Classic air miles and hotel points’ schemes no longer rule the world of loyalty, so what does? Andrew Hennigan reports
Until fairly recently consumer loyalty schemes in the travel industry were entirely based on handing out rewards for points collected for being a regular user of a service. But with tougher, more turbulent, markets, the growing dominance of mobile apps, better digital infrastructure and consumer churn, the rules for loyalty today are being rewritten. Here is what we have learnt.
1. Price is a central driver
While loyalty schemes are still popular with many travellers, not everyone is convinced that this is really what drives loyalty today.
“The number one driver for loyalty by a country mile is price, and pretending otherwise is just lying to yourself,” says Jochen Schnadt, the CMO at BMI Airlines. “Also loyalty can be very different whether we talk about the customer or the consumer. When the customer is a corporate with a travel policy and is footing the bill they may have a very different motivation concerning loyalty compared to the consumer who is actually flying on behalf of the company and personally collecting loyalty points.”
Hence the rise of solutions like the business travel cost saving app from TripActions.
The number one driver for loyalty by a country mile is price, and pretending otherwise is just lying to yourself
Jochen Schnadt, CMO, BMI Airlines
2. Offering stress-free convenience will be the next big thing
But this is not going to be true forever, and Schnadt believes that ultimately convenience will become the next big driver for loyal customer behaviour.
“Let’s face it, the actual travel experience always has a degree of stress dialled in and creating a more seamless and less stressful experience for the customer will become an even more important consideration,” he says.
This is especially true for digital products, where this seamless, intuitive interface can be baked into the product itself, becoming a loyalty driver without the need for any scheme based on points. For Schnadt then, we are slowly moving into a world where loyalty is rewarded and offered based on actual values, rather than obscure mechanisms. Offering a simpler, less stressful experience is one of these values.
3. Smaller businesses will need to find ways to keep up
While travellers welcome the benefits of loyalty schemes, they are also increasingly reluctant to be tied into a single airline or hotel chain. So for smaller businesses, the real challenge will be to find a sensible way to offer a quality product that drives loyalty. One option is to partner with specialist third parties like Kaligo Travel Solutions, Connexions Loyalty or Comarch, that provide platforms for broader loyalty schemes that allow rewards to be redeemed at different companies.
As an example of this, airline companies like Virgin Australia and Hainan Airlines, the largest privately owned air transport company in China, have recently built partnerships with Kaligo. Through its partnership Virgin Australia can now offer access to online hotel bookings and customers can redeem Virgin’s Velocity points as hotel stays. Meanwhile Hainan’s Fortune Wings Club progamme makes it the first Chinese airline to offer real-time hotel and car redemptions options for loyalty.
Other recommendations for driving loyalty include:
Constantly evolve and consistently offer differentiated value, more choice and a superior experience to generate repeat purchases.
Know that time and experience is just as valuable as the product and price
Build a members-only eco-system where it makes sense for travellers to stay within that eco-system
Understand that loyalty is based so continuously improve to keep the loyalty experiences competitive.
Don’t think of loyalty as a profit generator or cost savings tool, but rather an investment to maintain an exclusive eco-system
Jochen Schnadt, CMO, BMI Airlines sharing a track at EyeforTravel’s European Summit (May 3-4) on loyalty in the customer journey along with executives from Airbaltic, Scandic Hotels and HomeAway
May 2017, London