the world, your brand, and they see themselves. That may seem like, “How do you do that?”

Micro-Moments: A 3-5 second moment where you do something for a customer that emotionally connects them to your brand, themselves and the world.

He talks about how the airlines do it and gives some basic examples. It is toward the end of the show, but when he talked about that, this is what a lot of people don’t understand in how to build not just a loyalty program, which we are going to talk extensively about, but how to build loyalty. You can’t have a loyalty program without having loyalty first. It’s not about the perks and the benefits. I want to be with that brand. I want to use that brand. I want to go back again. This is not about airlines. It goes much broader than that.

Mark Ross-Smith is the CEO of Status Match, which is a fascinating model for the airline industry. It would be best to let him explain it, which he does at the front end of the interview. I love talking to entrepreneurs like him because he experienced a problem that people weren’t talking about it being a problem. He was like, “There is a solution to this.” Fast forward, he spent a lot of years learning how to solve the problem before he started solving the problem. He talks about how he did that.

This is such a fascinating conversation. I live in Dayton, Ohio, and it is such an aviation town because of the legacy of the Wright Brothers. This particular interview has been fascinating to me and learning so much about the challenges in the business model of the airlines that you don’t hear about in the news. They talk about a lot of things.

As he points out, the CEOs are talking about things that conversation should be shifting, and he anticipates that the conversation will shift. It is a great conversation that our audience is going to embrace because, more than likely, everybody that is reading this blog is a flyer, and many of them are probably frequent flyers. This will be an interesting conversation for everybody reading. Without further ado, let’s meet Mark Ross-Smith from Status Match.

Mark, welcome. We are happy to have you here.

It is fabulous to be with you.

We are looking forward to this conversation. As our audience knows, we do prep sessions and we kind of know where this conversation is going to go. It is a unique business you have. We are excited to dive into it. Give us the background. Tell us about you, how you got to this point with the work you are doing now, where you are from, where you live now, all the things.

I’m an Australian originally. I’m now living in Malaysia, Southeast Asia. I got into this industry deliberately. My previous business in Australia had a social network. It was in the telco industry and as part of having a cool funky social network flying around the world, conferences, events, speaking, doing, and being a frequent flyer. That was a lot of fun.

When you work your way up the food chain in an airline to get gold, platinum, or diamond, those status levels, you start meeting people at airlines. Funny enough, they want to get to know you. They want to know how they can improve the experience for you, and they can do more for you because they want you to spend more money.

I met a lot of people that are interesting. I got a bit of insight into how the airline game worked. I sold that business in Australia, and I moved to Hong Kong after that. When I moved there, I couldn’t fly Qantas, the Australian airline, because I was in a different country. I’m moving for a legitimate reason. I spoke to Cathay Pacific, the major airline in Hong Kong. I said, “Can you give me a status match?”

I said, “I’m high level with this one airline over here. I want to start flying with you guys. You give me the same with you for free right now, and I will start flying with you. I fly a lot. I like flying. Clearly, I’m going back to Australia a lot because I got family there. I’m a good customer. Why wouldn’t you want me to spend more money with you? If you do that, I will spend with you. If you don’t, I don’t spend money with you. Take your pick.” They said, “No.” That was an awkward conversation.

Did you think that was such a no-brainer that they would say, “Absolutely?”

In my mind, I’m spending $50,000, $60,000, to $70,000 a year on business class travel. I thought, “I’m the customer that you want.” Now that having worked in the airline industry, that is a customer airlines should want. I thought, “Why wouldn’t you want my business? It costs you, in theory, nothing to get that to give you the diamond status?” It was a brick wall I ran into there.

I spoke to another airline, Singapore Airlines in the region, and I tried with them, but they said, “No.” I spoke to another airline in Taiwan, China Airlines. They said, “No.” I thought, “This is odd. Why do airlines not want my business?” You see them spend a lot of money on marketing, branding, and advertising. You see things like all the emails all the time, “Fly from LA to Phoenix for only $59.” They spend a lot of money on this stuff, trying to acquire your business. Yet, here I am, walk in the door, putting my hand up, saying, “I’ve proved my ability to spend some decent cash in the industry. Do something. Give me this status.” I thought, “This is weird.”

What I figured out is that airlines are good at getting the average once or twice-a-year flyer to fly. They are pretty good at that. As you work your way up, there is a gap in the middle. The people that have a silver or gold type level with an airline are not too good at getting these people on board. The ultra top end, like corporate government big contract clients, they are pretty good at that, but what I will call the middle of the member base for an airline, which, to be fair, represents 30% to 40% of all the ticket revenue. It is a pretty big base you want to look after. They are not that great at acquiring them.

That is where all this started. I thought, “I’ve got to create a process. I been a customer of an airline. I understand that part. Now I need to create this for the users and represent my fellow frequent flyers out there, try and solve that problem.” In 2013 and 2014, I started trying to create Status Match back then, and it didn’t work. I didn’t understand it enough. I sold my business in Australia. I’m effectively unemployed now and out of money. I thought, “There is no university to learn this stuff. You can’t go to university and learn how to do airline loyalty. It doesn’t exist.”

I went to every conference possible and paid my way there. I had nothing to sell. I’m there to learn. I realized pretty quickly that I could grasp a lot of what they were doing being a real customer of the product. It went from there, and, long story short, I ended up using that knowledge, getting real experience, I actually ran loyalty at an airline, leaving there, and picking this up again. It is doing pretty well now.

Tell us a little bit about how the business operates. We know the problem you are solving, but how do you go about that?

We do two things. We outreach to frequent flyers. We say, “If you are moving cities and changing jobs like I was, come sign up. It is free. Punch in your details. If something comes up, we will let you know.” This is a bit of that. There is a bit of also our proactive outreach talking to major global airlines and hotels and saying, “You are not that great at acquiring customers. Let us do it for you. It doesn’t cost you anything. It is free. We will pick through our process, and we validate stuff, take all the legwork out of it.”

All the logistics behind it that airlines are not set up to do. Airlines are pretty good at flying metal tubes through the sky. They are pretty good at feeding you in the air. They are okay at cleaning stuff. They are not good at acquiring new gold members. That is where we come in. It is like a bolt-on to their business and lets them focus on what they are good at.

What is the business model for Status Match?

We charge the end customer. When you apply as a customer, we charge you a fee of anywhere between $49 and $99 to apply. That is good because it gets rid of the tire kickers or people that expect it for free. There is a whole psyche around when you pay for something you are more likely to value it and use it, which is important for the airline because if they go give you elite status, a gold status for example, they want you to use it. The deal is I give you some of this over here, and you give me some of that hard-earned money and fly with us.

If you paid a fee, a nominal amount over here, $50 for example, the chances of you flying astronomically are higher than if you had got it for free. If you get it for free, you put it in your back pocket and think, “One day, that airline brand comes up, I might fly them.” If you have paid for it, you are like, “I will show them. I will spend even more money with them.” It locks you in. It is like Amazon Prime. You are paying a bit of subscription where you are going to buy things.

You have brought about statistics, which I don’t think I have heard before, the 30% to 40% of ticket revenue comes from this middle ground. What is it that drives airline revenue? We talked about this a little bit but let’s dive deeper into why they should want to go after those status customers beyond the ticket revenue. You talked about credit cards and some of the other ways that airlines are making their money. I don’t think a lot of people know that. I have worked in the hospitality industry for years. I was not aware at the level that airlines are running into challenges with flying and making money that way. The alternatives they have got to focus on.

There are two major parts to airline revenue. One is selling seats for cash, getting people to fly, and there is the whole ancillary revenue, charging for bags, seat selection, and all that stuff. There is this other part: loyalty. When the pandemic started, a bunch of big airlines needed cash pretty quickly. How do you raise cash? You can go to the government to beg for money, but the government is smarter this time. They said, “These are loans. You got to pay them back. You got to secure it somehow.” They secured it with their loyalty programs because they had already mortgaged aircraft and gate slots.

Everything was a mortgage to the hills. They needed something else. I go, “We got this loyalty program thing. If you read through some of the SEC filings for the US carriers, the loyalty program is worth more than the airline, not by a little bit by a factor of 2 to 3 times. In the height of the pandemic, you got, for example, in American, United, and Delta, the market cap of the airline was somewhere between $8 billion to $15 billion. All of the loyalty programs are worth north of $20 billion.

Micro-Moments: Since the pandemic started, airline companies have needed to raise cash pretty quickly. Since they could not go to the government to beg for money, they turned to loyalty programs.

In this tiny part, the airline was worth 2 or 3 times what the entire group was worth. What that effectively means is that airlines are worthless. The loyalty program is where all the value is. This is because it is the type of revenue that is generated. Loyalty program, which is most of the revenue, comes from banks. You got your credit card. You spend and you earn one mile per dollar thing. In the background, there is a lot of money changing hands. Effectively the bank is paying the airline for those miles. They put miles in your account. You are redeeming a miles-free flight.

You get a free flight, but the banks make money every time you swipe the card to buy something. They make many billions of dollars from that and it is high-margin revenue. There is a report that American Airlines published. It was a 73% gross margin they have on those points. It is 52% net. There is a bit of margin. It is not like there is low volume. They are selling billions, if not trillions, of these miles every year.

They are making a lot. Because it’s high margin revenue, and they don’t have planes, fuels, pilots, and all this high CapEx stuff that airlines have, and it is a loyalty program, it is effectively a marketing company, which is valued differently in the market. An airline trades like a bad auto company, 4 to 5 times profit earnings ratio. Whereas a tech company is 20 to 30 times. It is not unheard of. It is normal. Therefore, that is how you get these huge valuations on the loyalty program.

Micro-Moments: Loyalty programs provide high-margin revenue to airline companies even without the planes, fuels, pilots, all the high capex stuff.

If your loyalty program is worth so much and it is generating all this high-margin revenue, let’s put a customer experience hat on for a second. Why wouldn’t you focus more on this loyalty stuff? Why invest crazy money in making the seat recline an extra three degrees? Why go to the effort? What is the payoff? Nominal. Whereas if you put a little bit of money into loyalty to grow the revenue by an extra 2% or 3%, that is going to translate to 30 times more on the backend value, which you can use to borrow more to invest in the airline to have a better product. This whole cycle flows around. We are leading with loyalty, loyalty customer experience as a Venn diagram is somewhere they overlap, lead with that, and the airline follows along.

It is funny thinking about that. I have been flying a lot. I had the ability to tie my Lyft app into my airline loyalty program. Every time I take Lyft, I get points on my airline loyalty which would not cost them anything. These partnerships would be a good thing as well. The other piece of it is I get double those miles when Lyft is taking me to and from the airport. There is so much room for creativity that it would not cost them a lot of money to do that. It got my attention.

You are now using Lyft more than you otherwise would do, right?

It is making me loyal to both. It is a Delta perk and I don’t know if the other airlines do it or not, but the whole loyalty thing can be so much bigger than what most people, what the perception in the market is about a loyalty program. I’m fascinated with what you said about the margins on it and how it is more valuable.

It is a bit of a case with Lyft and Delta., It is like 1 plus 1 equals 3 to a certain degree. You get two big brands, and people know them both. When you pull them together, it’s like, “This is cool. I have to do it.”

I didn’t realize until this last trip that I was getting double miles when the trip was to and from the airport because they have that information on the Lyft app. I didn’t realize I was getting double. That was a feel-good customer experience thing. I was like, “Look at that. I got twice as many points because I used Lyft to go to the airport.”

You got to think twice about flying a different airline because you were like, “I need double points.”

It is an interesting deal because if we start looking at how they are connecting the dots in these different loyalty programs, I got a credit card from an airline, and I use it all the time. I pay it off and use it again because I want my miles. As I’m thinking about that, all of this data is flowing through that they should be able to really know their customer because they got data, but yet, you are telling us that they struggle to acquire loyal customers. I’m curious. What is it that they need to learn or what is it that they could do to make a difference?

I might backpedal a bit here. Maybe struggle is not the right word. Some airlines are slightly complacent to the degree. They’ve got no choice. If you want to go from here to here, have fun flying in three stops on another airline, a little bit of that. There is the acquisition part, like getting people to start flying your airline, and traditionally, it has been outsourced to sales teams, not loyalty customer acquisition teams. The other part is the retention piece, keeping people loyal to your airlines, not flying other airlines.

This is one of the golden metrics that loyalty airline programs have. It’s called share of wallet or share of spend. This is how much you are flying this airline versus everyone else. This is an important metric because we can all have different numbers, but all be ultra-loyal at the same time. You can imagine if you are flying twice a year. One is to visit grandma, and one is to visit your cousin. That is 100% of your air travel.

If the airline knows, they are getting 100% happy days. Whereas Betsy over here has got 200 flights a year, spending a lot of money, first class all around the world, everywhere, 100 of those flights are with Delta. In Delta’s eyes, you are a diamond member, a top tier member, valuable, great customer, and loyal, but you got another 100 flights with American Airlines over here. You are not loyal. That is a 50% share of the wallet.

What they would do is target Betsy with more promotions because of the ability to grow that revenue that share of wallet exists. Whereas Tony they were already getting everything they could get out of you. It is about, on the one hand, stretching it to try and get more out of someone, or better yet, you fly a couple of times a year and now get the credit card. Here are some ways you can earn some extra miles on the ground, hotel partners, and all this stuff.

It’s about expanding the revenue and the engagement laterally through non-air at that point. If they are not getting 100% share of the wallet from you, there is a big opportunity to capture more of that. Hence, this is where loyalty programs are designed intentionally to have tiers in the program. You want to reach that next tier up.

This is also why airlines introduce high tiers because you got people that already have the highest tier. They start splitting the business off to another airline. For airlines to bring that back, one way to do that is create a new tier. People stop spending over here and bring it all. They aggregate it with one airline, and then you get this new status. That is why a lot of airlines have 5 or 6 different tiers because they keep adding them on top of it to solve this problem that is never going to end – trying to get people to be more loyal in the retention side of things. It is keeping people spending and on that train of earning status every year and keeping earning the miles.

Micro-Moments: Loyalty programs are designed to have tiers, so people constantly want to reach the next level. Airlines always introduce new tiers to avoid those in the highest levels from splitting business off to another airline.

I want to go back a little bit to the beginning of the conversation when you said you were calling all these different airlines, and they were saying, “No.” Did they give you any rationalization for why they were saying no? Was it back to complacency, and it is not what the script says? Why do you think that is that you were getting a brick wall there?

To be fair, a lot of us don’t have a process in place. There is no policy and no official way to do stuff. It has generally been if you know the CEO, you have golf on one Saturday, and you have the gold status conversation. “I will buy you drinks if you do it for me.” There has been a bit of that. On top of that, you got corporate sales teams at airlines and hotels going out there, schmoozing people doing dinners and drinks. They are like, “I will give you gold status.” There is a bit of that.

One airline said, “All our top customers spend at least $50,000 a year with us, and we can’t give it to you for free because you haven’t spent that with us.” You are not going to get it unless you give it to me. I’ve got a lot of airlines I can fly, but there are not that many of me out there. Take your pick. I didn’t end up giving this one particular airline my business. Long story short, I ended up meeting a girl there and marrying her. She worked at the airline. I ended up getting staff travel. Not only did they lose out on my revenue, but I also cost them some money because suddenly, I was flying on staff flights everywhere where I could have been on paid revenue tickets. It is a lesson learned.

When you are talking to them now, are you starting to see them understand what you are doing? Are they starting to embrace Status Match and understand why this is so good for them?

Totally, we’re signing up an airline a month. The run rate right now, traditionally, the sales cycle of airlines has been ridiculously long, many years. A lot of interest for different reasons. Some are strategic. Some realize, “We are not that great. You guys are the experts. Handle it for us.” A lot of that is about education. We help you input policies and procedures in place internally to deal with these requests from customers. A customer emails an airline and says, “Can you give me a status match?” It is a common thing. If there is no process, that gets a bit of a black hole, and you don’t reply to us.

If someone got a gold status in an airline, they are spending $5,000, $10,000, $15,000, and $20,000. This is a good customer versus Tony over here who is doing two flights a year. You want more of these people. If they contact you wanting something, reply to their email. You’ve got to know what you are going to give them, put some terms around it, and put some expectations there. There are a bunch of airlines that work with us. They outsource it. If someone contacts them, they say, “Go to StatusMatch.com. Go through the process there. That’s whom we work with.”

It is a lot easier. They save face as well. They don’t have to say no to customers, which can be awkward sometimes, especially if you have hit up a C-level person in the company and said, “Can I ask this?” The last thing you want to say is no. It is a lot easier to say, “Go here.” They are not saying no. They are saying no and yes at the same time. They get a way to get out of that awkward moment if they need to. It is a bit of a political thing there. It can help manage some of that for airlines.

We are becoming a lot more popular. We’ve got ways to help make generate revenue on the back of it as well with other fees and stuff. We’ve got clients whom we bring new customers. The airline pays us nothing, but we end up paying the airline on top of that. You get paid to get new customers. Who has ever heard of that? I would sign up with that.

Get paid to get new customers – who has ever heard of that?!CLICK TO TWEET

I’m thinking, “How can we do that?” I love that you are solving other problems for them, like saving face. That is a problem you are solving for them that isn’t maybe the primary one, but certainly, a value add.

You are going to imagine a typical airline CEO, meeting a lot of people, and handshakes. A lot all around the world, governments and corporate. People all the time ask for one of their most valuable assets, which is elite status. They are asking for it generally for free. You know what it is like. You are in some industry. Your friends know you do X and they are going to ask you for it, “Can you fix my computer?” Take a look at it for a second. With airlines, it was like, “Can I get some free tickets? Can I get some miles? Can I get free gold stuff?” That is that thing. It is something that these higher-ups in airlines run into all the time. I‘m helping them through that process a bit. We have positive results from it.

I want to shift gears for a second because the airlines have done an amazing job with loyalty programs. Next to hotels, they are some of the best in the world at loyalty programs in general. What could other companies or other industries learn from the airlines that would add value? I’m thinking of any consumer-focused business. If they could generate 2 to 3 times the value or the revenue from a loyalty program, why not go that route? How can other companies do this?

We take a step back and look at why it is successful for airlines. There are a lot of emotional drivers there for customers. I call it an emotional pull. That is done via the loyalty proposition. For example, you are a platinum member. They call boarding for an aircraft and say, “Platinum members can now board.” It feels good waltzing past 300 other people that are still lined up. That moment sticks with you for about five seconds until you scan your boarding pass, you get on the plane, and you are like, “That feels good. I want more of that.”

It is these small moments repeating over and over. That is one. Another one is when the cabin manager comes down and says, “Welcome back. You are one of our loyal customers. Would you like a glass of something from a business class, even though you are in economy class now?” It is these tiny little moments, small moments, and highly emotional moments.

What that does is it starts training you in your mind, “I like this brand.” When this is consistently repeated over and over again, it triggers these chemicals in your brain. It is the same feeling as falling in love. With that in mind, how can other brands effectively replicate that? It is an emotional journey. How do you make your customers feel good about something?

Loyalty programs are about creating an emotional journey that mirrors falling in love.CLICK TO TWEET

For example, let’s say you own a juice company. You make juices for people for $5. If you notice someone is a loyal customer, and you give them an upgraded cup. It doesn’t cost you any bit of product. That is about it. If you did it and didn’t even mention it, say, “You might need 2 hands to hold your cup instead of 1.”

That is one of these examples of a small moment. No one thinks about it, you don’t make a big deal out of it, and it is a friendly reminder of what is happening. You feel good about it. Do that over and over again. Put a loyalty structure around that with tier things like having a separate VIP line for top members. That is one of those things. You go, “I’m going to go shop at this brand because there is a special line for me.”

In all these high-end luxury retail brands, there is generally a couple of secret doors. You are at Louis Vuitton or something. This is the main retail space, but if you want the good stuff, there is a special passage somewhere, and you go into that. There is always a super secret passage. There are three tiers of shopping experiences. Not all stores but a lot. If you get into that super back room, you are in the best space they have. They have products that no one else can buy. Generally, you don’t ask about the price in that room. You can afford it or you are not invited there.

That would be an example of how some high-end retailers are doing it through not a loyalty program, but it is in a way. If they know you, they know that you buy a lot from there, you buy the right type of stuff, and you are the right type of clientele, they will start inviting you to these things. They are like, “Come with me over here. Let’s go away from everyone else.”

Some of these brands, you walk in, and it’s like, “Do you want a drink? Can I get something for you?” The answer is not, “I will grab a glass of water.” The answer is, “I will have some champagne.” And you go hey, a glass of champagne. It is cool you are shopping at the mall and buying some shoes. Admittedly, not every business can do this, but it is all about creating emotionally charged small moments and consistently repeating them over and over again. That is the core of what airline loyalty does well.

Not every business can offer loyalty programs. It is all about creating emotionally charged small moments consistently repeated over and over again.CLICK TO TWEET

The consistency part of that is important, too, because it is training the brain again to fall in love with that brand.

What I would add to that are the brands that proactively reach out to you. For example, we have a local store that will call my husband when something they know he likes has come in, and they don’t have a lot of them. They were like, “I have put a couple back for you. Come on in. We will be here. I will pull these out for you.” When you have the ability to create those moments rather than to react to those moments, that takes it to a whole new level because I’m impressed whenever we get that phone call.

This is old-school personalization. These days we have all that big AI. Personalization is really knowing your customer. Those relationships and small-town-type vibes where it is exactly that. You get this product in, and it’s like, “So and so would be interested in that. I will give him a call.” Car companies do this all the time. They were like, “We are getting this special model in. It’s a limited edition. A lot of them have waiting lists, but I might call someone because I know he likes orange stripes. He hasn’t spent $1 million with us this year. I will give him a call.”

Mark, this time has flown by. To me, it was such a fascinating conversation. Tony, do you have any other questions before we start wrapping up?

The only question I have is looking at where things are going. COVID changed a lot. Where do you see Status Match and the airline industry moving over the next couple of years here? We are beginning to see people coming back to travel, but with a lot of the work that I have been doing, I have seen people’s decision-making process has changed. I was talking with a cruise line. They said they went from an eighteen-month booking window to people booking the week or or within a few weeks to take a cruise. I’m curious about what you might be seeing for your company but also for the airlines more broadly.

The business model in airlines, at least 50 startup airlines that are running jets in the world in the last few years. It has never been a better time to start an airline. If you want to make/lose money, it depends. A lot of those are coming in with no debt or less debt than some of the legacy carriers. Hence, they are in a much better financial position. Specifically airline, we are going to see some business models that look and feel a little different from traditional legacy carriers and different from the traditional ultra-low-cost airline models. I don’t know how that will pan out yet.

Some of those are looking at loyalty programs and going, “Why are we trying to compete on price for seats when hang on, all the values in loyalty? Why don’t we compete on credit cards and compete on perks, benefits, lounge access, upgrades, miles, and the stuff that apparently the market think is a lot more valuable?” It is a bit sexier to talk about than pilots, fuel, planes, strikes, and all stuff that has been what every airline’s CEO has been talking about for the last several years.

It is about time that the industry moved in a direction that is more sustainable from a business perspective instead of ups and downs. The airline business model is sustainable from a revenue economics perspective. That might be subscriptions or all sorts of stuff. On the whole sustainability thing, airlines are getting a lot of pressure from governments and sometimes customers to start acting in that area.

It is tricky because they fly metal tubes through the air then spew out fumes everywhere. It is a bit difficult to how do you do that. There is an upside and benefit of people traveling because when you travel, you are traveling for a reason, not to have caviar with your friend for lunch. You are doing some business there, and you are meeting someone.

There is an economic activity that makes the world work because of that. There is a bit of a balancing act there. In the next few years, we are going to see a bunch of new business models come out, which is going to be exciting because they have to do it, and other industries can learn from it. The airline industry is forced to innovate. We are starting to see a little bit of it, and we will see a lot more of it in the coming years.

Mark, it has been wonderful talking to you. This is so interesting, and I love the way your mind works thinking about this problem. I don’t think as many people are out there thinking about it the way you are. Before we wrap up, on our show, we like to invite our guests to give a shoutout to an organization or non-profit charity that might be doing some good work that you would want more people to know about. Is there anybody that you would want to tell us about?

It keeps you on the theme of loyalty and points and is an interesting product. It is called DoGoodPoints.com. They partner with thousands of charities and non-profit organizations. What I like about it is you earn points when you give. Instead of giving and not knowing where it is going, you earn points from it, and you can choose.

It is almost like a charity introduction. I like this because suddenly, seeing new brands and charities you don’t think about. You think niche and small charities that don’t get the limelight they probably deserve because they are hyper-focused on this tiny little problem. You look at it and go, “That is something I can get behind. I will do it and get rewarded for it.” I’m a big fan of their platform and what they are trying to achieve.

I have not heard of that. I can’t wait to dive into that and look at it. Thank you so much, Mark, for joining us. This has been a great conversation. I’m excited to watch what happens in the next few years with Status Match and the evolution of the industry in terms of innovation. Thank you so much for sharing all of this with us.

Thanks, Betsy and Tony. It has been great to talk with you.

Betsy, what I loved is that early on in the episode, Mark identified something I didn’t even hear the statistic when we did the prep session, but he talked about how people with status, certain gold, silver, and platinum status. He said that they make up 30% to 40% of the revenue of the airlines, but the airlines are challenged to acquire those to bring them from other airlines over.

I was thinking during the show, and I was probably a little quiet at the beginning because I was processing some of the things that he was saying here, but it is about knowing your customer. It is the essence of our show. If the airlines don’t know those core customers, a small percentage of the customers that are bringing in 30% to 40% of the revenue, they don’t know well enough to bring them over from a competitor. That is a big hole. You step back a minute from the airlines and say, “What about other businesses? What other businesses don’t know why their customers may be using a competitor or potential customers are using a competitor spending more of their money over there and how do you bring them back?”

It got me thinking about the book that we wrote this year, The Rarest Advantage, because in there, we talk so much about how the executives need to have this open-door conversation with their strategic customers. Whether it be B2B or B2C, you got to have that open door where you are listening, asking questions, engaging, and living with them side by side.

You understand what is going on in their lives and businesses. You can step up and help them when they need that. If changing statuses because you are moving, your life is changing, or whatever it may be, understanding what is going on in a person’s life or business would open the door tremendously for these airlines and for a lot of other companies too.

If you think about the return on investment of knowing your customers and the opportunity, and he points it out clearly. You are saying, “I’m a good customer. I got proof that I’ve spent $50,000 to $60,000 flying. Why do you not know this about me? Why do you not want to do everything you can to convert me into your customer? I’m not going to stop flying. I’m going somewhere. Why would you not work hard to turn me into a loyal customer for you?”

It is such an interesting problem that he is solving for the airlines. The residual, they are taking it off the plates of the airlines, not saying, “We are not going to do that.” It is rather, “Here is who you should talk to to help you do that.” They are solving that problem too. It has so many ripple effects. It is going to be fun to watch and see where this goes. It can only be good for the consumer.

On that point you made there, they are outsourcing the solution to a problem that they have, which is making the experience better. I would normally be the person saying, “You don’t want to outsource a strategic challenge that you have. You want to figure out how to do it internally because that could be a way you distinguish yourself in the market and differentiate yourself in all of that.”

The truth of the matter is that some of these problems are too big to solve internally. It could be too much effort. If someone is got a good solution, it might be best to outsource them. If we go back to the beginning, when we started our show a few years ago, COVID was just hitting. I think about how all the retail stores, restaurants, and all these other establishments, which are brick and mortar, we couldn’t go into them anymore.

They had to immediately outsource to delivery services and last-mile-type logistics. They gave up the experience of being in the restaurant, being in the retail shop, but they had to. Airlines are choosing to make this shift to say, “We’ve got a bad experience in this area.” They are smart enough to say, “Let’s hand it over to someone who is an expert in this space. They can deliver a great experience, and we will focus on what we are already good at.”

That is a perfect way to wrap it, Tony. As always, it is a pleasure to have these conversations. I love doing this show with you. I love our readers that have been loyal to reading. If you have not yet subscribed, please hit the subscribe button. We will continue to bring you great guests on the show. Thanks for joining us.

Important Links

Related Podcast