AOL AAdvantage: The most eagerly anticipated loyalty program

Is the Launch of AOL AAdvantage Rewards Premature?

Every so often, the world of frequent flyer miles is shaken to its very foundation. We’re not talking limited-time bonus promotions or incremental program enhancements; we’re talking milestones.

Examples include the original expiring miles policy, the first miles-for-charges card, Hilton’s Double Dip, Southwest and Starwood’s “no award blackouts” commitments, and the new MilePoint program which allows frequent travelers to use miles like money as never before.

When American and AOL announced in January that they were combining their considerable forces to bring a new loyalty program to market, the expectation was that AOL AAdvantage Rewards was going to be a groundbreaker; that the course of loyalty program development would be changed forever; that this would be the beginning of a new era, miles-wise.

American’s AAdvantage–the first and still the most robust of the frequent flyer programs–has more than 40 million members. AOL, with more than 24 million customers and an offer to purchase Time-Warner in the works, is the quintessential new media powerhouse. Among their respective competitors, both companies are recognized as being forces to reckon with. A marketing effort combining the size, resources, and capabilities of American and AOL could only be one thing: huge.

So when, during the first week of October, American and AOL finally announced that AOL AAdvantage Rewards was up and running, it was with a real sense of history-in-the-making that I visited the AOL AAdvantage website (http://www.aolaadvantage.com). After reading and rereading the site content, my excitement turned to confusion, the confusion gave way to disappointment, and the disappointment shaded into frustration.

What is AOL AAdvantage?

What, I wanted to know, is AOL AAdvantage Rewards? How does it differ from the AAdvantage I already know and love? If I join Rewards, do I get any benefits not available in the existing AAdvantage program I’m already a member of? Do I forfeit any benefits I currently enjoy? What about my AAdvantage elite status?

I can now answer those questions, and for the benefit of those who share my confusion, I will. But my understanding was hard-won. It took more reading than it should have, supplemented by extended phone calls with an AOL rep in Virginia and her American counterpart in Dallas.

It turns out that they key to understanding Rewards is an easy-to-remember descriptor: AAdvantage-plus. Rewards members get exactly what a regular AAdvantage member gets, plus-

• They can earn miles for various online activities, including making purchases at Sharper Image, Giftcertificates.com, and 1-800-flowers.com; subscribing to Time magazine; and participating in online surveys.
• They can redeem miles, again online, for various products and services, including books, CD’s, consumer electronics, and AOL services.

Both AOL and American resisted the “AAdvantage-plus” moniker, even for explanatory purposes, presumably because it undermines the part that AOL plays in the partnership. Notwithstanding the branding implications, “AAdvantage-plus” simply and accurately communicates the program’s essence. It also lends itself nicely to the inevitable casual spin-offs like “AAd-plus” or simply “A+.”

Naming considerations aside, the more important question was one of substance. And the disappointment began taking hold when I realized how very few additional earning and redeeming opportunities were included in the new program. Which begs my next question…

Why are there Two (Count ‘Em… TWO!) Programs?

The answer seems to have everything to do with AOL’s ego and American’s greed, and little to do with consumer wants and needs.

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Remember that AOL could have simply become another AAdvantage partner, rewarding its customers with AAdvantage miles for signing up for AOL services, and allowing AAdvantage members to redeem their miles for AOL services. AAdvantage has hundreds of such relationships; There’s no obvious reason why AOL should have received different treatment. Or is there?

What AOL offered, and American dearly wanted, was the chance to establish a proprietary relationship with the huge AOL customer base–24 million strong. And AOL’s customers are not only plentiful, they are desirable. First and foremost, they are online, which means they have the financial wherewithal to own a computer and pay for an Internet connection. They have the means (if not in the inclination) to make purchases online and are poised to become the first major wave of cyber-consumers. If American can sell AAdvantage miles to even a small percentage of the online merchants servicing this exploding market, the revenue potential is enormous.

American’s appetite for access to cyber-consumers is understandable. And AOL (I’m guessing) said, “Fine. But only on condition that the program be co-branded.” For all American’s marketplace power, AOL had the upper hand. If American had refused AOL’s terms, there was always United and Delta to partner with, or a consortium of second-tier airlines. But for American, there is no other company capable of matching AOL’s ability to deliver online consumers.

So American migrated AAdvantage onto the Internet. In exchange, they allowed AOL to put its name on what is already the largest, and some would say the best, program in the marketplace. And consumers are saddled with the unnecessary complexity and confusion resulting from two programs.

When Will the Program Realize its Potential?

So far I’ve been critical of the program’s confusing duality (two programs, one currency), and its failure to realize its own potential. But what is the promise? And when, if ever, will it be delivered on?

The promise inherent in launching AAdvantage into cyberspace is the promise of a single program which will recognize and reward me, for my purchases, across all areas of my life.

The travel and offline activities were already well covered by the “old” AAdvantage. But for my online transactions, I and other cyber-guys and -gals have had to consort with non-airline programs like WebMiles, or programs like ClickRewards which operate in conjunction with, albeit one step removed from, airline programs. Now, with Rewards, we can be brought back into the fold.

Here’s the explicit promise, as communicated on the Rewards website: “With so many partners, products, and services to choose from, you’ll find that shopping and earning with AOL AAdvantage are an easy part of living your life.” At this point, with so few earning partners, that’s simply not true.

American and AOL have both assured me that there are many more earning and rewards opportunities in the making. I was comforted by that prospect until I remembered that programs like ClickRewards and WebMiles already have extensive lists of earning and rewards partners. Why, nine months after the initial announcement, have AOL and American put their respective big names on a program which promises so much and delivers so little?

So, Should I Join AOL AAdvantage Rewards?

Yes. And do it quickly.

While the new program offers very little in the way of improvements over the old program, there’s no downside to joining. But there is a substantial, if temporary, upside: a million-mile-a-day giveaway launch promotion in effect from October 3 until November 1.

A million AAdvantage miles would go a long way toward mollifying my misgivings about AOL AAdvantage Rewards.