Hotels, car rental companies, airlines – loyalty programs of all kind offer status to their best customers to distinguish casual guests from true loyalists. Status involves greater benefits in exchange for an increase in business. In order to create new loyalists, status requirements may be temporarily lowered or prorated to bring new elites into the fold. But when that status does not match the true benefits it can create more adverse effects than positive ones for both consumers and the brands that offer it. So why do they continue to offer status lite, and what are the consequences?
What Is Status Lite?
Status lite is a derogatory term for when the same name of the status level is given to a customer but the full benefits are not provided. This could be as a result of a challenge, a perk of a credit card, a match to another competitor – any number of reasons that the brand may not want give the full benefits associated with customers who have spent far more.
The intent is to offer something of value, but to avoid devaluing the benefits for their current best customers. If it’s too easy to achieve and offers the same benefits as normal status, instead of creating incremental revenue from their best customers striving to achieve it, the brand canabalizes their revenue instead. If a Starwood guest can achieve full Gold status as a result of being an American Express cardholder but was otherwise two stays away from the same status; they have no incentive to book those extra two nights away from the Starwood’s competition.
Status lite can be of benefit for customers who may want some perks but are not willing or able to become a fully fledged elite. For businesses, offering status lite gives a chance to introduce new customers to your system that are high-value to other brands but not yet yours while maintaining the value you have built-in your brand at the same time.
United’s 1K status (I matched and challenged earlier this summer) comes with just (1) Regional Premier Upgrade and (2) Global Premier Upgrades while full status comes with (4) RPUs and (6) GPUs. World of Hyatt’s Globalist challenge comes with a fraction of benefits usually associated with the status as well. The problem with both are that they are marked as normal status levels. Successful challengers or matched guests will have 1K or Globalist status (for example) listed on their account but they will not necessarily hold the same
In fact, Hyatt’s approach diverges so sharply from the benefits of Globalist that it inspired this post. Here is what Hyatt has recently offered for their credit card holders:
“In order to earn a new elite status through February 2019, cardmembers have to register and complete the full amount of tier qualifying nights at any Hyatt hotel or resort between September 1 and December 30, 2017 (10 nights for Explorist; 20 nights for Globalist).” – World of Hyatt offer terms.
“Under this offer, you can enjoy all Globalist tier benefits, which include Club lounge access, room upgrades to best available room (up to standard suites), a 30% point bonus, late check out at 4:00 p.m. (subject to availability), priority access to your room when checking in early, complimentary parking on free night awards, and two complimentary United Club passes. However, certain benefits are not tied to Globalist status, and are instead awarded only to individuals who complete 60 qualifying nights, earn 100,000 Base Points or hold 20 qualifying meetings/events in a calendar year; this includes the milestone achievements of the 4 suite upgrade awards, free night award in a Category 1-7 Hyatt hotel or resort, access to My Hyatt Concierge, and ability to achieve Globalist status after 55 qualifying night each subsequent year.“
The problem is that Hyatt has separated out the benefits from the status in frankly a ridiculous and petty move. For example, while a guest qualifies for Globalist status at 60 nights, that doesn’t include four suite upgrades. Those are only achieved by staying 60 nights. I know it looks like I mis-typed something there, but when the program changed I went around and around with a PR contact for Hyatt trying to understand how the suite upgrades were now separated from status, but still achieved at the same time as status. What would be the point (with an airline) of offering status achieved at 100,000 miles, and four confirmed international upgrades at 100,000 miles but for some reason pretending that they are not associated?
It’s a little absurd.
At the time I thought this was just some sort of weird quirk but then it seemed like it could be a bit specific and excluded just a single group of elites – those who they don’t actually want to qualify. In fact, I outlined all of the exceptions whereby one could have status without the benefits and with just one exception Hyatt confirmed that all others would hold both status and benefits yet they insisted on the separation of the two. In this status challenge, Hyatt has identified yet another reason for the separation, to give the appearance of top-tier status while actually offering status lite.
United does the same during their challenge with the aforementioned upgrade limitations only valid on successful completion of the challenge. While 1K matched/challenged flyers will be eligible for most of the same benefits as those who earned the status from scratch – perhaps the most important and valuable benefit is reserved for those that were not challengers.
Other examples exist outside of these two, however these are most relevant for most of my readership.
Why It’s Bad For Customers
Patrons of a business that earn their status traditionally often spend extra money and go out of their way to earn status and benefits for their effort. When status challenges are offered, it can attract high-value customers that may be stuck in a loyalty loop they no longer want to pursue but find it too hard to break away.
I found myself in this position with American Airlines. After multiple cuts to their Advantage program I was feeling like I was loyal to the airline, but they weren’t loyal to me. It was time to leave and see if the grass was greener on the other side. The problem with status lite is that customers do not get the full experience and negatively associate some of the differences between brands with the new entity.
Challengers to Hyatt may enjoy day-of-travel upgrades and free bottles of water, but will serious travelers who might see the confirmed suite upgrade benefit as the strongest status advantage hold the brand in the same regard without this?
As a new United flyer I can’t tell whether my upgrades will clear on long-haul regional tickets because I don’t have enough to even burn them on a roundtrip. How could I know if the brand is better for me than American who did not offer them regionally and have made them useless internationally? Surely, more options to clear an upgrade are better than less, but when United sells upgrades cheaply at checkin, it’s hard to know if there is a difference for my experience. Status lite really only makes it less clear rather than clearer whether guests are better off with the brand than without.
Why It’s Worse For Brands
Brands that are trying to engage top-tier customers from competing companies should want to put their best foot forward. When brands offer top-tier customers a curtailed list of benefits it does the opposite of making them feel valued – it makes them (quite literally) second class. Instead of sending the message that these benefits are so highly valuable that you will want to earn them and they couldn’t be given away to anyone who didn’t earn them the hard way – it instead fails to prove their value simply by way of exclusion.
To new customers, it sends a different message. It says, “We will let you in the restaurant but you’re sitting at the back and need to be out in 30 minutes.” While it should say, try us, we’re better – instead they don’t give customers the chance to see it for themselves.
It also comes off – at least to me – as terribly petty.
For consumers that have been faithful and true to the brand, that have earned their status through nights on the road and seats in cramped economy, it cheapens the experience. While they may not have competition for the benefits they prize the most (confirmed upgrades for important long term or long-haul trips) they do face competition for the daily upgrades that can devalue their day-to-day experience.
Challenges like the Hyatt credit card challenge (10 nights for Explorist, 20 for Globalist) don’t even require proof that you are truly a highly frequent traveler. Rather it opens the flood gates to anyone, which explains why they limit the benefits, but how does that help the brand to build back the elites they have clearly scared off through their new requirements? Doesn’t it just make credit card holders get slightly more serious than perhaps they would have been before?
What’s The Solution
As a top-tier elite member I don’t want my upgrade going to someone who hasn’t earned it and yet as a top-tier that has switched brands as a result of status challenges, I am grateful they exist. So how would I change it?
- Make status challenges equal to earned status but time-specific. Instead of offering them whenever throughout the year, I would offer full benefits during the period and they would remain upon successful completion of the challenge but only offered in the first quarter of the year. If guests will not be true to the brand throughout the year then it doesn’t seem like they are good converts in the first place.
- Truly verify status elsewhere. Not all brands have a great process for verifying status elsewhere. It wouldn’t be hard to modify a PDF (though dishonest and unethical) to make loyalty appear more than was true. While login information shouldn’t be provided to the brand, what about changing the email address to a status verification email address for monthly statements direct from the competing brand to the status matched brand? I have received status matches or challenges without even presenting an equal status with a competing brand – that’s not good.
- Limit the opportunity to once every three years. If you allow it once per year like Marriott, one could actually game the system to never stay with the brand more than a handful of nights every year but slowly rise through the ranks from zero to gold to platinum in under two weeks over a two-year period – instead of the required 50, then 75 nights. However, limiting to once every five years is too long and once per lifetime (Alaska had this) only encourages people to start a new account when they want to challenge and then merge the old account with the new once the challenge is complete. Three years is just reasonable enough that it can be respected and treated honestly, while at the same time doesn’t allow someone to challenge every year – they need to be loyal.
What do you think about short-changed Status Lite? Is it better than nothing or just a half-baked theory?