United rolled out a handful of changes to the MileagePlus program on Friday. There was nothing particularly earth-shattering in this round of changes, and I wasn’t planning on writing about it… until United got me on the phone with Luc Bondar, the airline’s VP of Loyalty. While these aren’t big changes, I asked Luc to open up about what was driving them. Here’s what he had to say.
Luc started off the conversation with a broad statement about why this was happening.
We are looking for ways to ensure customers understand that the best way to travel on United is as a member of MileagePlus. And the best way to fly in MileagePlus is as a Premier member.
He followed up by saying that United wants to make the program “simpler, more consistent, lining up value we’re able to give by making sure we’ve got the right customers in the right tiers.”
There’s not a person in the world who would describe MileagePlus as simple, but then again I suppose the goal is “simpler,” and that shouldn’t be too hard to achieve. Pretty much ANYTHING is simpler.
With that stated backdrop, how do the changes being made fit? Let’s go through them.
United recently revamped its boarding process (for the millionth time) so that there are 5 groups and two lanes. 1K members (those who earn more than 100,000 Premier Qualifying Miles in a year and meet the spending threshold) fit in none of those groups. Instead, they pre-board with Global Services, British royalty, families with small kids, people with the last name Smisek or Tilton, active-duty military, White House-approved dictators, unaccompanied minors, anyone associated with USC, and disabled customers. Meanwhile, Gold members (50,000 PQMs a year plus spend) move up to group 1. This certainly has nothing to do with simplicity, but I suppose it would fall into the “lining up value” category.
I was curious to know why United bothered putting 1Ks into pre-boarding. After all, if you have a new boarding process, you can just create 6 groups and let the “pre-boarders” go into group 1, moving everyone else down a level. So was it just the cachet of saying you can pre-board? Luc…
Pre-boarding comes with a reflection of status; that we are recognizing the value of these customers and inviting them to board before all other fliers. It’s an important driver of increased satisfaction.
So it is a psychological thing. Pre-boarding just sounds more important than being in Group 1.
On the baggage front, there are a few changes, all positive for the customer.
- Silver members used to have a cap of 50 lbs per bag on their free baggage allowance. That now rises to 70 lbs per bag to match the weight limit for those with higher status.
- Silver members flying in coach between the US and Europe get two bags for free instead of one bag.
- Gold members flying in coach between the US and Europe get three bags for free instead of two bags.
These changes do fall into the “increased simplicity” category, especially standardizing weights at 70 lbs per bag for all elites. But was that the only reason? Luc…
Ensuring that a consistent proposition is in place definitely streamlines the operation, and as a business we’ve been focused on improving the operation, and that’s reflected in all our operational stats. But from a customer standpoint, our Silver members, looking at the different benefits, they saw this as important, around key times of the year like the holidays.
Once again Luc referred to the impact on customer satisfaction scores, so that appears to be an internal goal to get those higher. In case you’re wondering, that’s measured in a couple ways. If you’ve flown United, you’ve probably received a survey after your flight. That’s the primary way of measuring satisfaction. There is also separate consumer research done around the loyalty program which goes into it. These two previous changes may very well improve customer satisfaction scores, but the next one is more of a mixed bag.
Rising Qualification Threshold
For travelers to qualify for elite status today, they need to earn a combination of Premier Qualifying Miles (PQMs) and Premier Qualifying Dollars (PQDs). A 1K today, for example, needs to earn 100,000 PQMs and spend $12,000 in PQDs (fares excluding taxes and fees). Two things will change on that beginning January 1.
On the PQM side, United’s cheapest premium cabin fares (those in P class) will now only earn 150 percent of actual miles flown, down from 200 percent now. That will have the effect of making it harder for anyone to qualify for status if they’re living off cheaper fares.
On the PQD side, 1Ks will now need to earn $15,000 instead of $12,000. That makes it harder to qualify for 1K, of course.
This certainly won’t help customer satisfaction for those who will be knocked down a level in status because of this. But for those who remain, this should increase satisfaction. After all, having fewer people to compete against for upgrades and other benefits will be good for them. I wondered if United was managing the program to a certain number, or percentage based on total traffic. Were these changes meant to keep the ranks at x members achieving status? United says no.
This isn’t goal-seeking against a set target…. We have a finite number of resources we can deliver, whether upgrades or seats…. It’s more art than science; it’s really about aligning the value we get with the customers with the value we are receiving and the value we are able to promise.
That was a semi-muddled explanation, but I think the key here is that it’s more art than science.
Upgrade Changes for 1Ks
Once a true road warrior reaches 1K today, United has to find a way to keep that person flying the airline instead of switching to try to qualify for status on another carrier. That involves giving people the ability to earn more upgrades.
Today, for every 25,000 miles above 100,000, 1Ks earn 2 regional upgrades (RPUs) which can be used domestically. Then for every 50,000 miles above 100,000, they earn 2 global upgrades (GPUs) to be used anywhere in the United system. Obviously the GPUs are far more valuable and coveted. This is especially true now that the cost of just buying First Class domestically has come down.
So, United is taking away the ability to earn more RPUs after qualifying for 1K. (The ones you get at the time of qualification don’t change.) Instead, now 1Ks will earn 1 GPU every 25,000 miles. This should generally be viewed as an improvement. How did United view this change? Luc…
Looking at how customers use RPUs, GPUs, where they get the most value. Part of the value was… learning GPUs are much more valued and getting more GPUs sooner was important. For customers that are flying up over the 100,000 miles, they tend to have global travel in their footprint, so getting access to the GPUs sooner [was important].
And that’s it for this round of changes. I’m sure some people will be unhappy, but many more should like this plan. Either way, at least now you have a little more context on how United is approaching this.