Travel has some of the
longest-standing, largest and most historically successful loyalty programs of
any industry. So much so, in fact, that travel’s points-based rewards have been
the gold standard other sectors have looked to emulate as they built out their
own customer loyalty strategies.
But the past couple of
years have left travel loyalty programs looking a little shakier than they once
did. While the industry’s recovery from pandemic disruption is encouraging
(some forecasts project a return to 2019 levels by 2024),
changes in who is traveling - and how often - are challenging tried-and-tested
loyalty strategies.
Consider that leisure
represented a huge 80% of global travel spend in 2021. And recent research from Accenture shows that, even with rising
travel costs, over half of consumers plan to maintain or increase their spend
on leisure travel in the next year.
Business travel is
also coming back in the post-COVID economy. But, given their experience of the
past two years, growing numbers of business travelers might limit their travel
frequency, combine business with leisure trips (bleisure) or switch to digital
nomadism.
Time for a loyalty
upgrade
This has implications
for loyalty. Historically, business was the only segment that traveled enough
to qualify for high-status loyalty rewards, and the high-volume business “road
warrior” was the bedrock of points-based programs. The likelihood is that fewer
travelers will be able to rack up loyalty points for perks in future.
Loyalty strategies are
therefore in urgent need of an upgrade. The good news is that there are several
ways to increase the “loyalty dividend” - an objective measure of the perceived
value of a program to customers relative to the cost to the business of
providing it.
Growing the loyalty
dividend begins by understanding which rewards today’s travelers really value.
And some recent qualitative research from Accenture sheds light on this
question. Three insights in particular stand out.
The power of now
The first highlights
the growing importance of “right now” in loyalty rewards. Unlike traditional
business travelers who patiently built up rewards over time, leisure travelers
expect to be able to gain and use their rewards immediately.
Travel companies can
respond by enabling a “real-time” earn and redeem model. This treats loyalty
points more like a form of currency, with customers able to see how much
they’ve earned and spend their points as and when they choose.
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That includes spending
on smaller moment-by-moment “microburn” purchases, such as a drink at the bar
or upgrading to a better seat or room.
Savvy companies can
also consider building in gamification to increase engagement. Banyan Tree
Group’s digital scavenger hunt at its Laguna Phuket resort shows how
gamification can improve customer experience and boost ancillary revenue.
Guests used their
mobile devices to search for digital objects (NFTs, i.e., non-fungible tokens)
and win exclusive prizes while learning about the resort’s services. The
scavenger hunt was designed to be engaging, easy and economical to deploy. By
linking this kind of gamified experience with loyalty, travel companies can add
value for travelers, as well as increase brand awareness and drive sales.
Flexibility my way
Today’s travelers
expect reward programs to reflect their changing needs across different
situations and stages of a trip. That includes greater choice, flexibility and
autonomy, with programs that allow members to choose benefits that are most
relevant in the moment, based on the unique needs of each journey. Hilton is
offering Honors benefits that you can choose per stay and per brand, which is a
first step in personalizing benefits and being able to make the choice in the
moment.
One way to do this is
to broaden the number of redemption partnerships that travelers can make use of
- including partners outside the traditional travel ecosystem. This “earn
anywhere, redeem anywhere” concept provides more options for spending points on
rewards that make day-to-day travel just that little bit easier.
Alongside this, travel
companies should ensure they’re using data from loyalty programs to guide both
the strategy and the execution - everything from which partnerships to enter,
to which benefits to offer, to creating a well-designed personalized user
experience that avoids “option overload.”
Tried and true
The third key insight
is that much travel brand loyalty is driven by reliable, consistent, convenient
experiences and by reassuring customers that their expectations will be met. In
the end, this trumps both price and transactional value.
Travel companies
should therefore focus on being “the hero” of the travel experience, making
customers feel valued and providing rapid human-centered customer
service—especially when challenges arise - understanding how this impacts the
broader loyalty strategy.
It’s also important to
consider which customers are willing to pay a premium, whether to avoid stress
or enjoy a better trip. For example, several airlines are offering to buy
memberships for lounge access.
Time to recapture
the pioneer spirit
Recent years have
shown travel companies adapting to disruption with impressive flexibility and
responsiveness. This same spirit of innovation now needs to be applied to
loyalty programs.
By continuously
reassessing how those programs understand, reflect and respond to changing
customer needs, preferences, passions and purpose, travel companies can keep
their loyalty strategies relevant, valuable and profitable.
That’s how to make
loyalty rewards more rewarding - for the business as well as for customers.
About the authors...
Emily Weiss is senior managing director and global industry sector lead and Liselotte De Maar is managing director and global strategy lead for Accenture's travel practice.