In The Big Chair - Craig Brennan of Switchfly

Craig Brennan, CEO

Craig Brennan joined Switchfly as CEO in January 2019 after spending more than 25 years as an executive at SaaS and enterprise software companies including Brio Software, Overtone, QuickMobile and Oracle.

Switchfly provides loyalty, dynamic packaging and other solutions for airlines, financial services companies, hotels and other travel brands to drive incremental revenue, maximize conversation rates and increase engagement. Clients include American Airlines, LATAM Airlines, Marriott International and IHG.

Let’s start with a fundamental question - is brand loyalty in travel slowly dying?

With online travel agencies and all the different ways that consumers book travel nowadays, travel has become more of a commodity for brands, so consumer fidelity to specific brands is challenging.

In the past decade, carriers have seen a decline in direct bookings and an increase in booking with online travel agencies – but it’s not permanent. Airlines and companies like Marriott are coming back really strong with digital programs to achieve solid brand differentiation, so consumers will go directly to them versus the more commoditized approach of booking with OTAs.

If a travel company is not proactively managing their brand and building out their digital capabilities to own their customers, then travel brands will be commoditized. What we’re experiencing now is that travel brands are coming to us, and we are helping them build their direct capabilities and take more ownership in those direct customer relationships.

How does loyalty in 2020 look different than it did in 2000?

Travelers have the ability to leverage both cash and points, and to combine them, so they can optimize both points and dollars - that is a major, positive difference. Today’s loyalty programs are far more sophisticated, and they have more personalization in terms of tracking and helping passengers understand what it takes to achieve certain levels in the loyalty program.

The Switchfly platform delivers the ability to connect and treat your most loyal customers in a differentiated way. Communication and the ability to differentiate is far superior today, and there is also the recognition factor. Today we have the ability to tailor packages to the needs of the consumer and recognize their loyalty in meaningful ways.

Brands could not do that 20 years ago. So the biggest differences between 2020 and 2000 is the ability to differentiate the individual by loyalty status and then offer them added incentives or special recognition for that loyalty. 

What are some of the biggest mistakes you see brands making in their loyalty strategies?

I’ve actually experienced this - the value of loyalty points, and accessibility to take advantage of the points, has definitely diminished with certain airlines. If you want to use your points to fly to Europe on some airlines, it’s almost impossible because only 3% of the seats are available. For other airlines, it’s maybe 25%.

Consumers earn the points with their loyalty, but it’s really hard to take advantage of them. There is also a devaluation of loyalty points. Airlines, probably in an effort to achieve better economics, are trying to adjust the value and accessibility of loyalty points.

I think we need to be very careful in how we adjust without upsetting our most loyal customer expectations. Communication is key. We need to do a better job of proactively communicating with top‐tier loyalty members when these changes are coming down the pipeline.

How are younger generations - millennials and Gen Z - impacting the design of loyalty programs?

Different generations have different priorities for their booking experience. Millennials and Gen Z don’t want one‐size‐fits‐all rewards that do not fit their lifestyle or travel behaviors.

This demographic recognizes the value of loyalty programs, but relevancy and flexibility are essential for them. I recently read a study that said 28% of millennials and 30% of Gen Z rank tailored travel packages and the ability to pay with points‐plus‐cash as the most important aspects of booking travel, with mobile capabilities as a close third.

Millennials and Gen Z prioritize experiences over stuff. As digital natives, they are 85% more likely to post pictures on social media of their trips, meals and accommodations than previous generations. They really crave personalized recommendations, so airlines that can deliver relevant points‐plus‐cash travel packages will capture these travelers.

How is technology such as artificial intelligence changing what can be offered through loyalty programs?

We are at the infancy of leveraging AI to help drive relevancy and personalization. When the technology is fully developed, we will be able to easily identify travel patterns across different levels of loyalty programs, like patterns at different times of year, or to optimize the value for different consumer segments.

Once implemented, AI will recognize patterns over tens of thousands, even millions, of consumers and loyalty members. We will be able to find new patterns around loyalty where it may be more cost effective to offer tailored packages to different demographics. It’s not here yet, but it is coming - it’s clearly coming.

What are your thoughts on the relationship between revenue management and loyalty strategies?

Airlines are always trying to maximize revenue. Loyalty has to balance making great offers in a differentiated program to benefit consumers and achieving the travel brand’s objectives with growing overall revenues.

This is the balancing act: how, when and where consumers use the points, which incentives, in terms of loyalty upgrades like going from coach to coach premium, or for higher point members, going from business to first class. There are a variety of strategies to optimize the customer experience and loyalty while simultaneously maximizing the revenue for the airline.

Serving the customer is absolutely keyed in with revenue enhancement; they can’t be separated. I think one of the most crucial ways that airlines can optimize their loyalty program is around points‐to-cash, cash‐to‐points. That scalability is a relatively new feature in the industry, but being able to have not just cash, or not just points - but the ability for travelers to determine how they will spend their points and cash, and the framework from a travel brand to optimize their revenue as consumers optimize their cash‐to‐point ratio - that’s the best of both worlds.

If you were starting a new airline or hotel, what would be the top two or three things you’d do to build brand loyalty?

You absolutely have to have a differentiated brand - you have to know that you’re going after a very clear consumer segment. Make sure you have differentiated your offering in the marketplace, then build brand loyalty holistically, after you have carefully thought through all of the critical touch points between the brand and the consumer.

It’s imperative to make sure that the loyalty program is built to reward those things that matter the most to your customers; that is where your value lies.

In December, Switchfly announced its partnership with Japan Airlines to provide custom packages for people coming to Tokyo for the Olympics. Can a one‐time event such as this provide an effective way for a brand to establish long‐term loyalty?

Japan Airlines didn’t partner with Switchfly just to take advantage of a one‐time event ‐ this is a long-term relationship. However, it is absolutely a fantastic opportunity to launch the program! When you have millions of visitors going to Tokyo and to Japan, and Japan Airlines is the premier airline, this is a great opportunity to let travelers know that when they book the airline for their flight, they can take advantage of some really great packages.

The timing of the Olympics is a huge launching pad for the program - but it’s not the end‐all. They never thought of it that way, and neither did we, but we certainly wanted to make sure that it was launched in time to take advantage of this natural opportunity.

Looking ahead, how might loyalty look different in 10 years?

If you look at where technology is going, the next level is comprehensive interaction. With the advent of AI capabilities, the capacity to capture and store historical data, the power to perform real‐time analysis and real-time tracking – fingers‐on‐the‐pulse loyalty is going to be there.

Travel is going to be such a different experience than it is today, because of mobility, 5G, AI, all of the innovative, emerging disruptive technology and the platforms that make it accessible to airlines.

The contextualized ability to interact with your most loyal customers is key. We will have to balance the technology with data security and privacy, but I would say that for travelers who opt‐in to these programs, we are going to be able to take care of them in ways that we have never been able to before.

You came to Switchfly about a year ago after more than 25 years at a variety of tech companies, including Brio Software, QuickMobile and Oracle. What did you learn in those prior jobs that has influenced your role as Switchfly CEO?

This is something I’ve been wanting to evangelize: Every industry that I’ve worked in prior to the travel industry has been large, sophisticated brands. They think they want customized technology to differentiate themselves from their competitors. But the problem with that is the cost and complexity to first build, and then maintain it.

I think one of the most crucial ways that airlines can optimize their loyalty program is around points‐to-cash, cash‐to‐points.

Craig Brennan - Switchfly

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When you add innovation on top of it, it’s a losing proposition. What consumers and companies really want is to work with providers that can deliver an innovation engine. They want an innovation engine in this new SaaS environment because everybody is moving toward SaaS as a business model.

What they really should be focusing on is the ability to innovate and to adopt innovations versus wanting to own and maintain a highly customized, one‐off technology. Technology moves way too fast, in terms of its architecture and its capabilities, so it makes sense that one individual company does not have the capacity to afford to do that or the insights gained across a community platform.

Switchfly focuses on driving revenue and making sure that we have built an innovation engine to continually deliver new features and functionalities. This helps achieve the brand’s goal, which is to build their revenue and deepen their customer loyalty. As far as configuration, you can configure and differentiate without the product necessarily be custom, so configuration and integration are not really complex, once the innovation engine is in place.

What are your priorities for Switchfly in the next five years?

We want to continue to be the leading travel e-commerce platform on a global basis. Our strategy is to deliver powerful and flexible travel booking and loyalty solutions that allow our clients to optimally engage with their customers. We also offer targeting and promotion solutions which can be used to stimulate engagement with loyalty programs, based on profile attributes like preferences, points balance and redemption history.

Our points‐plus‐cash payment option allows loyalty members to subsidize the cost of a full vacation package with points, which increases the value to the traveler, and at the same time, grows share of wallet for the brand.

Our goal is to continue to build our innovation engines and to be able to offer rapid and distinctive revenue generating capabilities to help our brands grow. Our priorities are finding and optimizing every revenue generating opportunity for our customers - that brings immediate value.

What advice do you have for people just beginning their careers in the travel industry?

Passion for travel is essential. I’ve traveled to 66 countries, so from experience I can say that a passion for travel is important, because you can understand and empathize better with consumers, as well as people in the industry.

There are great benefits to understanding brand influence and to participate in end‐to‐end travel experiences. American Express is a good example of the door‐to‐door experience, because their cardholders book flights, hotels, cars, activities - everything is going on the card and earning points, because Amex has that insight. And it’s the same for MasterCard.

It’s important to understand the collection and use of data and dynamic packaging – flights, car rentals, activities and ground services. The industry is leaning toward more comprehensive, yet less complex, travel experiences, so, if you are just starting your career it would be beneficial for you to work for an airline for two or three years, then a hotel, so you can get first‐hand experience in different aspects of the travel business.

Finally, I would say, you want to be very analytical. Even though this is an extremely high-touch industry, a very experiential industry, everything is moving toward data‐data‐data and analytics/analytical insights.