India’s GoAir, a smaller upstart airline with a unique business model, has continued its innovative ways with the launch of a new customer loyalty program that focuses on not only on repeat business, but also on solving a key cost problem for the company. As India’s airlines struggle with margins during a turbulent economic period and a time of high fuel taxes, GoAir has leveraged its new loyalty program to drive its own margins. By rewarding customers for booking only through the website, the airline is engendering loyalty and addressing the margin impact caused by travel agent commissions.
Looking at loyalty programs from the business model perspective is something which we consistently encourage companies to do -- primarly because their value is often determined by their alignment to the specific financial challenges faced by their companies. What can your business do to better align your rewards programs with your business model’s weak spots?