Articles - Written by Arthur Hughes - 1 Comment
The Merits of a Gold Program
|How do you get people to value and use their Gold Cards, and not just leave them in their top bureau drawers? So many people are issuing them these days that they have become as common as diskettes. The novelty is gone.
For a while, they were a valued and treasured item, unattainable by the ordinary customer — only available to the best buyers with the highest credit rating. Then, as always, the dam burst, and hundreds of companies began issuing them to everyone in sight. Another relationship-building bonus destroyed. That seems to be that.
But, hold on there partner, that is not necessarily that. There are still some companies that have not devalued their gold cards, and are still doing well with them. American Airlines Advantage Gold is one survivor that is worth discussing.
I have told the story of how I got my AA gold card so often that almost everyone knows it, but it is worth repeating here. To get an AA Gold card, you have to have flown 25,000 miles in a single calendar year. On January 1 of each year, the clock starts running again, and you lose all the gold qualifying points that you built up the previous year. I have been accumulating American Airlines miles for the past ten years, but I had never made gold. Last year, I came close. I called American Airlines on Christmas to ask how many gold qualifying miles I had built up.
“You have 24,600 miles, Mr. Hughes.”
“You’re going to give it to me, aren’t you?”
“No, Mr. Hughes, you have to have 25,000 miles.”
“Can’t I pay you for the missing 400 miles?”
“No, Mr. Hughes, you have to fly them.”
So, for $44, I bought a round trip ticket from Washington to Raleigh Durham. I flew down there at 7:00 AM, turned around and flew back at 9:00 AM. I was in my office by 11:00 AM, and I was Gold.
What does being Gold mean to me? I get to fly first class on every trip, without having to pay for it. It costs me $35 per flight. I get on the plane first with the old people and the children. I get 25% bonus miles whenever I fly anywhere. I have a special 800 number that I can call to get special services that are more personal and helpful than an ordinary passenger can get.
What does my being Gold mean to American Airlines? It means that they have Arthur Hughes hooked. He will jump through hoops to arrange his schedule so that he always flies with them, or with an AA partner. I go to Orlando via Miami — it takes longer, but costs the same — because American does not have a direct flight to Orlando as many other airlines do.
When I described how I got Gold in a speech at the National Center for Database Marketing Conference in Chicago last July, a member of the audience came up to me afterwards. He said, “American Airlines seems to have violated every marketing rule in the book! They should have given you the 400 miles. You could have called United and said ‘American won’t give me gold, even though I have 24,600 miles. What will you do for me?'”
I have thought about this conversation many times since, and I think that the questioner was wrong. I value my American Airlines Gold Card more because I had to work for it. They set the bar up there pretty high, and let everyone know that they have to jump over it. When you have succeeded, you feel that you have accomplished something. If the good things of life are handed to you on a silver platter, you don’t appreciate them as much as if you have to work for them.
American Airlines is not alone. There are many other companies that have not devalued their gold cards. The cards are tough to earn, and pay real dividends when you get them. The trouble with the companies that give Gold Cards to anyone, is that they have so many Gold Cardholders that they cannot afford to provide many benefits. The holders soon realize that the cards are of little value, and they don’t bother to carry them in their wallets or purses.
There are some relationship-building principles at work here which apply to all facets of Database Marketing. A clerk who says “Have a nice day” to all her customers is being friendly, of course, but it doesn’t mean very much. It is a cheap gold card. A clerk who says, “How is your daughter doing at Wellesley?” knows how to build a relationship. She is weaving a cocoon that will bind that customer to her and to her company for years to come. This is a real Gold Card relationship. How can you get your employees to accumulate the information needed to build Gold Card relationships?
It seems to me that there are several basic principles:
It’s not just for airlines anymore. Database marketing is possible and available to everyone who is marketing to consumers or businesses and has a way of tracking purchases. Whether you are going to be successful in building lifetime relationships and increased sales depends on your ability to build and maintain a database, and to use it to provide helpful services to your best customers.
How to set up a gold card system
When you think about it, every company that has a way of tracking customer purchases should have some sort of a gold card system. These are your best customers. You should treat them differently so that they feel special. You want to get them hooked on the wonderful service so that they feel that they can’t afford to switch. Even more important, you want to send a message to all of your second tier customers: those that have only 24,600 miles at the end of the year. “Just try a little harder, spend a little more, and you too can be Gold.” This is the real payoff for a gold card system: a motivator that encourages your second best customers to strive for best.
What should you do if you don’t have a gold card system in place right now? There are several universal steps.
Post Footer automatically generated by Add Post Footer Plugin for wordpress.
More In Articles
- How to Do Your Own Market Research & Identify Your Ideal Customer
- Email Strategy Study Group
- Why 21 Links Could Be Key to Your Email Success
- Why do e-mails bounce?
- How does frequency of e-mails affect open, click and conversion rates?
More In Telecom Articles
- Glossary of Telecom Marketing Terms
- Telecom Marketing Issue 01
- Creative Destruction Hits Telecom
- Case Study: Wireless Churn Reduction
- HDTV Bandwidth Requirements
More In Speeches
- Targeted Addressable Advertising Using Digital TV
- Speech on Distance Selling delivered in Athens, Greece by Arthur Middleton Hughes on December 15 2009
- Speech by Arthur Middleton Hughes on How to Retain Insurance Customers Delivered in Philadelphia to PIMA on November 17 2009
- Surviving the Recession Surviving the Recession with E-mail Marketing
- Online Marketing: Driving Traffic, Conversion and Sales