If you want to learn how to gain insights you can act on and solve business problems with data, all while building a data driven culture at your organization, sign up for Pragmatic Institute's new course, Data Science for Business Leaders. Find out more@pragmaticinstitute.com slash data.

Welcome to Data Chats, a podcast by Pragmatic Institute and the data incubator where we tackle data, topics and trends with experts, industry leaders, instructors, and alumni. I'm your host, Chris Richardson, and today I'm sitting down with Mark Ross Smith, award-winning global airline loyalty industry leader.

Mark is the c e o and co-founder of Loyalty Data co, the parent company of status match.com, a cutting edge loyalty program that's changing the game in the airline loyalty industry. And he's also the editor of travel data daily.com. Mark, thank you so much for joining me today, Chris. It's really good to be here.

I'm not sure we're changing the game in the loyalty industry, but we're trying our darnedest to do that. Well, that's what I hear. So we'll, we'll maybe get a better sense of that after talking about some of those aspects in detail. But I wonder maybe just for people listening, if you could say a little bit about where you are now and how you got there.

So what kind of experience you're coming into the game with and what you're doing, how you're spending most of your time now in relation to data. So we operate in the airline hotel loyalty industry predominantly. So it's. So that's loyalty is, you know, your points and miles, credit cards, your gold status, your platinum, all that kind of stuff.

The fun stuff that people have when they're traveling. I got into this, you know, way back in the day as a programmer, actually, you know, I taught myself, I want to build websites basically. And I thought, how do you do that? Cause I had some poor experiences hiring some folks in. Some other subcontinents that I thought I'm going to build stuff myself.

So, you know, I learned I'm cautious a while ago, but like basics that are PHP, MySQL kind of stuff. And then that kind of started the journey, you know, into this space. And so, you know, build a couple of companies in that time, build a social network as part of that. And. You know, in that time I started traveling quite a lot for business, you know, around the world, conferences, speaking at different events and stuff.

And it was basically a freaking flyer and, you know, started loving that game and I'd sold a social network business. We sold that 2013. And I thought, you know, how do I, how do I get free flights? , trick. How can I fly for free? You like, because I was spending so much money on air travel. You know, what, what could I do from here?

And so, you know, I thought, I need to work for an airline, right? I need to work for an airline. I need to start, create a product. 'cause, you know, 'cause you know, it's like when you can build something, you just build anything techy, build anything you want, right? Mm-hmm. There's, there's no limits. So I thought I'm gonna start building stuff for airlines and loyalty, you know, based off knowledge that I'd seen in the telco business.

Which, you know, in telco, a lot of really amazing stuff with customer data and, you know, churn analysis, all this kind of stuff. And so how could airlines leverage that? Because I see they weren't doing it. And so I did a little story, started a blog, travel data daily. com, where I just started just, just getting ideas out of my head, stuff that I'd seen in telco and like, how could airlines apply X?

How could they do this? How could they make this, but how could they make money monetizing this data asset over here? And that was all free for a while. It's still online today, travel data daily. com, a bunch of stuff that I did. Sort of put a thought, we'll call it thought leadership. And having that blog there was quite good.

It was the foot in the door to speaking to a lot of airlines, getting invites to conferences, to speak and stuff like that, which then, you know, pandemic hit. And I thought, how can we help the industry that needs the most help right now? And that's when we started multi data co and status match is our prime product, which is high value customer acquisition for airlines and hotels.

Since then you have signed, we've worked with eight airline brands now, you know, Emirates, some of tons of some of the big ones we've sort of work with. And you know, I think we're doing pretty well at that. And you know, part of what we do, we obviously deal with a lot of sensitive data, a lot of customer data and stuff like that.

So it's presented new challenges, new things that we need to work through as a business that I hadn't had to previously. And that's how we got to today. Yeah, so I'm curious what that looks like over time. So you've actually seen some of the transformations, you know, in particular with airlines and loyalty programs.

What changes have occurred and you know, what are some of the key points that you've seen along the way? Uh, at an event in person recently in London last week, and I said, airline multi innovation died in 1960. It was an audience of airline managers that didn't go down very well. But the point I was trying to highlight is that if you look at the airline industry, it doesn't, a lot has changed, but it doesn't look like a lot has changed, especially in the last 20 years or so from a loyalty.

Perspective and airline loyalty programs, uh, marketing companies effectively. Right. So you've got two parts to airlines. You've got the operations part, fuel pilots, planes, safety, that kind of stuff. And you've got the commercial side, which is marketing, loyalty, revenue management, this kind of the data stuff, the sexy stuff.

Yeah. So the commercial side has the ability to make a lot of money at scale. Operational side is there's a cost center. It's about safety. Right. And so what happens is in airlines, there's this culture of safety, safety, safety, safety, safety is drilled into your mind. If you ever walk into like an airline building, like with stuff, there's posters everywhere.

It's all about safety, safety, which to be fair is what you want. Yeah. I want a culture of safety because I want to know, I walk onto that airplane, that safety is the thing that they're thinking about, which is great. However, that culture sort of flows over into the commercial division, right? So folks that have been in airlines have been typically been there for many years, decades perhaps, and it's safety, safety, safety, safety, which means risk aversion, right?

So when it comes to trying new things. Even simple things like new marketing campaigns, new ways of, even airlines moving from hosting their own servers in their own offices into the cloud environment, that has been like the biggest transformation challenge probably in the history of airline aviation, right?

Even something that doesn't seem really that difficult has been pretty significant. And so if we look at specifically at airline loyalty over the years, what's really changed? Is it's moved from a, I'm so civil, but sending like an email to an email to like the member list, right? It used to be just spray and pray, just the whole database.

And a lot of airlines are still doing that. Just get one email, it's just sent to every, same thing is sent exactly the same person. There's opt out, you know, it's just, it's very 1999 ish. Right. Yeah. Whereas, you know, the, but the, the more sophisticated ones, like they're only at the point where what off like sending the right offer to the right person, the right time kind of thing.

You know, if someone's opening and engaging with certain type of emails, send them more of that. If they're not opening things like, you know, fly return to Cancun for 200 bucks kind of thing. Like there's a certain type of person that will open these emails and there's a certain type of, you know, high flying executive that will never open them.

Right. So more sophisticated airlines are starting to learn, stop sending 200 coach round trip tickets to executives that are making 20 million bucks a year, I think it's kind of wasted on them. You know? Yeah. Well, like better off to send like a discount on private jets or something, you know? So the more sophisticated airlines are more at that end where it's, they're learning what not to send to people.

It's about what to send to people. So in terms of sophistication, what we've seen in our loyalty hasn't really changed to be frank. No, a long time. Yeah. How, how have things changed in the sense that is there, it seems like every airline has a loyalty program and is doing. Very similar things, at least all the airline, I don't fly private jets or I haven't, but I hope to win maybe one day, but all of the airlines I take, and I've taken quite a few flights in the last few years, have very similar approaches from my perspective as a consumer.

I wonder if behind the scenes you see more significant differences and if, you know, someone with your experience, what you would look for, what you would notice. I'll give you one good example, Chris. So you're saying you're flying. a bunch of different airlines, right? So presumably you're not diamond elite platinum with any one single airline, right?

That's true. Yes. Oh, you should aim for that. Cause it's a good goal. I'll tell you the, what I'll call like the golden metric of airline loyalty programs, right? It's a share of wallet or share of spend. Right. So, you know, you're flying, say, let's say you're doing 10 flights a year, right? You got a few business trips, you visit grandma, you know, there's a few domestic things, nothing too crazy.

Right. Like you might, you're already in the top 10% of global travelers if you're doing 10 flights a year. Cause most people don't fly, right? So you're flying with airline A and let's say all 10 of your flights are with airline A, right? Call it just for fun. Say it's the Delta, right? And so your friend, John, who's an ultra frequent flyer, he's doing like 200 flights a year, always in first class.

He's, you know, jetting around the globe, doing all sorts of spending a million bucks a year on travel. If, you know, let's say he's, he's got 50 of those flights of the hundred he's doing with Delta, right? Typically, the airline would see John as a better customer than you are. I mean, he is, he's worth more, but actually he's less loyal.

There's only 50% share of his wallet is going to Delta versus as a hundred percent of yours. So what that means is airlines, the sophisticated ones would look at this and say, you know what? Probably not going to get much more out of Chris because a hundred percent of what he could possibly do is coming to us.

He's very loyal. Whereas John. It's worth more, but less share of wallet. So start sending John offers basically to stop flying other airlines. You know, if you do these two actions, we'll get these bonuses and airlines typically know what drives folks. There's three or four things that generally drive behavioral change within members.

So the two big ones are points of miles. Right. So that's generally true. Flights or credit card spend, you can, you know, earn points miles and that flows into aspirational travel, right? So it's, you know, I'm saving up miles so it can take. The wife and the kids to Tokyo, Disneyland, fly first class and that kind of stuff.

So that's one, one driver. The other one is elite status. That's the silver gold platinum you have with an airline. Airlines typically know what will drive certain people. Some folks don't care about points miles because they're earning hundreds of thousands or millions of miles from their credit card every month because they have a business.

Right. So if you give people more miles, it's the needle much. Right. Whereas status is an ego thing. And, you know, status drives all parts of society, right? That's why, that's why we buy fast cars that look good because we want the status. That's why we, you know, we fly first class as well. We do certain things for the status.

It's a huge, huge driver. So in the case of John, you know, he's already got the status. So how would airlines incentivize him to move more share of wallet and might be create a new tier above that he can't get yet. Something money can't, he can't buy. So airlines are quite good at this.

And so as long as they understand what can affect behavioral change for each of their members, especially the folks at the top, because they have the ability to spend more once they know that they know what to kind of send them. So, you know, this comes back to share of wallet and percentage of share of what and spend.

It's probably the number one metric for most airlines right now. I'm curious for, from a data perspective, if I, in that example, right, you would, if you were working at Delta in this example, you would have all of my information and half of John's information theoretically. So how would you know, or what signs might you look for to read in terms of the data to tell you that John's only spending 50%?

How do you know that's not, for example, a hundred percent of his work? So they would have a central system that collects data from both internal and external parties. So obviously when you fly, they can tell where you fly, right? If you fly, say you live in Atlanta, right? You fly to London. And then there's no return flight back.

So that's an indicator. They've missed out on something, right? You clearly didn't drive back. You could have gone on a boat or something. You know, something's not really, you didn't fly them. Could have flown another airline. Could have, you know, something else happened. Right. So there's just, you know, we chalk that up to, we didn't get something out of you.

Right. So that's one. Second one is. Where people are engaging with the brand. So you open the um, so I'm not saying Delta does or doesn't do this by the way, just mm-hmm. , purely example, just disclaimer. You open the Delta app and you're in London. So you flow, you've flown from Atlanta, London, you open Delta app and then two days later you open it and you're in Cairo.

Now, day later you open it and you're Hong Kong. And the airline knows that there was no flights with them or one of their sky team partners between those cities. Right. So that what they're doing is they're collecting, you know, Chris is over here. Like where do they think you are in the world physically right now?

Right. So they, you're at home, you're Atlanta or wherever, you know, now you're in London, now you're in Cairo, now you're in Paris, now you're in Johannesburg. If there's no flights there could chalk that up to something you're missing as well. So that's like another data. So none of these are a hundred percent accurate.

But when you, you'll see what I mean, when you lay them on top of each other, you start to get a clearer picture of what's happening. That's the, what was that, the third one we'll talk about? Fourth one is... Telco data. Again, this doesn't work for all carries in all countries. You can buy telco data and get geolocation on caveat doesn't work all the time for some users gets expensive for the airline.

So they tend to track just the folks who are spending a lot of money. And that's just, you know, again, where in the world are they right now? It's little things like clicking links on emails, getting IP addresses. So it's, yeah, it's a little, you know, where's Waldo type thing, where's Chris in the world right now?

And, you know, keeping tabs on him. The other one is credit card transactional data. So if, especially if you have the co brand credit card with an airline or a hotel, right? So if you've got like the Delta American Express credit card, they're transactional spend. They can tell if it's a in person transaction, you know, if you've tapped.

The chip in kind of thing versus an online transaction, they can tell that you're in the city and then you've gone to this city and then this city and that, and also the type of spend. So folks tend to start spending at high end restaurants just before they're about to travel as one sort of indicator that folks are about to start doing more.

If you start buying travel products, if you start spending at airports and other countries, you know, actually I'll tell you a story years ago when I met my wife, she worked for very large global airline. And she had a, like a supplement, a partner card on my American Express account. And I w I wanted to see, I want to test with American Express to see if I'd get better offers from them.

So I gave her a card. I said, and she's, she's flying all around the world for the airline. Right. I said, just. Every airport you go to, I just want you to just a small transaction at the airport, just to like, just ping up on the credit card radar, like I'm over here, like I didn't buy my ticket on using this credit card.

And so if you looked at her travel pattern, it's just off the charts, like who, who flies as much, obviously she's working for the airline, right? So she's not actually. you know, paying for tickets to travel around the world. And that resulted in me getting more offers to, you know, spend X dollars with this airline and get this bonus.

I started getting quite a lot of these things. So it's a bit of a hacking of the system to try and get more, more points out of credit card spend. Interesting. Yeah, actually that makes me think of something else I wanted to ask you about. So maybe we can jump into that. The different kinds of data analyses.

The way, the way that you can collect and the way that you can make sense of data in this particular, you know, scenario, we're talking about airlines and loyalty, but I'm sure. A lot could apply in different ways. What are some of those considerations? Because one might be those kinds of situations where people are trying to get the most of their points.

And I don't know if there's like a ceiling or something where they look for, I could imagine that on some level that could look similar to fraud. So there's fraud, obviously that's one way you can use data, but there's also people who are maybe collecting so many points that the airline is losing money.

I wonder if there are. different categories that you see frequently in, in this industry? Generally, they don't lose money when they sell points. In fact, most airline loyalty programs make so much money that as a business, they're worth more than the entire airline itself. And that's to do with the type of revenue they, they generate.

So when you spend on your credit card, you earn those points miles that effectively it's the bank buying those miles off the airline and then putting miles in your account. And you may not use those miles for two, three, five, however many years. Right. So they get the cash up front, helps their working capital and you don't use them for many, many years.

So it's, it's kind of a win win for them. There's a thing called manufactured spending in the credit card world, which is as it sounds folks that are, they'll go, I'm making, this is a terrible example, but you go to Walmart, you buy a hundred dollar gift card, you put on your credit card, you need to pay with your credit card.

Then you could get this gift card and you somehow you sell it for a hundred dollars to someone else. You get the cash, you get the cash, you put it, deposit in your bank, pays off the hundred dollars from the credit card transaction, and then you go do it again and then again. And that's not a hundred dollars each time.

It's 10, 20, 50, 000 at a time, right? And so to your point, that's where this kind of manufactured spend often looks like fraud. Like, like who's spending 50, 000 a day at Walmart? Hang on, your credit card application said you only earned 75, 000 a year and you're spending 50 grand a day. How does that work?

Red flags. Yeah. That has resulted in quite a few people having their cards limited and closed. But in that scenario, it's actually really good for the, for the loyalty program, because it's effectively the bank buying points of miles, um, on behalf of the consumer. So pretty much any point or mile that goes into someone's account, someone's paying for it.

And those points of miles, you know, they're They're making billions and billions of, of this kind of stuff. So there's, there's a lot of money in there. In that scenario, it's really about the merchant trying to protect their business as opposed to the loyalty program trying to protect theirs. But you get to, you get to a situation where everyone's making money out of the system.

Like, do you want to stop it? You know, just let slide and how to get more people doing this totally off topic here. I've totally forgot what you asked now. No, no. That's interesting. So, so yeah. So I'm thinking about the different kinds of questions a data analyst or people working with data might be thinking about in relation to this.

So I mean, already you've said targeting key people. Getting a bigger share of their wallet. I'm just curious if you have other common questions that can be answered with data or common things that you can look to data to find out, like what, what kinds of questions are best answered when it comes to data analysis and loyalty programs.

I give you another example. Pre pandemic, I. We're in a tech center of analysis on, on sort of flytop. com is a very large frequent flyer forum. There's millions of people on there. They talk about all their favorite hotel, airline, car, rent loyalty programs, right? And so the cafe Pacific at the time had changed their loyalty program.

They'd made a bunch of changes that. Yeah. Didn't look like it was that great for the top end frequent flyers, you know, the gold, platinum, diamond, these kinds of folks. And being a bit of a geek I was, I wanted, I wanted to prove that their changes were bad for their business because there's no other way to tell.

You just have to wait until people stop flying the airline. And there's a lag time between making a change in a, well, like some sort of business decision. And then when you actually see the effect on that, that might for an airline, this could be two or three years. And you make another change, you're going to wait another two or three, it's just too long.

Right? So I wanted to speed this up a bit. So they made the, Cathapisib made their changes, and about six months later I scraped the data off, please don't sue me for my talk. Scraped all this data off, you know, 600 million words, it was quite a lot. And ran a, the cognitive, Text sentiment is a Microsoft tool at the time I'd run over that and positive or negative.

I got the top people posted a lot in the forums and I messaged them all. I said, what status are you with the airline? What do you have now? What did you used to have? Just to get an idea of where they are versus the timestamps on all their posts. So if they were like positive, positive, positive. And at that time I knew they were top status and then it was negative, negative, negative.

And they were at a lower status. Like there's some correlation between their status and how they talk about the airline in a public forum. Okay. And so what I discovered, I can't remember the number, it was like a 12% drop or something in terms of how people spoke about it. And it was that year that Cafe Pacific had announced a loss as well, which is unusual.

This was 2018 I want to say at the time. And it just stands for loss and that attributes a lot of that to loyalty.

And you changed it. I've got some data to prove it. And you know, I thought, you know, gotcha now. Cathay ended up changing their loyalty program again to make it a lot better for consumers. But I did publish that. If you just Google like Cathay Pacific churn sentiment analysis, you can, you can see the full report.

It's all free. I'm like, okay, cool. Yeah. We'll put that in the show notes as well. Yeah. So, um, you know, it's kind of a bit of a project I had to do. Get that going. And I do that with a bunch of other airlines as well, just to understand how folks were talking about it. Cause when you, in airline loyalty, when you go, you drop in status.

So let's say you're a gold member and then the airline takes it away cause you're not flying enough. Right. So there's a bunch of people every year. This is pretty normal. I dropped down when that happens. There's a lot of like, you know, screw you. I'm a gold member. I'm super loyal. You've taken away from me.

Right. And like what happens at that point? Right. So you have a bunch of social media stuff that not always friendly and, uh, folks tend to disengage. They will draw if they pull back a little bit. And so I think just like, you know, there's other industries are really good at predicting churn using this kind of data and airlines, uh, they're really just getting into this.

You know, so I think there's probably a lot airlines could draw from other industries. So if anyone out there wants to start working with airlines, there's, there's an info predicting churn based on date on, especially on third party party data, like not airline data. If there was some other correlational link with something else over there, I'd be interested in that if I was working in an airline.

Yeah, I wondered now that you talk about that, if there are key indicators that you look for that you think are most valuable, especially when we're thinking about leading indicators versus lagging indicators. So maybe, you know, they obviously want to know how much money they made in the past to understand what they're what they're doing, but.

I'm sure if they can predict how much money they are likely to make, that's even better. What are some of those indicators that you would suggest, say people working here in this specific industry, of course, but also maybe others that are similar in some sense? I talked a bit earlier about folks that are traveling, starting to spend more on like restaurants and stuff.

So this is one of the things 2020. 20, 2021, when airlines were looking at which routes they reopen international routes to the open up again. So rewinding everyone's mind, you know, a lot of countries locked down, they were easing restrictions at the time. Airlines have all these aircraft. Where do we deploy them next?

Cause the world was ever so slowly opening up. Right. And when an airline relaunch, it puts a plane on new route, it's super expensive. So they, they need to get it right. So they're thinking about what data we have to support launching back on, you know, Amsterdam versus Paris. Right. Which one's going to be better.

And one of the things I found, this is a MasterCard study, was that in the cities that people live in, they started to feel more comfortable going out again and high in restaurant spend. And I think it was jewelry as well. There was two categories that when those went up, that was an indicator that people in that city were ready to travel again.

And that's how airlines were making decisions based on where they were deploying aircraft. Unlock the full potential of your organization's data with business driven data analysis. In this Pragmatic Institute course, you'll learn how to communicate better with stakeholders, provide concrete results based on the data available, and support business strategy.

Find out more at pragmaticinstitute. com slash data.

Yeah. Any other markers that you've seen that are interesting? Data points that you would encourage people to look for if they're working in a industry like this. I think airline loyalty, you know, I started off saying how they closed for innovation a long time ago. I think airlines would be open to, so this is airline loyalty specifically, open to looking at different things because they're very much in a bubble in how they work in these, there's bubbles in the silos, right?

They're in both. And if anyone had a great idea on some other data that could be used, so I'm reversing the question back on you here. If someone else had an idea on what might be useful, I think airlines would be very receptive to that because they don't, they don't know what they don't know because they're in these ultra silos, you know, they're not really looking at this and this stems from, you know, years ago when, you know, big data, machine learning, you really sort of.

Data is the new oil, when all these buzzwords came out, when was that, 2014 or so? I think they're still floating around, depends what circles, right? Right. The first wave of it years ago, when that came out, there was a lot of, you know, airlines need to do it for these three reasons. You know, one is to optimize flight times and stuff, all that kind of cool stuff.

But in the marketing side and the loyalty and personalization and pricing and this kind of stuff, they got a bit burned. I want to say that and that and so there's been a reluctance to really invest in anything that doesn't make a lot of sense. So if someone was to come along and say, Hey, we think there might be a correlation between people that do X or start spending in these categories or stop buying new phones or, you know, whatever, get super creative, right.

Between that and people buying business or first class airfares. All right. Airlines would get super interested in that. We know, like we know from our analysis in status match, the people that have, so we effectively go out and we give like a gold or platinum status to people that don't fly with that airline currently.

So the idea is you're a Delta Platinum member. I come along and say, Hey, have you ever tried Spirit Airlines? And you say, Mark, I have not. And I say, okay, here's a gold status of Spirit. I was straight off the bat. You don't have to do any flight. Here's a gold status. The chances of you flying Spirit are off the charts at that point.

You may have never flown them before, you're like, well, you know, is the grass really greener over there? Right? So we know that giving out status to the right people. So these are people that have the, the willingness propensity to fly. Giving them elite status is a primary driver in a lot of cases for them to try a new brand, try a new airline.

I mean, our whole business is centered around this. We've got a lot of data on this. It works really, really well, but the catch is it's about giving status to the right person. Not necessary to have for you to have like a platinum status with an airline, but that's a, Obviously a huge indicator. That's, that's like a no brainer for us.

There's another group of folks that you are like yourself, not necessarily loyal to one brand, very high value to the travel industry in general, because you're spreading yourself so thin, you're actually really valuable, you're just not loyal to one brand. So there's an ability to capture some of your spend at that point.

And if that means we give you gold status to try to help you consolidate some of that travel with one brand. That's a win for the airline as well. I wonder if you have seen anything or if you have any thoughts on the idea of like an elite status. So by definition, giving it to fewer people, right, or making it difficult to access versus if you could give this elite status, like you just mentioned to everyone who is going to fly, then they might be willing to travel more, but it kind of dilutes that idea of an elite status, right?

Is there kind of an optimum? number or way of thinking of that. I'm thinking specifically, like I used to travel more while I still travel, but I used to go to these airport lounges. And when I had my first credit card that gave me access, I was all happy. But then now it seems like those things are just as full as the food courts and everywhere else because everyone gets that with their credit card.

So, you know, it obviously dilutes how good it is to get airport lounge access, but I would imagine, you know, that kind of thing translates to gold status, platinum status, things like that. So are there ways? to measure that or think about that. So fun fact, a lot of airlines make more money of credit cards than profit out of that than a lot of other things.

And lots of programs are worth more in valuation terms than some airlines. In fact, sometimes the laws programs were double than the actual hold on group. So that's why we're seeing like airline lounges like food courts. This is definitely true. I can think of one airline brand in particular. So generally people that have an airline status.

This, they represent the top 5% of frequent flyers globally. That 5% is worth some, contribute somewhere between 30 and 40% of total airline revenue. So they're the most important, most valuable customer group an airline can have. This is very similar for hotels as well. So airlines, you think, want more of these customers, you get more of them, they spend, because they're spending the right type of money.

They're in, they're not on the basic economy fares. They're typically booking, you know, within a week of travel. So close in to departure, which means they're paying more for the ticket. They tend to buy business first class more often, company funded or not. They tend to, you know, do more of that more frequently, high yield fares.

They tend to buy more of the ancillary, the options as well, where available. They're just your best type of customer, right? So airlines, you would think most of the time want more of these folks. So is there an optimal, you know, number we've seen around, around five to 10% of the total member base having elite status is.

Around the sweet spot. If you have, you know, too many to your point, lounges become crowded, the priority boarding line, suddenly, you know, if you are not in group one, you're not gonna get those bags in the overhead lockers, right? Mm-hmm. , because God forbid you're in group two, like the second group to board, right?

It's like mm-hmm , it's full of it. 'cause everyone was in group one. So it's a bit of that. But the opposite of that is airlines that have a low. Elite status penetration that can have low yield and things like that. So there is an optimal point. You know, we're starting to see like Delta Airlines, good example.

They're starting to prioritize people that have credit cards, access to the lounges versus people that have status. And so this is going to present some challenges for them in terms of the type, like what is their ideal customer now, right? What is the customer profile and how do they get more? Is, is it just credit cards?

It's just people with a credit card, which anyone can get as long as you earn X dollars and you're willing to pay the annual fee. Are you now more valuable as a customer to the airline than someone that's spending 50, 000 on business class fares and traveling around the world? And the answer is very interesting.

A credit card customer can, in a lot of cases, be more valuable. So then, you know, what is the customer dynamic now? Is it, it's possible to never set foot on a plane and be worth more to the airline than someone that's flying, you know, road warrior every day of the year, always in first class. And is that a numbers thing, like the amount of people?

Is that what you're saying? It's the type of revenue it's created. So they're charging on their credit cards. Yeah. So that's high margin revenue. So that can be 50 to 70% net margin in terms of the type of money it's created. And that's, it doesn't sound like much, but you know, say the bank is buying miles.

On your behalf, let's say two cents a pop, right? You're redeeming it at the equivalent of one cent or less, right? So there's, there's a decent margin there. Yeah. Versus you buying a ticket to fly somewhere, right? Airlines have traditionally talked about how, you know, razor thin margins, three to 8%. Right. So if you compare 3% margin versus 70% margin, which type of money would you rather have if you're running that business?

I see. Interesting. I wonder, I mean, you talked earlier about the drive for safety in airlines and then also the idea that Early on in this industry and like a lot of industries, a lot of people promised, I guess, you know, magic with data and it didn't necessarily happen. And so they got burnt in some ways.

Now we have this newer wave of AI and machine learning hype. I wonder if you have thoughts on what airlines and more broadly programs like that should be looking for, but also should be looking out for. I think I put my airline hat on for a second. Airlines do a lot of things really well. They also a lot of things very poorly.

And in some ways, if they can't, like in the last few years, we've learned that airlines for some reason can't handle refunds. It's like as I'm technical, they can't, they just don't want it. Right. So keep that in mind. AI effectively is a tool. It's not going to solve everything for the airline. Do we really want.

Um, AI flying aircraft, not sure on that one yet, but we're not, I think I something about having a human there that, yeah, you know, no, no, there's a whole other thing. Exactly. So let's have the same conversation in five or 10 years in terms of, you know, I also suffer marketing. I think there's definitely application there, but there's a lot that they're not doing right now.

A bunch of airlines, it's baby steps and AI is just too much of a leap right from where they are right now. Yeah. So if you're trying to sell a tool to an airline, you know, that does some really amazing, I don't know, if it's just generating new content texts that they can put on their website to help sell a destination, even that is like.

A big step. Hmm. So, you know, when I worked at an airline, my default response to anyone with any sort of data proposition was, if you can show how this will make the airline a million bucks in the next month with no investment on our end, let's have a conversation. Otherwise, you know, let's, I've got 50 other things that can make that much money.

So you know that the million dollars kind of gets you onto the radar, but that gets you into the top 2030 priorities. Then you've got to get in the top three or four to get the attention internally to get some traction on what's going to happen. So I think it all comes down to, you know, what could it deliver and how fast.

And are there, you know, in asking that question or maybe seeing people respond to that kind of thing, what have you seen work well? Like, are there strategies for introducing new technologies or thinking about new technologies? I'm sure it helps if you can go from zero to a million. But what other techniques or things have worked well in the past when, when introducing new data strategies?

I tell you that question, what it folks to think about. It forced vendor suppliers to think about the airline business. Not just if you did this square peg and that's sort of a round hole kind of thing, it doesn't fit. Whereas if they have to spend a day trying to understand the airline business, what do customers want?

How could this apply to it? Generally, they would come back with a more thoughtful approach. So Oh, I thought this might've worked for you. That's what I was originally thinking, but I've now refined it to this, that process really is what that was designed to achieve. Not necessarily how do you make a slot money?

That was just. Get them to understand what we're thinking, because if an external party really understands the loyalty business, they would get it. They would get the drivers behind the business, which is selling points and miles to banks and third parties. How can you do more of it? How can you turbocharge it?

How can we get the banks to pay more for? for miles. How can you, you know, do that kind of stuff? So it was really about, uh, getting free brain power from consultants on that. Not, it's not necessarily about, you know, how really can you make us a million bucks in the next month? Although that would have been nice as well.

Yeah. To flip that the other way. What do airlines or an industry, hospitality, what have you, what should they be careful about? So I can understand being hesitant to try new things, especially in an airline industry that's, that, you know, focuses on safety. But if they weren't risk averse, or if there are other industries that are less risk averse, what should they watch out for?

What are some things that could go wrong when implementing a loyalty program or when looking for data about a loyalty program? Good question from a marketing perspective. I'm not sure much could go wrong. I say that because airlines are at such a basic level that they're down here, there's a lot of room to grow.

So what could you really screw up at that point? Not, not a lot really, but you just test it, see how it goes, test again, see how it goes, test again, see how it goes. Yeah. So from that perspective, I think it's all upside is just how do you get in the door in terms of do a biz dev thing then rather than a technical thing.

And I think a lot of airlines, sadly, that's how some of the decision making process happens. It's based on does this feel right? It's a gut feeling thing. There's been plenty of airlines where I've talked to them and show them how they're losing X dollars by not doing this thing over here or how they could make more by doing this thing over here and doesn't get conversations going.

But when you say, look, your competitors. Just launch this thing that's really basic. Suddenly, that thing becomes ultra urgent number one priority. The whole 10, 000 employee company is like, Oh, we need to do this right now because if they're doing it, it must be good. So I don't really see many risks on the surface of trying something new that's so data driven like this.

But sometimes I think it's easier if there's a leader out there, someone doing it first. Cause airlines tend to like, they like to copy each other. Well, with that said, I want to think just a little bit about the future before we wrap up about this industry and this, these practices. Are there things you see coming down the line, either general changes to slight tweaks or maybe profound changes that could happen that you see happening in say five or 10 years when it comes to loyalty programs like that?

I think the speed at which you're moving is a lot faster now than it was five, six, seven years ago. If I was to look at the last three years. And how could I use that to project in the next three years? And again, if you asked me this six years ago, so prior to the last three years, my answers would be very different.

So in what we'll call pandemic times, the rate that loyalty programs accelerated through that faster, I think, than the prior 10 years. Before that. So if we try to project the say next three years of where it's gonna be, we couldn't use the last three years as an example just 'cause of the rate of change has being so rapid in that time.

However, I think ultimately travel and loyalty programs in general have a, you know, bit of a moral obligation to improve the lives of travelers globally. We travel, you know, for a good customer exp experience, for a good experience. We wanna see new places, do new things, see people have fun, laugh, learn, drink.

Dine, you know, all this stuff that travel brings to our, it brings joy to people's lives. So I think there is an obligation from loyalty programs, airlines, hotels, it's all this to, to, to provide more of that. I think our expectation over the last few years has. increased. And, you know, there's a whole revenge travel thing happening now.

That's a pleasure business plush, leisure travel. So I think, I think we're going to see more of that, which is good for everyone. I think it's good for travelers. We're expecting more and we've got more choice than ever before. You know, what some of the 180 new airlines have started in the last two years, like it's quite a lot.

Not big ones, but it's a lot started. So we've got, got a lot of choice and things are expensive now to travel. It's quite expensive in some parts of the world. So we've got more choice and you know, we're less likely to want to choose our favorite brands, especially if the price is astronomically high. So we're open to trying new things, new brands, new experiences.

Yeah, it'll be interesting to see how things evolve and change, especially as you said, after COVID where anyone looking at data trends would probably have, have to just. You know, separate that out or just treat it as a special case, because I can imagine how, how much that would mess up a lot of the trend lines and things like that just because of that anomaly, hopefully an anomaly that doesn't quite happen again, but at least, yeah, looking at that and learning from that experience is going to be crucial.

I wonder the people that are listening, the people that listen to this podcast, they're typically either. In the trenches, doing data work, doing data analysis, or there are people that rely on those others, maybe product managers, product marketers who are listening to this and thinking about strategy ideas, things that they might be able to ask their data teams about.

So I wonder if you have any advice for people listening to this of things that they could do, maybe one or two things that they could do, whether they're working with the data or whether they're asking. People who work with the data, certain questions, what could they do now that would start to see significant results or, or that would lead to greater effects relatively quickly?

What could they start to implement today or tomorrow to see change two things? So firstly, here's something else do well shareable. If you're not looking at that kind of data, absolutely. That is just magic, especially on your top customers or people you think might be a top customers that actually are not.

Yeah. Because the ability to move the needle on that is astronomical and very fast. It's not that expensive really to start tracking. You know, where in the world do you think Chris is right now? That's kind of one idea. The second thing is, you know, anyone that's working with data and maybe Let's just say you work for a venue, you're trying to, you work with an airline, you're trying to pitch something to them kind of stuff.

Anything can drive a fast ROI. And I, especially in travel, they're looking for these ideas. They're looking for something new, airlines, right? They want, they want a good story to go to their management with and say, look, we've found, we've been digging in this haze that for last five years, and we finally found the little needle here.

It's a golden needle. It's worth a lot of money. And this is what we need to do. We're going to get this data. We're going to put it on here and it's going to result in these types of emails. It doesn't need to be complicated. You know, a lot of these data companies totally overcomplicate what they're trying to sell a lot of the time and getting back to basics, talking the language of these people, because there's not a lot of analytical data, geeky type folks.

That work in these travel companies, especially the people that make decisions. So, you know, really just make it easy to understand what in PowerPoints, I don't, it's so basic, but this is the stuff that, that works. So it works really well. And if there's a really good story around, especially a story about how driving up specific travel metrics, this becomes really, really interesting.

And the reason I share this. Data and like how to help sell people to airlines and stuff, because ultimately that benefits you and me and millions and billions of other travelers. Because if airlines start doing cool new stuff, we all benefit. It's not just airlines making more money. They don't really need that.

If they can improve the lives of you and me and everyone else that travels, I'm all for that. And so hence. You know, try new things and keep it simple. Yeah, I think like you said, sometimes it seems like basic advice, but if people would were really doing it, it wouldn't need to be said so frequently. And it is something I hear from guests a lot is that, yeah, we need to think about returning to basics and not over overcomplicating it, which a lot of data geeks tend to do just because, you know, they can or they want to challenge.

But oftentimes it's a simple equation or something that you can put together. Mark, for people who are listening and want to follow you, or maybe even contact you, where should people follow? Where should they look? So I'm very active on LinkedIn. Can I be on there? Mark Ross Smith. It's not many Mark Ross Smiths out there.

Easy to find me. Traveldatadaily. com is my blog. Otherwise, if you have a status for an airline or hotel, you're looking for something new, check out statusmatch. com. Perfect. Well, Mark, I really appreciate your time today. It was really interesting hearing your views and about your experience. And, uh, I just want to thank you for joining Data Chats.

Thank you, Chris. It's been wonderful.