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THE EFFECTS OF DIFFERENT STATUS LEVELS IN  AIRLINES’ FREQUENT FLYER PROGRAMS ONCUSTOMER LOYALTY AND SERVICE EXPECTATIONS  ...
Backround• Currently there is fierce competition between airlines   – High fuel costs   – Low-cost airlines• High importan...
Research Questions• 1. Do frequent flyer programs’ different status levels influence  customer behavior in terms of loyalt...
Conceptual Framework• Measuring customer loyalty – Customer loyalty score   – Customer loyalty = Satisfaction x Recommenda...
Methodology• Case Study – Finnair Plus• In-depth interview• Customer Survey   – Designed to find out customers’ loyalty an...
Main Findings – Customer Loyalty• Weighted Customer Loyalty Scores:  – Gold: 36  – Silver: 23,3  – Basic: 13,7   The high...
Conclusions• High-valued customers are more loyal than  low-valued.• It cannot straightly be concluded that  frequent flye...
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The Effects of Different Status Levels in Airlines’ Frequent Flyer Programs on Customer Loyalty and Service Expectations

A Bachelor's Thesis conducted for a major Finnish airline concerning its relationship marketing strategy

The Effects of Different Status Levels in Airlines’ Frequent Flyer Programs on Customer Loyalty and Service Expectations

  1. 1. THE EFFECTS OF DIFFERENT STATUS LEVELS IN AIRLINES’ FREQUENT FLYER PROGRAMS ONCUSTOMER LOYALTY AND SERVICE EXPECTATIONS Case of Finnair Plus
  2. 2. Backround• Currently there is fierce competition between airlines – High fuel costs – Low-cost airlines• High importance of customer loyalty and retention in the airline industry.  Frequent Flyer Programs - Rewarding loyal customers with free tickets, upgrades etc.• Many studies show that customer satisfaction and loyalty lead to customer retention.
  3. 3. Research Questions• 1. Do frequent flyer programs’ different status levels influence customer behavior in terms of loyalty and commitment?• 2. Is there a difference in frequent flyer programs’ members’ expectations of service quality between high and low status levels and are they as easily satisfied?• 3. How keen loyalty program members are about their membership statuses and what are the effects on customer’s loyalty towards the airline when dropping from high-status level to a lower status?
  4. 4. Conceptual Framework• Measuring customer loyalty – Customer loyalty score – Customer loyalty = Satisfaction x Recommendation x Retention• Net Promoter Score - Used to gauge the loyalty of a firms customer relationships• SERVQUAL – Calculates the gaps between service expectations and experiences – Five service dimensions (Tangibles, Reliability, Responsiveness, Assurance, Empathy )
  5. 5. Methodology• Case Study – Finnair Plus• In-depth interview• Customer Survey – Designed to find out customers’ loyalty and service expectations towards Finnair. – Aim to collect at least 20 responses from each status level. – Carried out April 11. in Helsinki-Vantaa airport’s lounges and terminals.
  6. 6. Main Findings – Customer Loyalty• Weighted Customer Loyalty Scores: – Gold: 36 – Silver: 23,3 – Basic: 13,7  The higher one’s tier level, the more loyal one is towards Finnair.
  7. 7. Conclusions• High-valued customers are more loyal than low-valued.• It cannot straightly be concluded that frequent flyer program’s member’s service expectations rise with the status level• High-status members demand different types of service than low-status members

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