Loyalty Scheme and CSR impact in Airline Sector
Loyalty Scheme and CSR impact in Airline Sector
For the past years, competition in the airline industry has been intensifying, thus creating the need to sustain long-term growth and profitability. The ability of airline industry to attain long-term growth hinges on implementing loyalty schemes that boost customer relationship management. For the past decades, loyalty programs have grown in complexity throughout airline industry. Today, over one million people are enrolled in loyalty programs to receive free upgrades, travels, and favourable treatment in return for being potential or frequent clients. Indeed, loyalty schemes have been a powerful tool to convert first time clients to frequent and potential clients. In airline industry, customer loyalty schemes seek to retain and acquire clients, boost customer spending habits, and boost purchase of additional goods and services. Additionally, Corporate Social Responsibility (CSR) program has promoted growth in this industry. CSR programs have increased growth and profitability in the sense that, companies have embraced the fact that they have ethical and moral obligation in addition to their actual roles of attaining profits and complying with laws and regulations. With this, this pamphlet seeks to discuss how loyalty scheme and CSR has operated in the airline industry and affected business and other stakeholders.
In the 21st century, successful airlines companies have integrated loyalty schemes to address and boost customer relationship and interactions. This strategy has enabled most companies to develop marketing and promotion campaigns that augment growth and profitability (Li-Wei & Chung-Yu 2012, p40). Loyalty schemes are an effective way to boost customer-retention levels. By increasing customer retention, the industry has grown tremendously. As the business world become competitive, the industry has recognized the need to reward the most valued customers. As a result, this has enhanced profitability and converted new clients to potential and frequent clients. The industry has implemented various programs such as discount, rebate, and points program. Often, consumers receive instant discounts when shopping, and in turn, this increases their spending habits. Discount programs create a platform where consumers enjoy favourable prices and impact the industry’s growth. Rebate programs have played a significant role in increasing consumers’ spending. Basically, consumers accrue benefits from their purchases and receive their profit after a given span of time. This increases consumers’ spending in that, many accumulate financial benefits from the company’s programs. Points programs have augmented growth in the industry. Often, consumers obtain points from buying goods and services and thereafter they obtain discounted or free goods and services. In so doing, this increases sales and revenues and retain potential and frequent clients (Hobbs & Rowley 2008, p369).
By embracing CSR programs, the industry has worked hard to ensure that the desires and needs of a society are met by the flexible interaction of corporations and individuals in the marketplace. Airline industry has worked hard to ensure that it is working in accordance with laws and regulations set by the government. The industry’s overriding goal has been to maximize profits, to maximize investor returns, and ultimately benefit the company as whole. Typically, legal responsibilities ensure that corporations comply with laws and regulations set by the government to control competition in the marketplace. The CSR programs allow airline industry to conduct business in accordance with moral and ethical standards acceptable in the society. Although the standards may vary according to time, the overall base remains the same. Social responsibility of the CSR has protected and improved the welfare of both business and society by complying with moral, legal, and ethical actions.
CSR programs have improved environmental responsibility. Airline industry has played a significant role in meeting environmental responsibility and enhancing a strong corporate culture. It is important to note that, the airline industry has been undergoing great changes. Because of higher energy and fuel prices, there has been a need to protect the environment. The industry has been pushed to restriction on green house emissions in order to operate efficiently. The industry has ensured that it is operating effectively and eradicates the major threats to the environment. For the past years, the viewpoint of airline industry concerning sustainable actions has changed due to laws and regulation, stakeholders, and environmental interest. Overall, the programs have laid a strong ground for the industry to respond to consumers needs while taking care of the environment. By embracing CSR programs, the industry has been able to offer excellent deals to consumers, added value for promotions, and creating unique campaigns that benefit the society at large (Evanschitzky et al 2012, p1).
The focus of airline industry has been to develop skills in both operational and corporate environment that boost growth and productivity. Through CSR programs, the management team has had a strong zeal to promote a healthy environment and workforce that work hard to achieve the set goals and objectives (Blanca, Ana, & Jesús 2006, p390). The HRM ensures that employees are skilled, supported, and motivated to perform efficiently. The company have embraced opportunities that ensure employees are adequately rewarded and remunerated for their quality performance. Rewarding employees increases employees’ zeal and morale to work hard and attain the set reward. In so doing, this creates a strong pace for quality performance and retains the best and competent employees (Wirtz, Mattila & Lwin 2007, p330).
Through CSR programs, the human resource management recognises the contribution of competent and skilled workforce in providing excellent services and reducing operational cost. Instead of hiring and recruiting more employees, the company work hard to retain and motivate competent and best employees. The HRM has a strong approach to create a favourable environment that motivates and support people to do their best. Basically, the company has an ongoing approach of managing performance individually on a tem level. The HRM has been on the lead to support and encourage professional development and productivity in the workplace through identifying competent employees and approving education and training courses that foster growth. The HRM builds and foster a strong organizational culture, which is free from bullying, harassment, and discrimination. The management team provides equal recruitment and employment opportunities without considering irrelevant characteristics such as disability, race, and gender. The HRM team foster a strong workforce that respect and tolerate human rights and cultural differences. The team treats its people, customers, and wider community with respect and dignity. The management team values constructive leadership, which promotes equality in the workplace (Mathies & Gudergan 2012, p275).
With the mentioned facts in mind, I would recommend the government department to provide online services to airline industry on how it can improve its programmes to focus on customer behaviour. I would request the government department to walk hand in hand with this industry since real winners are those that understand and recognize where their brand fits in consumers’ life and where reward, respect, and relevance are aligned to demonstrate a real value to their clients (Cant & Toit 2012, p10). It would be profitable for the government department to guide the industry on how to capture new clients and emerge the best among other competitors. As the business world becomes competitive, the management team should be encouraged to integrate strong leadership that stimulates high performance and productivity. The government department should also provide guidance on the professional development plan, which would help the management team facilitate a strong teamwork that augments profitability and productivity.
Blanca García Gómez, Ana Gutiérrez Arranz & Jesús Gutiérrez Cillán 2006, “The role of loyalty programs in behavioral and affective loyalty”, The Journal of Consumer Marketing, vol. 23, no. 7, pp. 387-396.
Cant, M. C., & Toit, M. d. (2012). Identifying the factors that influence retail customer loyalty and capitalising them. The International Business & Economics Research Journal (Online), 11(11), 1223-n/a.
Evanschitzky, H., Ramaseshan, B., Woisetschläger, D.,M., Richelsen, V., Blut, M., & Backhaus, C. (2012). Consequences of customer loyalty to the loyalty program and to the company. Academy of Marketing Science.Journal, 40(5), 625-638. doi:http://dx.doi.org/10.1007/s11747-011-0272-3
Hobbs, R. & Rowley, J. 2008, “Are pub discount cards loyalty cards?”, The Journal of Consumer Marketing, vol. 25, no. 6, pp. 369-377.
Li-Wei, W. & Chung-Yu, W. 2012, “Satisfaction and zone of tolerance: the moderating roles of elaboration and loyalty programs”, Managing Service Quality, vol. 22, no. 1, pp. 38-57.
Mathies, C. & Gudergan, S.P. 2012, “Do status levels in loyalty programmes change customers’ willingness to pay?”, Journal of Revenue and Pricing Management, vol. 11, no. 3, pp. 274-288.
Wirtz, J., Mattila, A.S. & Lwin, M.O. 2007, “How Effective Are Loyalty Reward Programs in Driving Share of Wallet?”, Journal of Service Research : JSR, vol. 9, no. 4, pp. 327-334.