Loyalty Program Strategy for Beginners – Part 3

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Loyalty Program Strategy – Introduction

In part two, we did a comparison between fixed points and flexible points. Highlighting their distinct advantages and how you can seamlessly integrate them into your Loyalty Program Strategy. One of the most rewarding uses of flexible points that we explored was the ability to transfer them to frequent flyer programs. In this third part, we’ll cover how to deepen your understanding of these airline and hotel loyalty systems to empower you as you start your journey!

This Loyalty Program Strategy for Beginners is part of a guide series:

Loyalty Program Strategy for Beginners – Part 1

Loyalty Program Strategy for Beginners – Part 2

Loyalty Program Strategy – Boost Your Knowledge

Frequent Flyer Programs

To unlock aspirational experiences like flying in a premium cabin using miles, it’s key to delve into the world of frequent flyer programs. You don’t need to become an expert by any means! Your understanding will naturally expand as you research flight redemption options when planning your trips.

Start by acquainting yourself with the frequent flyer program that aligns with your goal. This is after you’ve explored the airlines that fly to your destination. If multiple programs fit, narrow down your choice based on the ease of collecting miles.

Next, explore the flight reward charts to grasp the award pricing. Some elements you’ll discover as you review flight reward charts include:

• Award pricing is based on one-way travel
• It is distance based from origin to destination by geographic/travel zone
• An airline’s frequent flyer program pricing may differ from its partner airlines
• Award pricing can be dynamic, fixed or a hybrid

Did you know that when searching for flights using miles, it’s best to search one way? Unlike booking a revenue fare, where roundtrip pricing is often lower than booking two separate one-way tickets, the same doesn’t apply to miles. Mileage-based pricing is calculated separately for each leg of the journey based on distance and travel zone.

Searching one-way itineraries for your flights offers added flexibility to adjust travel dates and cities more easily. This is also useful if you want to book an open-jaw itinerary, where you fly into one city and depart from another. You can mix and match airlines for different legs of your journey, maximizing options for the best value.

This is especially the case if you find better award availability or a lower redemption pricing becomes available on a different frequent flyer program. Another advantage is that some frequent flyer programs allow a stop-over on one-way tickets at either no or minimal cost. This enables you to add extra destinations to your trip, further stretching the value of your miles.

Understanding the geographic or travel zone defined by each program is essential for optimizing your redemptions. Frequent flyer programs may define their zones differently, influencing the pricing for specific destinations. By comparing programs and exploring their flight reward charts, you can determine the optimal routings with most competitive pricing, subject to availability.

One common feature you’ll encounter with frequent flyer programs is dynamic pricing. While some offer fixed pricing for their partner airlines, others embrace full dynamic pricing. Yet, by reviewing flight reward charts and miles estimate calculators that some programs offer, you’ll have an estimate of how many miles you’ll need to accumulate for a redemption. Despite the unpredictability, sweet spots exist where certain routes offer incredible value for your miles.

Hotel Loyalty Programs

Transitioning to hotel loyalty programs, you’ll find that they’re more straightforward. There are fewer programs, and a lower level of complexity is involved. While most hotel loyalty programs are dynamically priced, doing periodic checks may be beneficial where you may find dynamic pricing playing in your favour as the point price may drop closer to your check-in date.

In exploring hotel loyalty programs, there are a few key points to consider. It’s useful to learn about the size of a hotel chain’s footprint to determine if there are solid options available for the destinations you travel to. You can also assess the value you can extract from your point redemptions for your stays. Finally, you can explore the value proposition offered by the program, such as the type of benefits you can expect if you aim to achieve high-tier status with the program.

Resources

Besides familiarizing yourself with the various points and miles loyalty programs, blogs like Points Miles and Bling (PMB) provide valuable insights for redemptions. For example, PMB’s monthly What Did You Book? offers tips and tricks for booking flights and hotels.

Blogs are also great for keeping up with the news on:

• Airline and hotel loyalty programs changes (i.e. devaluations)
• New airline products and airport lounges
• New or changes to airline partnerships or alliances
• Airline and hotel loyalty programs’ promotions
• Travel credit card offers and promotions

No matter how much you learn, there will always be something new. The landscape of points and miles is ever evolving with regular changes and updates to the various airline and hotel loyalty programs. Despite this, don’t be intimidated. As you immerse yourself further, you’ll be able to better navigate the complexities of these programs, and will learn how to best optimize them to achieve your travel goals.

Loyalty Program Strategy – Learn the Value of Points and Miles

An extension of learning about the airline frequent flyer and hotel loyalty programs is to know how much each point or mile is worth. This will help you gauge whether you’re better off paying cash or redeeming your points and miles for your flights and hotels. You can calculate the Cents Per Point (CPP) to determine the value of the miles/points. The CPP calculation is as follows:

Cents Per Point (CPP) = (Cash Price/Number of Points) x 100

Let’s illustrate with an example of the hotel loyalty program, Marriott Bonvoy. Suppose you’re considering a one-night stay at the Marriott Downtown CF Eaton Centre from April 29 to May 1. You have three payment options:

1. Redeem points
2. Use a combination of Points and Cash
3. Pay with cash

For this scenario, this property offers the following rates:

• 52,000 points
• 26,000 points + $108 USD for a points and cash combo
• $288 USD for a standard cash rate

Points	Points +  Cash	Cash
52,000	26,000 + $108USD	$288USD
(Cash price/Points) x 100   (288/52,000) x 100 = 0.55 CPP	(Cash price – Cash portion)/Points x 100   ((288-108)/26,000) x 100 = 0.69 CPP	0.7 CPP

Given that Marriott Bonvoy points are typically valued at around 0.7 CPP, paying cash or going with the points plus cash option offers similar value in this case.

While optimizing points and miles can be very rewarding, it’s important to consider other factors. For example, if you have a soon-to-expire Free Night Award (FNA) certificate that you earned through a credit card, it may be wise to use it, even if the cash option provides slightly better value.

Similarly, in airline frequent flyer programs, award redemptions are sometimes dynamically priced. If you find a date that suits you best, but it costs more miles than another date, you may opt to go ahead with it and pay the extra points for the convenience it provides you.

To sum it up, while understanding CPP can guide your decisions, don’t get too hung up on always maximizing your miles for the best value. Do what works best for your individual circumstances and travel goals!

Loyalty Program Strategy – Engage in Points and Miles Community

One of the best ways to accelerate your knowledge is to engage in the points and miles community. Going to in-person meetups, such as the ones PMB organizes gives you the chance to meet with others that are passionate about this hobby. In addition to the knowledge and advice that you get, you develop friendships and have people to connect with that can help you, and share tidbits that you likely won’t find online.

During the pandemic, in-person meetups were rare and that’s when online chat groups flourished and they’re still going strong. You can try joining discord or other online groups that are focused on points and miles. There’s also reddit, which is a great place for a beginner to ask questions on r/churningcanada.

For an immersive experience, you can watch and listen to What’s the Point on Zoom/Facebook, hosted by PMB’s founder, Anshul. Over the past few years, he’s interviewed guests from the points and miles blogosphere in addition to folks from the industry, such as Aeroplan executives. This is also a great resource for keeping up-to-date on airline and hotel loyalty news, promotions and all things miles and points.

Loyalty Program Strategy – Takeaway

You’ve just taken the first steps into the wonderful world of points and miles. The journey may seem overwhelming at first, but remember, every expert was once a beginner.  You’ll find that the more you engage in this universe, the more you’ll get out of it.

Are you ready to jump in?