I received an “offer” in my e-mail today that I thought I would share with you and then cover some of the marketing missives that you will receive. You will definitely receive them as you start applying for cards and signing up for various loyalty programs. This little guide should help you realize what you need to look for and what might be best to stay away from.
The Purpose of Marketing
Believe it or not, the purpose of marketing is to make the company money. Pretty simple! So, how do frequent flyer communications make the companies money? In order to generate more revenue on their part, they need to offer you something that will seem appealing enough to have you sign up for it. What you may miss sometimes is that the “deal” they are offering you is generally less than the market value of your miles or points.
Here is an example: Airlines have a massive amount of frequent flyer miles on their books. At any given time, there are millions of miles that are out there in people’s accounts. Many times, an airline may run a large number of promotions to attract customers in exchange for those miles. The problems start to rise when they have given out more miles than those being redeemed. Those are debts on their books since they do have a dollar value assigned. As such, they will do what they can to get people to trade them in. Some of the “deals” they throw out there are terrible!
Back to the e-mail I just got. It was from Delta and was encouraging me to use my miles to go to Australia. Not a bad start – using Skymiles for a business seat redemption to Australia is probably as good as it gets. However, what drew my attention was the amount of miles they said I should use for Australia – 100,000. I thought – great! They are offering a promotion on business class seats to Australia (not that they need to, that route has very slim business availability). Nope, what it turned out to be was basically an announcement that I could use up to 100,000 miles to pay down (with Pay With Miles) my ticket to Australia by taking off $1,000.
Is that a good deal? To me, that is one of the worst things that one could do in the area of mile redemption. Why? Well, if I did not have any status with Delta, I would receive around 21,000 miles by purchasing that ticket to Australia and NOT using Pay With Miles. (When you use pay with miles, it voids any mile earning opportunities you would otherwise have on the trip – even if you only used 10,000 to reduce it by $100) If I flew to Australia as a Diamond Medallion member, I would actually receive about 46,000 miles! That is almost enough for a ticket to Europe in coach! The value of that many miles would be between $600 – over $1500 for me. So, smart move on Delta’s part to “offer” this and try to get people to use their miles in this fashion. In effect, they are collecting 100,000 miles and saving on another 21,000 – 46,000 miles that would have to be paid out otherwise for a total of close to 150,000 miles they save on. Very smart – for them. Is that a good move for the traveler? NO!
Now, some marketing e-mails can be very helpful. I receive many good offers from all card companies and airlines – including Delta and American Express. The best way to approach them is to take all the ones you can get but read through carefully to determine if the offer is helpful to YOU. This is one of the reasons it is important to learn the different programs’ redemption offers. It helps you understand the value of your points. Don’t ever give your points away for less than your target redemption is. If the e-mail is offering you a chance to use your miles on something, probably not going to be a good deal for you. If the e-mail is offering you miles or points in exchange for something, chances are that will be a good deal for you.