Ok, I will upgrade you, dear Friend…

Subjects: Creative offers
Principle: Leveraging to full extent your assets
Potential Worth: Around 30 M$ additional profit per year

We talk again about Airline Industry today. I am a big time flyer: I fly so much that pilots greet me when I board the plane " ”Hey Kramerilio, long time no see on this route… How’'s going buddy?”". Just kidding... But I do fly a lot.

One area of business (and life) that fascinates me is the amount of assets that a company has that are unexploited. Those assets are not on the books but they have a clear commercial value. For instance, what is the value of a clients’ database? And how much more a very good database (with all kind of information collected, like Amazon does) is worth versus a mediocre one (where just name and last name are present)? Difficult to quantify, but we know that this difference can become worth real dollars, if the asset is entrusted in the hand of a savvy business person or a guerrilla marketer.

Along these lines, we talk today of a very creative way that American Airlines (AA) found to create some extra money: I love these examples because– they create wealth and value out of thin air.

A word of introduction: When a person flies a lot, she accumulates “500-mile upgrades”, that allow for that person to upgrade to First Class on domestic flights (if seats are available). Now, these upgrades are non-transferable: I got hundreds of them and they sleep unused in my account because I cannot humanly fly enough to use them all.

Now, instead of just allowing this upgrades to be passed to a friend, AA decided (smartly, may I add) to see if they can make some cash out of the transaction… Ehi, what’'s the downside? People not taking advantage of the offer… big deal...

So, now I can make friends, family, colleagues happy for just 15$ transfer fee: they are happy, I get big hugs+recognition+love+friendship and AA gets some money.

Let’s run some basic math about this: if I transfer just 2 times per year, AA makes 30$ out of the transaction at basically zero cost and zero risk. If 1 million travelers do that per year, that'’s about 30 millions in pure profit that AA gets, every year, forever, amen. (remember, upgrade is subject to availability, so they are not putting first class revenue at risk: if first class is full of paying customers, no free upgrade is allowed).

Oh, I love smart and elegant ideas like this one: just upside, no downside.

Have a great Sunday, fly safely!

Kramerilio in USA