Customer loyalty is the key to success for most businesses, but in the highly competitive airline industry consumer retention is especially important. So just what can be learned from the rapid growth of Norwegian?
Founded in 1993, the airline launched its low-cost long-haul operation in 2013. Today, it's one of the world's fastest growing airlines operating around 500 routes to more than 150 destinations in Europe, North Africa, the Middle East, the Caribbean, Asia, South America and the US.
“We’re leading the market in low-cost long-haul,” says Brede Huser, Managing Director of Norwegian's loyalty scheme, Norwegian Reward. “It's no longer a novelty but here to stay as there’s huge demand from new and existing customers.”
We speak to Huser about how it builds customer loyalty, and what this means for the consumer and the industry as a whole...
Click.: What has been Norwegian's key strategy for retaining customer loyalty?
Huser: It’s simple, we believe in providing affordable fares for all. People are more cost conscious than ever, but they are also more demanding of a high quality travel experience. We offer both at Norwegian, and combined with our expanding network of global destinations, and huge aircraft order, travellers can fly further for less. By joining Norwegian Reward, we offer members even more value by making it easy to receive benefits and use them whenever they fly Norwegian.
Click.: How has Norwegian Reward improved customer retention, and what are its key benefits?
Huser: Norwegian Reward is a simple and flexible loyalty programme, which is why our membership has grown to almost seven million worldwide. Not only can members earn CashPoints with Norwegian and our partners, but they can spend them on purchasing any Norwegian flight, including taxes and fees. We also don’t apply blackout dates like some competitors, so members have as much choice as regular customers when choosing to travel.
[The way we deliver our loyalty programme] has seen us add more than 150,000 Norwegian members every month in the past year
Our loyalty programme caters to all types of traveller no matter how often they fly, so it's easy to benefit from being a loyal customer. We give leisure travellers the opportunity to earn CashPoints through everyday spend to make their affordable Norwegian flights even cheaper, and if they have enough points, flights could even be free. Business travellers who fly more often can also choose flight extras, including fast-track security, free baggage or a CashPoint boost, and we give our more frequent flying members a reward after every sixth flight.
The simplicity and flexibility we offer, in addition to being a fast-growing airline, has seen us add more than 150,000 Norwegian members every month in the past year, more than a third of our customer base.
Click.: Aside from Norwegian Reward, what other ways do you ensure customer retention to encourage repeat business?
Huser: We focus on providing high quality at low fares. This strategy saw us fly 33 million passengers, our most passengers ever, in 2017. Our low-cost long-haul expansion has seen us unlock more affordable travel options to underserved destinations, and on routes where fares have been too high for too long. That said, as customers become more familiar with Norwegian and the service we offer, we see this as a huge opportunity to drive awareness of Norwegian Reward and the cost benefits we can quickly deliver to travellers.
Click.: Which loyalty or retention strategies have worked, and which have not been as successful?
Huser: We work with partners to deliver even more value to our members who may not be frequent fliers. This fits well with our strategy of retaining and increasing membership. As Norwegian Reward is only in its 10th year, we’ve seen that some partnerships have been more successful than others. While we cannot predict the popularity of a partner, we certainly enter new agreements only with our members’ best interests in mind to generate the best value for them.
Click.: How is the data collated by the loyalty programme used to improve a customer's experience?
Huser: Customer data is hugely important to Norwegian, it means we can communicate more effectively with our customers and offer a more tailored experience. It’s also useful for communicating with those who earn CashPoints in their everyday spend, as it’s important to keep in the customer’s mind.
If you’re a local coffee shop, how cool would it be to say, 'buy your daily coffee and turn your Frappuccino into flights.'
Click.: Finally, how do you think the practice of customer retention and loyalty will change in the future, both at Norwegian and in the airline industry in general?
Huser: Loyalty programmes are becoming increasingly common, especially in retail, but with all that competition it’s increasingly important to stand out and remain relevant. People sign up to loyalty programmes, but may not pay much attention to what value each scheme actually offers. Running loyalty programmes demands investment, which could be costly, especially when trying to effectively tailor communications and benefits to individual members. Based on this, it could cause different loyalty programmes to partner or consolidate, which would give members a much wider and more relevant proposition, while being more cost efficient.
We see this as an opportunity for Norwegian Reward, since we know that getting cheaper, or even free flights is a very attractive reward. Many people dream about their next holiday, their weekend getaway or even their honeymoon. If you’re a local coffee shop, how cool would it be to say, 'buy your daily coffee and turn your Frappuccino into flights.'
Want to read more articles like this? Try: How personalisation can enhance customer experiences
Hero image: credit to Nils Nedel
- Norwegian flew 33 million passengers, its most ever, in 2017
- It operates around 500 routes to more than 150 destinations
- Its reward scheme - Norwegian Reward - is in its 10th year
- Norwegian gives leisure travellers the opportunity to earn CashPoints through everyday spend to make their affordable Norwegian flights cheaper
- The airline has added more than 150,000 Norwegian members every month in the past year