Deutsche Lufthansa AG (Lufthansa) is one of the leading airlines worldwide, and has been proactively transforming its loyalty programme. With the help of Web 3.0, the airline aims to maximise brand engagement and revenue streams, increase relevance and customer base, and better navigate consumer behaviour. To prevent stale loyalty membership, the carrier is adopting the use of NFTs (non-fungible tokens) to nurture power users, and support the collection of customer data, which in turn, can bolster the introduction of more consumer-centric practices and tailor-made services.
Unveiling the Lufthansa story
Germany’s flagship carrier and one of the largest airlines in Europe, Lufthansa operates a vast network of routes. In 2023, within airlines, the carrier recorded just over 4% value share worldwide, positioning it among the top 10 leading players.
Revenues from customer loyalty programmes which includes (passenger airlines, logistics, MRO and catering as well as additional businesses and company functions) reached EUR358 million in 2022 compared to EUR292 million in 2021
Source: Lufthansa Group
Miles & More is the biggest loyalty scheme in the group, which includes all the airlines under the umbrella of the company alongside its partners (such as other airlines, hotels, rental companies, financial and insurance providers). Liabilities from customer loyalty programmes reached EUR2,087 million in 2022 versus EUR2,131 million. As of 2022, the programme had more than 36 million registered members worldwide.
In 2023, Lufthansa launched in partnership with Miles & More its own NFT loyalty programme, Uptrip. The airline is following the example of such competitors as Air Nippon Airways (ANA) in Japan, and Emirates Airline and Etihad Airways in the Middle East, among others, which are all embracing Web 3.0 as part of their loyalty schemes.
The use of blockchain-based digital assets such as NFTs, fungible tokens or cryptocurrencies create innovative ways of collecting rewards whilst boosting exclusivity and creating a sense of community.
44% of global consumers are extremely or moderately interested to invest in digital assets such as NFTs
Source: Euromonitor International’s Voice of the Consumer: Digital Consumer Survey 2023
These new-age tools can help reach a wider customer base, reinvigorate old and traditional loyalty programme structures, whilst bringing greater flexibility as part of the loyalty offers, and ultimately can help shape consumer behaviour. They can also improve the real-time customer feedback process seen by many consumers as one of the biggest barriers for established loyalty programmes.
The new Lufthansa programme offers travellers the opportunity to exchange their flights for digital trading cards in the form of NFTs by scanning their boarding passes via an app. These NFTs have unique themes based on the following groups: cities, aircrafts and specials, and are part of an individual collection. Once the passenger collects all the necessary cards, they are provided with an option to choose a set of different loyalty rewards such as complimentary in-flight Wi-Fi, priority lounge access, and flight upgrades.
Another important stage as part of the launch of this new programme is the establishment of Uptrip marketplace, which will facilitate the interoperability of rewards between passengers and ultimately boost greater interaction between loyalty members. Travellers will have the option to mint, trade and transfer their NFTs using their digital wallets. The business model of this new loyalty programme is an open ecosystem, which will help drive further partnerships and ultimately deliver greater utility.
NFTs - democratising the rewards space
NFTs can bring financial gains for both the membership scheme and the customer. In addition to the initial sale of the NFT, the brand alongside the member can reap additional benefits from the value of the digital asset, any sales or through royalties. Aided by smart contracts, members can mint NFTs and take advantage by directing a set of revenue percentage from any sales they acquire, to the digital wallet or member of their preference.
NFT loyalty adoption can also help boost hyper-personalisation, which in turn, can create a community of brand advocates that will drive retention as well as repeat purchases. The brand can issue additional digital rewards through “airdrops” for the specific members, which can enhance experiential rewards, including those offered in the metaverse environment. NFTs also support the gamification of loyalty rewards, which can help drive engagement and social sharing.
The use of NFTs by Lufthansa can help expand and further boost its global reach, connect the brand with a younger consumer audience such as Generation Z, and add higher digital value to the product.
Read our report Next-Generation Customer Loyalty for in-depth trend descriptions, case studies and strategic recommendations or The Transformation of Customer Loyalty: A Pan-Industry View for further analysis on the key trends adopted across different global industries.