Companies crack down on customer perks and rewards like airline miles

It’s not your imagination: Companies are getting stingier with customer rewards.

Airlines are making it harder to earn elite status. Retailers have tightened return windows and tacked on fees. Dunkin’ and Sephora are even cracking down on birthday treats.

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The shift shows companies are rethinking how to attract, retain and reward customers after the Covid pandemic as consumers change their spending priorities and businesses face pressure to control costs while increasing sales.

Companies have to be careful. If they slash benefits too severely, they risk losing customers, but being too generous comes with a cost.

“It’s not a simple math exercise to say letting few people into a particular group or offering fewer people a promotion just translates to a change in sales volume,” said David Garfield, global head of industries at consulting firm AlixPartners. “It also can change the way people feel about the company and influence others.”

During the pandemic, airlines allowed frequent flyers to hold on to their elite statuses. They ended that perk as travel rebounded, and customers racked up loyalty points on co-branded credit cards. Carriers including American Airlines, Delta Air Lines and United Airlines also have raised the number of miles customers need to earn elite status as the ranks of those with the benefits swelled.

“When you have that many customers in the so-called premium tiers, it doesn’t feel that special anymore,” said Yuping Liu-Thompkins, a professor of marketing at Old Dominion University’s Strome School of Business who researches loyalty programs.

Delta has taken steps to try to reduce crowding at its popular airport lounges. It has largely barred staff when they’re flying standby and raised membership fees and entry requirements. In February, American Express Centurion Lounges started charging members $50 to bring in an adult guest and $30 for children between the ages of 2 and 17 for American Express Platinum cardholders. Previously, members could bring two guests for free. The fees are waived if a cardholder spends $75,000 on the card in a year.

Those changes come as airlines see a new trend: Many travelers are willing to pay more to sit in business class or for other roomier seats to make flying more comfortable.

United, Delta and American executives said on earnings calls last month that premium-seat revenue has increased , outpacing growth from the main cabin. Airlines are racing to add roomier seats to cater to those free-spending travelers.