It’s Time To Stop Losing Sleep Over No-Notice Devaluations
Let’s cover the basics before the pitchforks come out. Plenty of time for those in a few minutes. But first, a few clarifying statements:
- At a high level, the miles and points you earn today will be worth less in the future.
- Airline and hotel loyalty programs will make changes to the value of those miles and points in a variety of ways. In many cases they will not provide notice.
- When programs change value without notice, you will frequently see bloggers and other members of the miles and points community lose their collective minds.
- I have frequently been a part of the group of folks who lose their minds.
A couple of items this morning lead me to write this story. First, TPG announced a devaluation by Southwest Rapid Rewards. It was a minor devaluation, but those folks holding Rapid Rewards points (myself included) will find their balance will buy them less travel today than it did yesterday. Side note: I hate the term devaluation. I understand it’s technically correct. But, nobody other than true nerds like me really think about it that way. Normal folks just want to be able to take a vacation.
Shortly after TPG published that story, One Mile at a Time reported on the news. Ben, the primary author of One Mile at a Time, and someone I consider a friend, was quick to point out the reasons why he thinks this is a bad move.
This is the part where half of the audience is getting out a bucket of popcorn to watch the other half of the audience brandish their pitchforks. Side note: those pitchforks do look quite sharp. Sorry to disappoint the popcorn eaters. I’m not about to disagree with Ben. Making my miles and points worth less is never going to be a win for me.
However, I do think the time has long passed where we should be surprised by loyalty programs changing course without notifying their customers. Taken a step further, I think I’ve gotten past the point where I’ll be outraged by one of these changes.
By and large, airlines and hotels are publicly-held companies. Their primary responsibility is to shareholders. While I’ve argued in the past that they can serve shareholders by protecting the long-term value of the miles and points they distribute, this is not a view that appears to be shared by the programs.
My advice? Stop complaining about airlines and hotels when they make changes. Start figuring out how to get better value for your miles and points. Start figuring out how to earn more miles and points so devaluations are less painful. As history has shown us, this will happen again. And, it will be worse than today’s changes.
We’re past the point where public shaming will have an effect. The only time I can recall a program looking in the rear view mirror on negative changes was when Suzanne Rubin ran the American Airlines AAdvantage program. I remember her getting up on stage at the Freddie Awards to acknowledge that they made some missteps on changes they had rolled out. I have a lot of respect for her getting up and making those comments, especially when many of her peers would not.
The Final Two Pennies
There is one valid reason to complain. If you really feel like screaming, yelling, or writing a few hundred words about why your favorite airline or hotel program really messed up your future vacation plans, go for it. Just don’t confuse a cathartic exercise with an effective method of change.
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I disagree. These devaluations create great drama in the blogosphere. It was fun to watch the bloggers (and their readers) lose their collective minds over the recent IHG devaluation and then carefully avoid the topic when Chase decided to bring out a new offer on the IHG Premier card a week later.
The sooner people realize that they are the mice in these corporate experiments in loyalty the better. Take the cheese whenever it’s offered, but know that one day they’re going to try to find out how little they can feed you and still keep you around.
I think we agree, not disagree. 🙂
Is it a surprise that another program got devalued? No. But it doesn’t mean that consumers and consumer advocates shouldn’t push back. People need to push out back with blogs like yours and with their behavior – what they spend their cash on and what kinds of points (or cash back) they should be collecting. If these loyalty programs don’t get push back then they’ll undoubtedly devalue their points even more quickly. Looked what happened to IHG last week after they got all that negative press.
AI C, the IHG change is a complete outlier. Bloggers have been shouting from the rooftops for years about these sorts of things with no progress to show for it. The definition of insanity is repeating the same behavior and expecting different results. Don’t cling to the hope of one reversal on the part of IHG. Plan smarter and get better value for your miles and points.
“No progress to show for it”? You missed the entire point of my earlier comment. If bloggers and customers hadn’t been raising hell about earlier devaluations, I can guarantee these companies would have been devaluing their points even faster than they already are. No one likes bad publicity. As for my personal situation, I’ve no IHG points or Southwest points so these devaluations don’t affect me one bit, but thanks for your brilliant suggestions.
AI, I just can’t agree with that assertion. American Airlines has something like 100MM unique loyalty members. A handful of bloggers and some customers raising hell isn’t likely to move the needle.
I disagree. Screwing over your customers – the more engaged they are the more they get screwed – is a terrible idea. I’m a business owner and if I intentionally made things considerably worse for my best customers without notice, that would show me up as an idiot. When Delta did another no-notice devaluation (the third one back) around six months ago I cancelled my Delta credit card and am now waiting to burn my remaining miles before waving the program goodbye. IHG is likely to follow shortly. When companies make ridiculously shortsighted decisions to my detriment I’ll take my business elsewhere.
Christian, this is literally the only way the programs will react. If many customers change their behavior, they will as well. If they’re not getting enough engagement from us, they’ll try to reward us more. When they have enough engagement, they’ll cut back the benefits until our behavior changes. The reality is you are likely in a very small group of people who cancelled a credit card when Delta made those recent changes. If you made that decision because you thought you’d get more value elsewhere, I applaud you for it. If you made that decision because you think it will impact Delta’s future decisions, I disagree. But, I certainly hope so.
Count me in the camp of people cutting credit cards. Cash back has been a part of my strategy for years and it gains a bigger piece of the pie after every devaluation. If programs need to do what’s best for them, I’ll do what’s best for me.
100%. If you can’t consistently get a 2% return on your points and miles, then cash-back cards are a better answer.
I don’t like it either, but do we get out the pitchforks every January 1st when In-N-Out raises prices because of minimum wage changes?
A good argument, Ed, and a reminder how important it is to “earn and burn”. Accrue those miles and spend them as fast as is practical!
Devaluation is of course a part of the game, but devaluation without notice is an abomination, especially for the semi frequent flyer with a credit card who has been saving maybe for years and just like that an airline or hotel chain moves the goal line. And it should not unnoticed, nor should we be OK with it. And thankfully, the majority of devaluations are given with advance notice. There are also ways to react that doesn’t make you sound like a whiny drama queen losing your shit, like sending a nice email to the program or post in a calm and courteous way on social media. If everyone does that, it has an impact. That’s what happened recently with IHG (well. some lost their s*** but there was a lot of people reacting – and it worked. And it should be reported on, but this post kinda hints that devaluation without notice is ok, which I think is a really bad idea.