Loyalty programmes as a direct sales platform: a cardholder segmentation based on air flight redemptions

• Main Authors: José Manuel Ponzoa Casado, Pedro Reinares Lara
• Format: Article
• Language: English
• Published: Universidad del País Vasco (UPV/EHU) 2010-12-01
• Series: Management Letters/Cuadernos de Gestión
• Subjects: Loyalty Programmes; Tourism Services; Decision trees; Direct Selling
• Online Access: http://www.ehu.es/cuadernosdegestion/revista/index.php/en/numeros-publicados?y=2010&v=10&n=3&o=9

There are increasingly more loyalty programmes that offer cardholders the opportunity of buying additional programme points or obtaining rewards, such as package holidays or air flights, by paying some of the cost in cash. This feature of the programmes, together with their very nature and structure and the current situation in which the tourism sector finds itself, has allowed for their development as sales platforms offering services directly to their members.This work discusses the potential of such programmes as a tool for a better knowledge and segmentation of customers by differentiating between them on the basis of those who redeem their rewards on a points-only basis and those that do so using points-plus-cash.Using information from a leading, Spanish, multi-sponsor, loyalty programme, this article analyses the importance of redeeming air tickets only, as against other rewards, and cash contributions as a means of completing the redemption transaction. By means of decision trees, as a segmentation method, it can be seen how variables related with buying behaviour, within the programme member companies, have an influence on the redemption of air tickets by the programme’s cardholders.