Loyalty in transition: Why the right rewards and ancillaries matter

As we look back at the loyalty landscape this year, it’s become an even bigger battleground, regardless of the industry, with all brands vying for moments of customer attention, devotion and spending. Their loyalty programs, once simplistic in their objectives, now contend with a multiplicity of expectations from consumers wanting rewards that are both relatable and valuable. Faced with these expectations, many brands are reworking (or at least reconsidering) their approach to differentiated programs and broadening their offerings.

What’s out? Generic rewards that add little to no value to the member. What’s in? Rewards and ancillary offerings that align with members’ priorities and contribute directly to the program’s financial success.

But not all reward and ancillary options are equal in their value or appeal. In a United States loyalty study we conducted earlier this year, we found that trust is a key driver of loyalty program participation, including trust and transparency in the actual reward and ancillary options that brands offer. Trust is one of the top three reasons consumers join a program, according to 43% of the consumers we surveyed. It’s also the leading decision-making factor across several key redemption categories.

Clearly, trust is a driver of loyalty. But it’s also a competitive advantage for the programs that figure out how to offer the right—and relevant—mix of rewards and ancillaries to entice their members.

Designing a travel portfolio that drives loyalty and revenue

Travel rewards remain one of the most sought-after redemption options. Our survey found that consumers were twice as likely to redeem points for travel compared to other reward categories. But it’s not just their popularity that makes them so compelling; it’s travel rewards’ ability to drive engagement across diverse experiences. From airfare and lodging to activities and car rentals, these are a priority for most members, and programs should calibrate their rewards and ancillary portfolios to meet this need.

Travel-related ancillaries are also excellent revenue drivers, specifically for travel-oriented loyalty programs. In IdeaWorks’ 2024 Yearbook of Ancillary Revenue, we saw total loyalty revenue for the top ten airline frequent flier programs, the original loyalty programs, was $32.2 billion, up 18.6% year-over-year. Overall ancillary sales for the top 10 airlines topped $54.1 billion, reinforcing their status as a central revenue stream for these businesses. Ancillary purchase and booking options can be just as lucrative for loyalty programs across industries.

To get the most out of their ancillary strategies, loyalty programs must offer payment options that work for their members. For instance, there is strong demand for flexible payment options among loyalty program members, with 63% of those surveyed saying they regularly use a mix of points and cash for redemptions, especially for travel. This shows how much members value flexibility and the ability to get the most out of their points and programs.

By addressing the demand for travel-related rewards and more flexible payment options, loyalty programs can satisfy two strategic goals: differentiate and strengthen their appeal and relevance. Offering members this level of choice not only increases member participation but also deepens the perceived value of the program and leads to increased satisfaction.

Expanding beyond traditional travel rewards

Offering the right selection of rewards delivers more than transactional value—it shapes how members interact with loyalty programs in their daily lives. Having the optimal selection creates more opportunities for members to use their benefits, including when they’re not traveling.

Take car rentals, for example. This ancillary option can encourage consumers to turn to their loyalty programs even when travel is not part of the equation. Nearly a quarter (24%) of all car rentals are for non-travel purposes, such as moving, visiting family or as a short-term replacement for a primary vehicle. Offering discounts or points redemption toward car rentals can capture the year-round demand for convenience and generate an ongoing revenue stream in the process.

A loyalty program’s ability to deliver high-value rewards and ancillary options, like car rentals, has become a competitive necessity. Programs that focus on rewards and benefits that reflect member priorities can reinforce their revenue position, strengthen member connections and carve out a distinctive place in a largely undifferentiated loyalty landscape.

The future of loyalty lies with programs that recognize their value as fluid—shaped by individual preferences and the ability to meet members where they are, which could very well be on the road.