How Carnival Cruise Killed Their Loyalty Program … And What Happens Next

In mid-June, Carnival Cruise Lines launched what may be the most shocking (and potentially destructive) experiment in the history of loyalty programs. They essentially ​announced that they will be scrapping their 13-year old program​ and instead replacing it with a new system based on how much you spend. More specifically, they are taking away Lifetime Diamond Membership for customers and instead requiring people to requalify for it with ongoing spending on new cruises. For the past few weeks, brand loyalists and fans are actively ​sharing videos about how much they hate it​, calling the new program a “glorified credit card rebate program.”

Why is this so potentially damaging for the brand? Here’s an excellent breakdown from neuromarketing expert Roger Dooley in ​his analysis of the program changes for Forbes:​

Here’s what Carnival got wrong from a behavioral standpoint: they’re taking away something customers already own. Under the old system, a cruiser who sailed frequently over many years earned lifetime Diamond status based on nights at sea. That status felt earned, permanent, and emotionally valuable. Behavioral economists call this the “endowment effect”—once we own something, losing it feels much worse than never having it at all. Now Carnival is essentially telling these customers: “Thanks for your loyalty, but you need to pay up or lose what you’ve earned.” This fundamentally changes who can be “loyal” to Carnival. Frequency and long-term engagement no longer matter. It’s all about 24-month spend.

It is possible this could be a sneaky tactic to stoke some short-term outrage from their best customers before reversing course and giving back these earned lifetime status privileges. And if so, that could work. Time will tell. If not, this could become a case study taught in business schools for how to destroy brand loyalty overnight.