Northern Lights Air Promotional Campaign Analysis

It's January 2019 and we've been hired as the Lead Marketing Analyst for Northern Lights Air (NLA), a small Canadian airline looking to boost enrollments into their Galaxy Loyalty Program. In 2018, NLA ran a targeted promotion with the goals of increasing enrollments prior to and bookings during the summer months. With the membership and booking data provided, we've been asked to assess campaign performance and identify improvements. Specific questions to be addressed include:

• What impact did the campaign have on loyalty program memberships?
• Was the campaign effective across all targeted regions?
• Did the number of booked flights increase? Did point redemptions?
• Was campaign adoption more successful for certain demographics?

Did the promotional campaign achieve its objective of increasing enrollment into the Loyalty Program?

The campaign resulted in increased enrollments during the promotional period, leading to an average YoY gain of 54% for the promotional period and boosting overall 2018 YoY enrollments by 21%. These increases were significantly greater than prior year-to-year changes. Seasonal patterns remained relatively unchanged, and there were no significant differences in campaign adoption across various membership demographics or targeted provinces.

Did the promotional campaign result in increased summer bookings and program point redemptions?

The campaign resulted in increased bookings leading up to, during and following the peak summer season, with June - August bookings up an average of 16% YoY and overall 2018 YoY bookings increasing by 12%. However, bookings % by targeted provinces remained unchanged at 77 - 78%. Point redemptions climbed throughout the summer, reaching a high of 5.8M in July. Both point redemptions and accumulation exhibited double-digit, year-over-year percentage increases.

Suggested recommendations to address current challenges and improve overall program performance

Program points are accruing at a 15% YoY pace, with total point balance more than doubling from 108M (2017 year-end) to 233M (2018 year-end). Industry metrics indicate that 80% of loyalty program points are currently redeemed for flights, with 20% of these redemptions used on full flights that could have potentially sold those seats to paying customers. At the same time, airline “load factors” are currently estimated to average over 80%, resulting in fewer available seats. NLA has previously implemented exclusion periods, increased required points and added certain other fees and restrictions to address the growth in outstanding point balances. Further limits threaten to alienate customers and decrease their perceived valuation of program membership and points. Options to address these challenges include:

• Changing point accumulation calculations to reflect the cost of flights rather than miles flown, and / or varying calculations based upon program membership level.
• Offering point redemptions in a “Bring a friend for free” campaign featuring free companion flights during off-peak travel times. Approximately 25% of current bookings include a companion, and limiting the offer to off-peak travel will minimize “displacement” of paying customers.
• Offer point redemptions for membership level upgrades, priority onboarding, airport lounge access and seat upgrades if available.
• Partner with hotels and restaurants to offer point redemptions for use re: their “distressed inventory” (otherwise empty rooms, dinner seats, etc.) which would be made available to NLA at a discounted cost.