Lockdown Day 290: As the Calendar Turns

Today is December 31. Tonight is New Year's Eve. And I... don't care. I will not be "ringing in the new year" tonight. Partly that's because social gatherings are on hiatus, as they have been for now 290 days. And partly that's because there's nothing new after tonight other than a new page in the calendar.

"But 2021 will bring political change!" some people gush. Maybe. We'll have a new president in the US on January 20, but the administration of President Joe Biden will be hamstrung for at least 2 years by the proven intransigence of the likely Republican majority in the Senate. And even if laws promoting equity in society do get past "Moscow Mitch" they might be shut down by the Supreme Court's 6-3 conservative majority anchored by conspiracy-theory-peddling party loyalists who value corporate profit over human rights and members of the religious majority over everyone else.

"2021 will be when we defeat Coronavirus!" some argue. I sure hope it is. I would like nothing more than to get to The After Times, similar to The Before Times, aka The Long-Long Ago. But January 1 is no red-letter today. Distribution of the vaccine began 3½ weeks ago. While that might have been a red-letter day my enthusiasm for it has been tempered by the US's utterly fumbled rollout of vaccine distribution. Seriously, news today is that we have 40 million doses, which were targeted to be distributed to 20 million people by 12/31, yet only 2 million people have gotten doses so far. Nobody in a position of leadership is able to articulate a clear, credible statement for where, how, and to whom the other 90% of the currently available vaccine is supposed to be distributed. I'm optimistic we'll get there eventually, but right now is no time for celebration.

Anatomy of a Good Promo. This One's Laughably Bad.

I continue to get a lot of email from airlines, hotels, car rental agencies, and travel portals advertising promotions. Most of them are deals encouraging super-spreaders I roll my eyes at. Today I got a reminder about a promo with Southwest Airlines I didn't roll my eyes at. ...Well, actually, I did, but for a different reason. I rolled my eyes because this one's just laughably bad.

Before I explain what's wrong with this offer I'll describe what good looks like. That will make it more obvious why this one's such a fail. Here's a behind-the-screens look at how companies should put together promotional offers for their customers.

A promo offer can be designed to serve any of three basic goals. A really good one serves all three at once. Within the travel industry I routinely see all three of these components in offers from Intercontinental Hotels Group (IHG) so it's definitely possible to do this right.

1. Incentivize Activity. It's a competitive market. Customers are always at risk of taking their business somewhere else. Likewise, some prospective customers may be engaging with your competitors but not you. A good promo gives customers a little bonus just for engaging, like a "Stay/Fly once and earn 1,000 bonus points" deal.
2. Incentivize Continued Activity. Offering deals to your customers costs money. It's unwise to put a big discount or rebate on things the customer would've bought anyway. But at the same time, competitors are trying to lure customers away. Hence, part of a well structured promo should offer customers a bonus for continuing at the same level of engagement as in the past. Years ago this was expensive to track and compute, but with today's automated digital systems it's trivial. A company can check its records of your past purchases, see that you've traveled with them, say, once a month in the past year, and offer you a deal like "Stay/Fly 3 times this quarter and earn a 5,000 point bonus." It's targeted to keep you engaged at the same level.
3. Incentivize Increased Activity. While it's good to keep customers engaged at the same level as before it's even better to get them to bring in more business! These promos give stretch-goal targets in exchange for typically the richest bonus offers. Continuing on from the example I gave above, a stretch-goal offer would be something like, "Stay/fly 5 times this quarter and earn 10,000 bonus points." 

So, those are the basics of how insightful companies put together incentive offers for customers with today's available technology. Yes, that's different from the past, when simple, one-size-fits-all offers were the norm. Today's technology makes it easy for companies to tailor offers that are wins for the vendor (incentivizing profitable behavior) and wins for the customer (offering meaningful deals for achievable targets). Now, let's look at the offer Southwest Airlines reminded me about today.



Notice that it's just a single bonus target. Spend $12,000 or more to get something. That means that out of the three goals I articulated above it meets at most one. At most, because it actually meets none of them!

The problem with this offer is that the $12,000 minimum spend requirement is completely absurd. My travel and spending with Southwest Airlines is way down across almost all of 2020 because of the pandemic. If they'd looked at their records for the past 9 months they'd see that my spend in any given 3-month period was barely $1,200... yet they think an incremental 30% bonus is going to get me to spend ten times as much?? Ha! This absurd bonus offer only serves to remind me to leave this credit card in the sock drawer.