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  Iberia Plus: The Value of Loyalty 

Hernández Martín, José Antonio; Chiesa, Cosimo
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In 2009, with more than four million customers and 90 associated companies, the Iberia Plus expansion plan could justifiably be considered a success.

But its leaders were still riddled with doubts about how to develop commercial relations with the company’s outside partners, as is recounted in the case study, “Iberia Plus,” written by José Antonio Hernandez, of Barna Consulting Group, and IESE Prof. Cosimo Chiesa.

After three years of rolling out the program to partners not directly involved in the travel industry, the time had come to decide whether to expand the range of sectors included in the points program, and to define the conditions for accepting new partners.

It would be a crucial decision, representing the latest in a series of milestones that has helped the company position itself as one of the top five airlines in Europe and the market leader in Spain.

History of Firsts
In the 1970s, Iberia launched its shuttle service between Madrid and Barcelona. Customer service was enhanced, with the “red jackets” – a customer-care team to help passengers with special needs – and InforIberia (now ServIberia), to provide telephone information.

Two decades later, Iberia started Europe’s first international customer loyalty program, launched its Iberia.com website and implemented e-ticketing and self-service check-in machines.

American Airlines was the first airline to launch a customer loyalty, or frequent-flyer, program in 1981. The original idea was: “The more you fly, the more you earn.”

At first, some doubted whether such programs were indeed an effective marketing mechanism. They worried about the costs of operating such large-scale programs.

Eventually, hotels and car rental agencies joined these schemes. Now members can access extra perks such as telecommunications, banking, insurance and health care. Time has proven the benefits these programs can generate.

The Expansion of Iberia Plus
As with other programs, Iberia Plus awarded the airline’s regular passengers with points, which they could redeem for free flights.

As more companies joined the program, it became possible to earn and redeem points on the products and services of these partner companies as well.

The Iberia Plus card now offers a number of added benefits, such as priority on waiting lists, more baggage allowance, foreign medical insurance, VIP lounges and automatic reservation of preferred seating. The advantages vary slightly according to the type of card (Classic, Silver, Gold and Platinum).

Though it took the program 10 years to surpass the million-member milestone, its growth rate has subsequently gained momentum, hitting the 4.2 million mark in 2009.

Selecting New Partners
By 2009, Iberia Plus already counted more than 90 partners, thanks to a 2006 campaign focused on three fundamentals.

• Promote the visibility and advertising of partners through the Iberia.com website, allowing customers easier access to all deals and special promotions.

• Streamline the administrative aspect of Iberia Plus for partners, by developing tools that enable them to coordinate their offerings independently.

• Bring in partners from new sectors. This would give Iberia an additional source of income, allowing it to offer customers a more comprehensive service and improve the brand’s image.

Following the success of this expansion plan, the Iberia Plus team began to consider the selection of new partners.

For starters, should they pursue partners more aggressively, particularly in non-travel sectors? This would affect how they negotiated and evaluated the new partner’s products or services, and the number of points assigned to them.

How should one judge the suitability of potential partners? Which industries or activities would be considered unsuitable? Should the number of partners be limited? Where to begin?

Resolving these issues would determine not only the program’s success, but also the company’s long-term profitability.
This article is based on:  Iberia Plus
Year:  2011
Language:  Spanish

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