Jenny Chan 陳詠欣
Jul 14, 2017

Asia Miles CEO: Loyalty points should not be virtual currency

Stephen Wong discusses all the sticking points about your Asia Miles points with Campaign Asia.

Full video of our Rise 2017 fireside chat in Hong Kong last week

Since loyalty points have been a de facto virtual currency long before the advent of bitcoin, many fintech startups have pitched Asia Miles chief executive Stephen Wong to consider miles on ecommerce sites as a payment option.

His answer has been no.

If miles become a virtual currency, tradability (and the necessary liquidity for it) will be its biggest flaw, he explained. A philosophical question about the value of the miles arises if they become tradable and Asia Miles will go into the danger of becoming a financial player, instead of the lifestyle and rewards program it's positioned itself to be.

"It's about where we want to stand. Some loyalty rewards programs are denominated very clearly on their dollar value, so for example five points may be worth one dollar in real currency terms," he said. "We have slight reservations about this. We don't want miles to be benchmarked against the USD. We don't want people to anchor the rewards program on the dollar signs (like a concert ticket worth HK$780), but to anchor it on the experiences (the immeasurrable memories from the concert) they can get." 
 
It's all about providing quality redemption options and then emphasising on the holistic value of the redeemed reward, he stressed, instead of having users "always calculating". 
 
It's human nature to be calculating, though, especially when redemption value equals monetary value. Asia Miles is closely associated with Cathay Pacific's Marco Polo Club in image and in ownership. Wong himself joined Cathay Pacific Airways in 1998 and has been with the airline group in a various management positions in Hong Kong, USA, Singapore, Japan and Vietnam before he was seconded to his Asia Miles post.
 
Miles to go

Wong is driving the loyalty marketing strategy of the program, charting its e-commerce and digital development, formulating partnerships with over 700 brands (out of which 29 are airlines), and determining database marketing strategy to enhance membership revenue.

Asia Miles claims to have more than 9.6 million members, up from four million members since Wong came on board six years ago. Members hail predominantly from Greater China, North America, and the Philippines, according to the company.

Conversations with some actual Asia Miles members, including lawyers and writers who travel frequently revealed confusion over the fundamental difference between Marco Polo Club and Asia Miles

"Marco Polo Club is the loyalty program for Cathay Pacific, and you can only earn Marco Polo points through flying—no other way," Wong clarified. "Asia Miles is actually a broader lifestyle and rewards program. If you're a Marco Polo member, you're automatically also an Asia Miles member." 

Customers can earn Asia Miles in multiple ways: by flying, by dining, by credit card spending.  The use of the word 'miles' though, common in aviation and air travel terminology, tends a signal that earning and redeeming are done primarily though travel.  

If the brand name causes some confusion and apathy, then the redemption system can cause downright consternation for some.  A common frustration is the inability to book convenient flights, even well in the future, without being placed on a waiting list.

"This is not a surprise to hear, as everytime I attend a new dinner, my first 15 minutes of conversation is spent explaining why people can't redeem a seat," Wong said. Airlines open up inventory at different times, so this is a matter of availability outside of Asia Miles' control, he said.

"A lot of people think that Asia Miles is secretly conspiring to not tell you when your points are expiring, so we can profit from it," Wong said on-stage at Rise. "To us that's actually 'toxic profit'. We value engagement with members more than that. If you have points, we want you to use it." 

"We try to focus on what we can do in terms of enhancement of user experience. Sometimes at the base tier of redemption, you can't get a seat, so we added two tiers, Priority One and Two, so as to give more choices for the redeemer." 

The typical 'earn and burn concept’ is supposed to keep one incentivised under a single loyalty program, but whatever points one has hoarded can devalue quickly thanks to unannounced changes to award charts. This could mean a coveted award, like first-class flights or Jay Chou concerts, may be suddenly out of reach as programs generally adjust for inflation and close redemption loopholes. The usage of price-based redemptions, such as for cash-plus-points flights, also make it harder to get something for free using only points. 

Wong tackles the challenges of keeping Asia Miles members engaged by going beyond the domain of travel and allowing restaurant and entertainment choices to be redeemed. "In additon, we are the only rewards program trying to build a Greater China proposition," he pointed out. Domestic Chinese airline loyalty programs, in comparison, allow just travel-related redemptions, he said.

Using design thinking to improve user experience is another engagement technique, he said. "Actually there is a lot of work in progress behind designing redemption processes and mechanisms."

For example, concert-ticket redemptions were done on a first-come-first-served basis before. "While this is the fairest way, it is causing the most pain to members," decided Wong, after doing research on pain points. "Instead we sent an eDM for members to participate in a raffle. They prefer just one minute of work, instead of spending two hours waiting to be the first. What matters is not fairness, but convenience and ease."

publicly-available analysis by Simon Fraser University student Alan Pang in 2016 revealed room for improvement for Asia Miles' website UX, some of which still exist today after a cursory check. Pang listed a few overarching problems: inconsistent design from page to page; a mobile-unfriendly site; calculator tools that are not very useful because all are independent of one another; a lack of customer engagement in key phases in the user journey during 'need recognition', 'information search' and 'post selection'.

Rewards versus CRM

One question that Wong gets a lot from both small startups and big brands: what is the difference between a points and CRM program?

"A lot of brands come to me and tell me 'my boss wants me to create a points program, because everyone is talking about CRM'. But the two are very different, with only one question to differentiate the two: is there a reason for people to collect your points?" Say, if a supermarket's points program is leading shoppers to redeem a free cookie, it may be better off inciting loyalty by providing a straight discount with a coupon, he advised.

"Remember, points are a means to an end. Don't be fixated on that," he urged. The greatest loyalty programs have some asset in hand that is highly aspirational, which can be discounted at the same time due to their perishable nature, such as hotel rooms or flight upgrades.

At the end of the day, every company should be doing good customer relationship management. "At the very basic, CRM just means putting all your customers in a database, and finding ways to communicate with them in a nice storytelling way. From day one, you should have a CRM program," he stated. 

But Wong has also argued that Asia Miles can't be purely customer-centric at the expense of their shareholders. So how does Asia Miles then strike a balance between those groups?

"We are quite naughty to say we are not customer-centric but stakeholder-centric. In the bigger scheme of corporate planning, we must think about value creation as a whole and not about trying to kill one another—this is what MBA classes don’t teach you. Value is about what matters to you and what I can do for you with value that I can provide," he said. Customers are important, but as a B2B2C ecosystem, Asia Miles needs to satisfy not just them, he said. 

"Some customers only want to have the cheapest stuff, so the company will go bust if we only fulfil the customers’ wishes. Yes, it's about identifying customer wishes, ranking them in hierarchy, and doing tradeoffs for each of them," he added.

Loyalty marketing is like maintaining a romantic relationship, Wong described. "Your partner does not stay with you only because you have no bad traits, but because you are exceptional in some areas like being caring. For a company it’s the same. There are good things we are doing, and we have to sustain that. Like Apple is exceptionally good in UX, and we will continue to be exceptionally good in rewarding users." 

Source:
Campaign China

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