One of my favorite writers at SmarterTravel.com is a guy named Tim Winship, who co-authored a book called Mileage Pro — The Insider’s Guide to Frequent Flier Programs (buy it through my Amazon link here). He’s written a lot on SmarterTravel about frequent flier programs and their rewards cards — a list of his many articles is here.
On Tuesday, Mr. Winship’s article was called, “The Truth About Deceptive Airline Practices.” In it, he makes some excellent points about airlines can exaggerate their on-time stats by simply pulling onto the tarmac and waiting endlessly there, and how they make their fare specials look more special than they really are by hiding extra fees and roundtrip requirements in the fine print. But what I wanted to comment on here, which I think is applicable to *all* rewards programs and not just frequent flier programs, is the exaggeration of their membership numbers.
“…Most industry outsiders would be scandalized to discover that in reporting the membership of its [AAdvantage] program, American includes every account ever established since the program’s inception. Included among those 56 million members are duplicate accounts; accounts of people who signed up but never earned or redeemed a mile; and accounts of those who enrolled at some point during the program’s 26-year history but have since died.” This, Winship says, is not unique to American, but is an “industry standard.”
Is this rather questionable accounting practice unique to airline frequent flier mile programs? I would seriously doubt it. My gut feeling is backed up by an analysis released by Colloquy.com in May that examined national membership in all types of loyalty programs and found that the average household belonged to 12 different programs, but was only active in about 5. “Fat membership roles may look good in a press release, but active loyalty program members are the only members who count,” said Kelly Hlavinka, senior director of Colloquy.
Usually, when I approach a newer or obviously lesser-known rewards program and request an estimate of their membership, their management politely refuses to answer. (Jellyfish co-founder Mark McGuire was the most recent to, very nicely, decline to share.) I don’t begrudge these programs their desire to withhold this sensitive information. They’re acknowledging that they don’t yet have anything to brag about. At least, in not answering, they’re being honest.
But what about those rewards programs that are willing to give out their membership numbers? Are they being honest, or are they using some version of the horrific accounting methods that American AAdvantage uses? Or perhaps are they just being cagey in their wording?
Upromise’s Company Information page says, “Since the launch of Upromise in April 2001, more than six million families have enrolled in the Upromise program.” Their 2006 annual report (see page 17) says, “Upromise’s popular rewards service…has more than seven million members who have joined Upromise to save for college…” That sounds like a lot of members, but knowing what we know now about how AAdvantage counts their members, I have to immediately ask, “Yeah, but how many of them are active members?”
Part of the problem may lie in defining “active.” Is a member active if they confirmed their account by clicking an email link and then did nothing else? What if they bought something through the rewards program once, four years ago, and nothing since? What if they log into the site frequently but never shop there? There IS no across-the-board definition of an “active member,” and unless a company is publicly traded, there is no requirement for a rewards program to release ANY membership information.
To show I’m not just picking on Upromise — I’m not, I’m a member there (though whether I’m active or not is up for debate; the site says I haven’t made a purchase there in 180 days), what other programs are releasing their membership data?
MyPoints’ Media Kit says that advertisers can “gain access to our permission-based audience of 6 million online shoppers…” In April of ’06, when United Online took MyPoints off United Airlines’ hands, their press release about the acquisition said that while MyPoints had “a True Opt-in(r) database of approximately 4.5 million members,” there were “approximately 1.4 million members with activity in their accounts.” Maybe MyPoints got 1.5 million new members since April 2006 to bring their total to 6 million, but that would still mean that just 2.9 million, MAX, were active. It would seem misleading (though again, industry standard) for MyPoints’ media kit to say their “audience” is 6 million but neglecting to mention that half of them were inactive.
Ebates’ Advertising and Partnerships page says they have “over 7 million members.” However, in a January 2006 article written by Ebates’ founder and CEO Alessandro Isolani, “The Art of Woo,” he said that the program had “more than seven million registered members and roughly one million active shoppers.” Wow. Pretty big difference. Kudos to Isolani for publicly making the distinction, and voluntarily so (Ebates is privately held and does not have to release their data). Even so, his definition of “active” may be very different than another site’s…so there can’t really BE any fair comparison of sites by membership numbers.
Other sites reporting membership numbers include BondRewards (their site has a banner saying they signed up their one millionth member this year), Memolink (“As of March 2005, memolink.com has garnered over 10 million registered members”… Yeah, Memolink’s bigger than Upromise! …if you believe that), Borders Rewards (“nearly 20 million members”), and Greenpoints (10 million members in May 2006).
I guess the point I wanted to make here is that, personally, I’d rather be given a “We’d prefer not to answer” response when asked for a program’s membership numbers, than to be given some number that is basically useless. You may think that exaggerating your program’s participation will make you seem more attractive to potential advertisers or to potential members, but the fact is, long-lasting relationships are built on trust. Be honest with your program’s data or just don’t release it at all.