BackA Renewed Focus on Customer Lifetime Value
What do consumers want from their travel loyalty reward programs, and are loyalty providers delivering?
We first sought to answer these questions in our 2022 Travel Loyalty Outlook Report, based on two concurrent surveys in late 2021 asking brands with loyalty programs and consumers about their views on value, reward redemption, loyalty technology and user experience.
But a lot can change in two years, and a lot has, especially in the world of travel. In the initial report, the pandemic still loomed large and travel-based loyalty programs were in survival mode. That’s not necessarily the case today. Travel demand has skyrocketed post-pandemic and continues to be in high demand despite the current high cost of travel.
In our updated report, aptly named The 2024 Travel Loyalty Outlook Report, we asked the same two groups similar questions about their travel loyalty rewards programs to understand how the industry and consumer sentiment have evolved in the past two years. The survey responses were collected in Q3 of 2023.
For brands, it’s clear that travel remains a vital part of their loyalty offering. A larger proportion of our 2023 respondents offer travel rewards (95% vs. 65%), and programs with travel booking capabilities have significantly increased, soaring from 61% to 84%. Companies also plan to offer new travel rewards or benefits soon (up from 63% to 84%). These increases confirm the uptick in travel interest post-pandemic, as do our findings among the consumers we surveyed; of those polled, 80% planned to travel within a year, while four-fifths of that group identified leisure as the purpose of their trip.
There’s more to do to meet consumers’ evolving expectations
While the supply and demand do seem to be aligned, our survey revealed that when it comes to value, brands aren’t living up to consumer expectations, particularly at this moment in time when value for money/price is the top trip planning consideration for nearly 37% of consumers, with 42% admitting it had become increasingly important in the 12 months leading up to the survey. Almost 45% of those polled said they believe that prices on their loyalty platforms are too high overall, and 23% are frustrated because they are unsure if they are getting the best value possible when booking.
These are sobering statistics for loyalty providers, especially today, as brands have primarily shifted their focus from growing their membership (a top goal during the pandemic) to increasing customer lifetime value (16% vs 29%) and boosting customers’ overall program spend (from 9% to 11%).
To meet their profitability goals, loyalty companies will have to up their value proposition through more desirable redemption offerings, close the awareness gap through better, more personalized marketing and offer their members stellar customer service to augment the customer experience.
Solutions to the value problem
Our survey findings signal several ways travel loyalty brands can create more value for their consumers. Finding a trusted loyalty partner — one who can secure exclusive travel discounts and redemption offers across a wide variety of travel suppliers — is critical. The right supplier will help travel loyalty programs address some of their biggest challenges, including their ability to introduce new redemption options (14%), maintain appropriate customer service levels (26%), attract new members (21%), provide rewards to members find valuable (20%).
They’ll also be able to provide the technology platform to fuel the loyalty experience, enabling customer-centric booking capabilities and additional value through mechanisms like a flexible loyalty currency, which allows programs to modify points’ value, integrate new savings with existing currencies and fund bonus points or miles through the margin earned on other travel products.
The outlook on travel loyalty is bright
Compared to static points or miles, a flexible currency unlocks significant value for loyalty members and programs, but it’s not something that most loyalty brands can, or should have, do on their own. A loyalty partner with a holistic approach should also be there to support marketing efforts and offer dedicated customer service that in-house teams are not necessarily equipped to handle.
We share more numbers from our survey and detailed insights in our report. Learn how loyalty brands with travel rewards can succeed in the current climate and best prepare for whatever is to come.
Download your copy of our 2024 Travel Loyalty Outlook Report here.