As travel recovers from the COVID-19 pandemic, travel brands need to re-examine the effectiveness of their loyalty programs in encouraging return visits and building a positive brand image.
A recent study by Phocuswright finds the pandemic has motivated loyalty program members to try new providers. Willingness to change varies, depending on the program status.
- 30% of low-status members said that they are willing to change brands and to try something new,
- 22% of mid-tier-status members are willing to change and
- 44% of high-status members are willing to try a different brand.
It's also interesting to note the intensity of this sentiment. Only 33% of low-status members said they are unwilling to change brands, 29% of mid-tier-status members said they would not change, and only 25% of high-status members said they are unwilling to try a new brand.
There is a vast swath of changeable neutrals in all three status categories (38% of low-status, 50% of mid-tier-status, and 31% of high-status) who could be drawn away from their loyalty program by the right offers and marketing strategy.
Miles and points can't buy loyalty anymore.
Rewards as currency are a depreciating asset, particularly now that the financial impact of customers hoarding points and miles becomes unsustainable. For example, in the airline space, the liabilities have grown to levels which force some to reduce the value of those miles flown or restrict the number of seats open to claiming rewards.
While this may be a business necessity, it does not encourage the loyalty that turns customers into brand advocates, forges positive customer relationships, and expands the customer base while growing revenue.
After the miles are gone, and the points are spent, it's time to ask what will keep customers coming back?
As Jacqueline Nunley, senior industry advisor for travel and hospitality at Salesforce, points out, travelers acted on pent-up demand. After missing out on travel for more than a year, some may have had extra cash to spend.
Others have loyalty status points preserved during the shut-down, which they want to put to good use. That creates a new uneven playing field for loyalty.
"If you've burned through your loyalty points, what happens now? Any brands can come and impress you and grab your loyalty for that particular brand or product," Nunley says. "You need to be able to market effectively to get your message out to the right people in a way that’s relevant to them, understanding your consumer, which is all about true personalization and not just guesswork.
"There are strategies in place with other brands that are coming into the fray and getting the attention of your previous loyal customers. Just having a loyalty program is not enough anymore. Those brands who are moving to experiential loyalty are going to benefit because their message is going to be more relevant to the consumer."
Are you sticky enough?
What makes you memorable? What makes your travel brand a must-have as part of an enjoyable journey? It is not enough to do the basics—providing the offered product. It's also about confirming satisfaction in a meaningful way, being there when things go wrong, and responding appropriately to customer issues.
"When we're talking about being sticky, it is the notion of customer advocacy, positive word of mouth, which helps grow the share of wallet," Nunley says.
When we think of sticky travel brands, we must mention American Express, which cemented its position as a travel-essential by offering travelers what they needed on the road - a familiar, trustworthy and safe link back home.
All products offered by American Express from its foundation as a trustworthy freight forwarding service have focused on protecting travelers' assets, assisting with communications, and offering them helpful guidance in unfamiliar settings.
As author and customer service consultant, Matt Dixon, explains the quality of customer communications is more valuable than the quantity of communications if you want to be memorable - particularly for B2B clients.
"It's the quality of the sales experience that separates one company from the next in the eyes of a business customer. So we know sales matters hugely in terms of creating loyalty is a high impact moment. We also know from the effortless experiences that occur another critical moment is when something's gone wrong, and the customer reaches out to the company for help.
"In those moments, it's the way that the company handles that interaction—whether in a high-effort or low-effort way—which will determine whether that customer keeps buying from the company, spends more with the company over time, and says good things about the company to their friends, family members, colleagues, etc.," Dixon says.
Product experience also matters, he adds. Stickiness or resonance, in that respect, correlates directly to the effortlessness of the product experience, which also directly impacts the perceived value of the product. Creating a low-effort experience, a seamless experience, boosts value, making the customer feel that they've made the right choice.
Whatever travel product companies provide, those three elements — value retention, effective communications, and effective support through the unexpected — make a travel brand sticky. After all, delivering the travel product, as advertised, is a basic expectation. And there’s nothing more rewarding than traveling with peace of mind.
But what's the best way to deliver those three elements of stickiness when the journey is a stack of dominos? Say a traveler has unresolved trouble with the airline; how will they perceive any issues they encounter later?
Will the hotel suffer the brunt of the traveler's pent-up dissatisfaction? Is there anything a travel brand can do to reverse this chain?
What's the right effort for loyalty?
The Phocuswright study on loyalty programs post-COVID-19 also shed some light on what factors motivate loyalty. For example, there is a strong preference for value for money proposition and an opportunity gap.
- 62% of airline loyalty program members say value for money drives their booking decision and only 38% say their primary airline brand delivers value for money.
- 61% of hotel loyalty program members say value for money drives their booking decision and 45% say their primary hotel brand delivers.
What do program members value most? The Phocuswright loyalty study found that good customer service was the strongest driver of airline loyalty among high (48%) and low (26%) status members, with mid-tier members evenly (33%) motivated by good customer service and easy travel planning.
In the hotel space, high-tier loyalty members are equally (47%) motivated by good customer service and the perception that the loyalty program is superior. Mid-tier members are most motivated by good customer service (34%), with easy planning a close second (33%). Low-tier members are most motivated by trust in the brand (30%).
Across the board, brand interactions are more potent loyalty motivators than the perception that brands offer a superior product or service.
As Matt Dixon suggests, effortless customer experience is the best loyalty builder. "I think there's a difference between captive and willful loyalty," Dixon explains.
"Willful is that I want this product because it is different. I want to stay a customer of this business. Captive is when there’s a high opportunity cost if I go somewhere else. If I switch airlines, I'm going to have to start over. Travel companies are out there fighting tooth and nail for those top-tier customers. I get regular outreach from other airlines offering a year free of their top-tier loyalty program, just for switching over.
"You try for a year, and if you hit these travel thresholds and the spend thresholds, you'll be executive platinum or diamond medallion or whatever it is, depending on the airline. It will match you with what you have right now. So there have been times where, because of the negative experiences that I had with my airline, I think maybe I will give these other guys a shot. What's there to lose? They’re rolling out the red carpet. They want me, and they're capturing me on the heels of a bad experience."
When travel brands offer customers effortless service through setbacks and disruptions, they can reverse that changeable sentiment. But what happens when the traveler's problem is out of your control?
Who owns the customer journey?
The question of ownership often comes up in the travel context. Who owns the journey? Well, the short answer is that the customer does.
Of course, the question behind that question is who is responsible for the customer throughout the journey? That's where things get sketchy. Where does the airline's responsibility for customer satisfaction end and the car rental company's responsibility begin? Who is responsible for the gaps along the way?
Are they doing more harm than good if all travel services providers bombard the customer with "satisfaction check" texts, journey updates, and surveys? Excessive communications may not only be ineffective, but they might also interfere with the traveler's enjoyment of their trip.
Perhaps the answer lies in remembering that the customer owns the journey. It is their asset, their investment. At any point along the way, the role of the travel provider is to retain the value of that asset. Here again, we return to the concept of effortlessness as a loyalty builder. The best way to retain the value of the trip is to minimize pain points and increase pleasure points.
Travel brands can design an effortless way to update travelers on the information they need to know while gathering customer feedback effortlessly. Some messaging can be "pull" rather than "push." For example, travel apps can be a go-to resource where travelers can check in to get updates when they need them and always be confident of finding the latest information.
Brands can still "push" critical alerts, such as severe journey disruptions that the traveler must know about promptly. But what's the point of "push" messaging for satisfaction checks? After all, can you be confident of an honest answer? Will any feedback gained from those checks add value to the journey or enhance brand stickiness?
Nunley suggests that companies need to refine customer communications to gain more meaningful insights into their product satisfaction. But it's trickier than it sounds.
"We need to talk about who owns the communication and the handoffs," she says. "There's a need for that coming together as part of the engagement as part of the experience, and our customers have told us that it can't be incessant, consistently barraging the traveler with communication and messaging."
"We know that fragmented metrics can also lead to a higher effort to market to customers consistently. It runs counterpoint to personalization. It’s expensive. It creates this disconnect in understanding the true version of the customer experience," Nunley adds.
"And when a consumer has issues of, say, a fragmented booking, it's going to affects the overall customer experience and, understanding "who the customer is" becoming increasingly more complex."
"I think a lot of companies tend to assume top-tier customers want to pick up the phone and talk to their people," Dixon says. "I think a lot of those top-tier customers want to talk to service representatives even less than regular customers because they travel so often. What they're looking for is an easy, low effort digital and omnichannel experience." Dixon believes that top-tier customers would prefer to use self-service options whenever possible. But when something goes wrong that can't be resolved through self-service, they want a more meaningful interaction with an agent
"They want to see a seamless baton handoff to a representative who jumps in and says, 'Mr. Dixon, I see you're trying to do this, let me help you out,' versus 'How can I help you today?' which is making me start over."
Dixon believes the COVID pandemic has raised customer expectations for a seamless omnichannel experience. "If customers go to the website or the mobile app, and if they go to that digital property and they find a clunky experience, then they have to call back and get back at the end of the queue.
"Then the rep who says, 'how can I help you today?' gets an earful because that customer is pretty frustrated before the rep even says hello. I would think about those two things in your high value, high loyalty customers: they want that low effort digital experience.
"They want to do it on their own. They don't want to have to call, but when they do call, they want to talk to somebody smarter than they are about the issue they're experiencing. That means an empowered rep, who is a Controller."
In an article on customer service written for the Harvard Business Review, Dixon and co-authors Lara Ponomareff, Scott Turner and Rick DeLisi, argue that companies should hire reps for competence, not empathy. They should empower agents to use their judgment because customers ultimately want results, not sympathy.
The authors identify seven types of customer reps:
- Hard Workers
While customer service managers (42%) preferred to hire Empathizers, Controllers are better at dealing with the needs of today's high-expectation and low-patience callers.
As Dixon et al. writes: "Why do Controllers do better than their counterparts? Our structured interviews revealed that they are driven to deliver fast, easy service and are comfortable exerting their strong personalities in order to demonstrate their expertise."
These take-charge individuals are confident decision-makers, opinionated and vocal, and proactive problem solvers. They also readily go off-script to get to the point. That is precisely what high-tier individuals need at the point where they've abandoned their self-service options.
"Controllers deliver what information-saturated customers want (according to the research): clear guidance instead of excessive choice. In CEB's customer contact practice, for example, we've found that 84% of customers would prefer a straightforward solution to their problem rather than a broad array of self-service channels."
In a B2B context, knowing the customer who owns the journey is trickier. Whose loyalty are you trying to win—the traveler or their company or the travel management company? Why not all three?
Earning return business from the corporate travel department or TMC may come down to offering the price points and ticking the boxes on essential product and service requirements.
Keeping a clear line of communication with those decision-makers and offering booking tools that reduce their workload while ensuring their travelers get the right products and services. Sales and service automation and delivering the right self-help tools on your company website can satisfy those needs.
Earning loyalty from corporate travelers as individuals through the product and services offered during their journey can convert them into loyal customers when they travel for leisure and turn them into brand advocates to boost stickiness.
But their level of satisfaction may be influenced by the decisions made by their corporate travel department or the service offered by their TMC. Some of the traveler information you may need to provide a more personalized service might be missing in the data provided by the travel managers. Self-service tools, including your brand apps, can help fill the gaps, as can day-of-journey and on-site sales and service automation.
"To the extent that the corporate travel officer is getting complaints from the rank and file employees about a vendor, that's going to weigh heavily on their decision about whether to renew with that vendor when the contract is up, or whether to spend more and expand the contract," Dixon says.
"It's imperative that businesses not assume that the people who are calling them for help have no bearing on the purchase decision. They have a huge bearing on it."
Surveys don't cut it
Travel often involves a flurry of digital and personal interactions, which may or may not deliver meaningful insights on a customers' level of satisfaction and how to improve the relationship. While surveys have become much easier to send out, they are increasingly ineffective.
"I think all companies have taken it to an extreme where they're all surveying every one of their customers after every single interaction or every single touchpoint,"
Dixon says. "It's created this massive survey overload for the customer. In general, surveys have always had a limited response rate. Every company has over-surveyed customers. And almost no company gets back to their customers based on the feedback they provide. It's just a black box. Because of that, you're starting to see survey response rates for big companies dip below 10% as a running response rate.
"When only 10% of your customers are filling out the survey, what percentage of those customers who fill out the survey are taking the time to explain why they give you the scores they gave you? Are they just giving you a number, or are they saying, 'Here's why I'm not willing to recommend you. Here's why I wasn’t satisfied.' They're just giving you the score because they're trying to get through the survey quickly. So, it's only 10% to 20% of that 10% of customers who reply to your surveys that take the time to give you actionable information."
As an alternative, digital resources which can effectively listen and gather unstructured data can predict the level of customer satisfaction and suggest meaningful interactions to follow-up on problems and missed opportunities.
"All this unstructured data is a goldmine of customer insight," Dixon says. "When customers interact with us, they don't just talk about the thing they need our help with. They talk about our brand. They talk about the in-flight experience. They talk about the hotel stay. They talk about the dirty rental car or the bad roadside assistance they got. They talk about your headquarters.
"They talk about how they were treated rudely by a gate agent or somebody behind the check-in desk. They talk about all kinds of things—about our website, our app, how it was frustrating or confusing, or they got an error message, and they don't know why and then they had to call. There's so much verbatim in there that if we have the technology, we could tap into it, and it would give us a much richer set of data to act on."
Keeping your promise
What makes brands sticky and successful over time is that they offer a single, clear promise, consistently delivering on that promise. American Express cemented that promise of a safe, secure journey with the tagline "Don't leave home without [them, it]."
Had American Express not consistently delivered on its promise, one of the most successful advertising campaigns of all time would have been meaningless.
Apple made their brand on the promise 'Think Different' and has focused their product and service design on delivering products that make their customers stand out. The consistent delivery of that promise helped the company rise from the ashes when Steve Jobs returned to the helm in the 90s.
Amazon has evolved from selling books to selling just about anything under the sun, but their brand promise has always been simple: get what you need or want quickly, from the comfort of your home, by buying it online. The company has consistently boosted its ability to deliver on that promise by enhancing its online self-service platform and creating unique shipping and logistics infrastructure.
Disneyland may not objectively be the "Happiest Place on Earth," but the Disney company has made sure it comes close through intensive staff training and experiential design.
Ditto with the "magic" of the Magic Kingdom. And what do these places have in common with the aims of travel brands competing for loyalty in this new post-COVID playing field? Both deliver their promise by reducing the effort it takes to navigate their vast properties and ensuring a consistent level of service for all visitors to the parks.
As travel brands explore how to earn customer loyalty, with or without points and miles, they must define their single brand promise - safety, security, comfort, speed, luxury, enjoyment, or adventure.
Any service or product offering must deliver that promise consistently and effortlessly.
Getting Travel Back To Work
One of the side-effects of the COVID-19 Pandemic, affecting every industry, is the labor shortage. The travel sector is experiencing more of a challenge as it reopens.