Loyalty Program - Spend Recognition Model

Strategic Decision: Revenue/Spend-Based Loyalty targeting high-frequency travelers who value immediate recognition over long-term accumulation.

The Loyalty Ecosystem

┌─────────────────────────────────────────────────────────────────┐
│                                                                 │
│                    SPEND RECOGNITION                            │
│                                                                 │
│                  ┌─────────────────┐                           │
│                  │      CHF        │                           │
│                  │     2,500       │                           │
│                  │   GOLD STATUS   │                           │
│                  └─────────────────┘                           │
│                                                                 │
│    A shift away from 'miles' to a 'spend-based' system         │
│                                                                 │
│    Target Demographic:                                          │
│    • High-frequency travelers                                   │
│    • Business travelers on shuttle routes                       │
│    • Value immediate recognition over long-term accumulation    │
│                                                                 │
└─────────────────────────────────────────────────────────────────┘

Strategic Shift: Miles → Spend

Why Spend-Based?

Model Comparison

Traditional:
  1,000 km flight × 1.5 multiplier = 1,500 miles
  Complex rules, caps, exceptions

Spend-Based:
  $150 ticket = $150 toward status
  Simple, transparent, immediate

Scope

Membership Management

• Instant enrollment (web, app, airport)
• Profile management
• Spend tracking dashboard
• Real-time status updates
• No complex mile calculations

Earn (Spend Recognition)

• Primary: Every dollar spent = dollar toward status
• Spend on flights (base fare + taxes)
• Spend on ancillaries (bags, seats, extras)
• Partner spend (optional future phase)
• No expiration on status credits within qualifying period

Status Benefits (Immediate Recognition)

• Real-time status updates
• Instant benefit activation
• Recognition at every touchpoint
• No waiting for monthly/annual calculations

Tier Management

• Spend-based qualification
• Rolling 12-month qualification window
• Immediate tier upgrades
• Soft landing for tier drops

Tier Structure (Spend-Based)

Qualification Thresholds

Benefit Details

Member (Base):
├── Member-only fares
├── Mobile app features
└── Birthday bonus

Silver ($1,000+):
├── All Member benefits
├── Priority boarding
├── 1 free checked bag
├── Dedicated check-in
└── +10% bonus on partner earn

Gold ($2,500+):
├── All Silver benefits
├── Lounge access (CCS hub)
├── Premium seat selection free
├── Priority rebooking
├── Fast-track security
└── +25% bonus on partner earn

Platinum ($5,000+):
├── All Gold benefits
├── Companion lounge access
├── Guaranteed seat on any flight
├── Dedicated phone line
├── Surprise upgrades
└── +50% bonus on partner earn

Research Topics

• Spend-based program benchmarks (JetBlue, Delta model)
• High-frequency traveler behavior
• Instant recognition technology
• Liability accounting for spend-based
• Gamification elements
• Social recognition features
• Partner ecosystem development
• Subscription loyalty hybrid model

Architecture Considerations

Data Model

LoyaltyAccount
├── MemberID
├── Customer
├── EnrollmentDate
├── CurrentTier
│   ├── TierLevel (Member, Silver, Gold, Platinum)
│   ├── QualifyingPeriodStart
│   ├── QualifyingPeriodEnd
│   └── NextTierReviewDate
├── SpendTracking
│   ├── CurrentPeriodSpend
│   ├── SpendToNextTier
│   ├── LifetimeSpend
│   └── LastUpdated
├── Transactions[]
└── ActiveBenefits[]

SpendTransaction
├── TransactionID
├── Type (Flight, Ancillary, Partner)
├── BookingReference
├── Amount
├── Currency
├── ConvertedAmount (if multi-currency)
├── Date
└── QualifyingPeriod

Real-Time Status Calculation

On Each Purchase:
├── Capture transaction amount
├── Add to CurrentPeriodSpend
├── Check tier threshold
│   ├── If threshold crossed → Immediate upgrade
│   └── Update SpendToNextTier
├── Activate new benefits instantly
└── Trigger recognition notification

Rolling 12-Month Window:
├── Daily: Remove spend >12 months old
├── Recalculate CurrentPeriodSpend
├── Check for tier maintenance
└── Apply soft landing if needed

Mobile App Integration

┌─────────────────────────────────────┐
│         SPEND RECOGNITION           │
│  ┌─────────────────────────────┐   │
│  │           CHF               │   │
│  │          2,500              │   │
│  │        GOLD STATUS          │   │
│  └─────────────────────────────┘   │
│                                     │
│  ████████████████████░░░░ 75%      │
│  Next Tier: Platinum at $5,000     │
│  $2,500 to go                       │
│                                     │
│  ┌───────┐ ┌───────┐ ┌───────┐    │
│  │  My   │ │  $    │ │  ✈    │    │
│  │Flights│ │ Spend │ │Benefits│    │
│  └───────┘ └───────┘ └───────┘    │
│                                     │
└─────────────────────────────────────┘

Integration Points

Social & Communications

Community Building

• Social media engagement (RRSS)
• User-generated content
• Status milestone sharing
• Community challenges

Real-Time Recognition

• In-app status notifications
• Airport recognition displays
• Crew briefing on high-value passengers
• Personalized communications

Crisis Management Integration

• Dedicated protocol for disruptions
• Priority communication to high-tier members
• Social channel monitoring
• Reputational risk management

Financial Considerations

Benefit Cost Model

Revenue Impact

• Higher frequency from status seekers
• Ancillary revenue from benefit purchases
• Reduced churn in high-value segment
• Word-of-mouth from recognized members

Technology Platform

Requirements

• Real-time spend tracking
• Instant tier calculation
• Mobile-first experience
• Gamification capabilities
• Social integration

Platform Options

Recommended Approach

Custom-build loyalty engine optimized for:

• Spend-based calculations (not miles)
• Real-time status updates
• Mobile app integration
• Simple, transparent rules