Using Airline Miles for Incentive and Recognition Awards

Ever since airline loyalty miles were invented, many businesses thought they could piggy back on their popularity and the lure of free travel to motivate their own employees or consumers or channel partners to higher performance. And, many companies have tried just that. Airlines are very willing to sell you a air miles for an average of about $0.03 a mile. The company in turn then uses that mile and determines a funding for their award program and away they go.

Simple huh? Yep. Motivational? Maybe. Cost effective? Absolutely not!

We get a lot of calls from companies wanting to structure employee or channel partner loyalty programs using these miles. We politely tell them to save their money. First of all, the vast majority of them do not want to budget their program with enough awards to make them motivational to the participants. They would have to spend about $900 plus excise tax and a processing fee, or close to $1000 for the participant to earn a round trip ticket for one person. This kind of funding is rarely used in incentive or recognition programs, and if it were, they would have to use a far more diversified award mix than just one round trip ticket to get the attention of the employee or channel partner.

This post in Loyalty Truth.com speaks to loyalty programs that are underfunded and produce more ill will toward the sponsoring company than loyalty. They backfire, and they become a negative. The same thing can happen when you implement an incentive or recognition award using air miles.

The theory of using air miles for awards in incentive programs is that every little bit adds up and the more you get from more sources the better for everyone. Problem is that doesn’t add up especially when the amount you get from the incentive program is so paltry. It’s never worked to my knowledge and if you do have enough miles to go around your spending rate is exorbitantly high. Combine that with the fact that all airlines have limited seating for free seats from loyalty programs, you run the risk of really upsetting your most valued resource, you best employees or channel partners.

Maybe more importantly, the average price of a domestic round trip airline ticket is between $350 and $400. Why you would want to pay $1000 for it is frankly beyond us. You’re better off giving them $1000 in Award of Choice cards where they can get a gift certificate to any of over 500 of the most desired merchants in the country. They would receive $1000 in benefit for your expenditure and be assured to receive the award of their choice, the one that fits their personal desire of the moment.