- The CEO of PSG bank just entered the room. She has a call in 5 minutes with stakeholders and is worried on the continuous revenue decrease of PSG and asks for your immediate advice for her call.
Recommendation: make a loyalty plan for retail customers
– Develop loyalty plan for retail customers (where we are losing $500M of revenues / year) based on giving miles per dollar spent. We will retain 100% of current customers
– Yearly cost is around $312 / year, which is inside our budget
Risks: i) Loyalty plan works for competitors, but our customers could react differently to these plans , ii) Potentially duplicating the demand of flights exchanged with credit card miles could increase flights estimated costs, iii) Additional marketing efforts and human resources for the loyalty plan could be hard to implement.
Next steps (remember… one next step for every risk!): i) Make a pilot to rapidly test the loyalty program on our different customer segments, ii) Start conversations with airlines and draft long term contracts leveraging on our size (monopsony power!) and iii) Train marketing direction on best practices of loyalty programs and define if its necessary to create a new unit to implement this initiative