Frequent Flyer Miles - The Mother of All Reward Schemes

American Airlines introduced frequent flyer miles in 1981 in response to a problem caused by the deregulation of the airline industry. They were introduced as a way of ensuring customer loyalty, but the creator of the regime could never have imagined the many similar incentives that are created in the next quarter century.
The introduction of air miles owes much to a loyalty program based on store shelves nationwide, Green Shield Stamps. For it was fond memories of licking stamps her mother's green shield and stick them on the books to be redeemed at a later date leading to AA Marketing Director Tom Plaskett to develop the frequent flyer plan.
Plaskett was back at work after having entered into the shoes of Robert Crandall who had recently been promoted to president of the company. The two had taken up their new positions at a time when the airline industry had just been deregulated by the federal government, removing price barriers and forced to come up with a way to sell tickets that do not use price as the key factor.
Crandall knew the company would soon be in trouble if passengers chose flights only cheaper and was desperately looking for ways to sell more expensive tickets yet maintain the profit margin of the airline. In order to solve the problem again Plaskett, who came with the frequent flyer plan.
The movement was especially clever marketing to structure a reward system that awarded loyalty bonuses of miles, rather than as a reward in dollars. Thus, companies were prevented from recovering the rewards of their employees. In designing the scheme to be aimed at business travelers AA ensured its success. Business travelers accounted for the majority of airline passengers in the 80's and it was his company - not them - who bore the cost of buying a more expensive ticket.
And so, the business soon took the book with an airline that offered a bribe legitimate. By air miles on business could eventually end up with a free vacation, all paid by the company.
A few weeks after American Airlines, the introduction of frequent flier miles, United Airlines and others followed his example. It was not long before companies outside the airline industry developed their own similar plans. Soon, credit card companies began granting reward points and hotel reward scheme - collection of loyalty points in return for staying in a hotel chain in particular - has also been introduced.
The loyalty program became an established alternative for the discount, has been adopted by numerous industries and has committed hundreds of millions of consumers around the world. These systems have evolved over the years and now many benefit plans, even linked to other affinity marketing partner. For example, you can use a credit card that rewards spending with airline miles or hotel points, and some offer cash, even the back.
It is without doubt that Tom Plaskett had no idea how their concept of frequent flyer miles that develop when he got the only solution to ensure customer loyalty for American Airlines.
Isla Campbell is an online, freelance journalist and avid traveler and pilates devotee. When the road is living on the outskirts of Oban.

Article Source:-http://bhishekumar93877.blog.com/2012/05/11/frequent-flyer-miles-the-mother-of-all-reward-schemes/

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