The Loyalty Programmes That Own Airlines
The future of loyalty in the travel and hospitality sectors
A scary fact recently re-iterated by Mark Ross-Smith in Travel Data Daily is likely to send shivers down the spines of the airline industry as it continues to rock the very core of their identity, “Loyalty isn’t an afterthought….. Loyalty isn’t the sideshow. Loyalty is the main event. LOYALTY IS THE AIRLINE. The entire foundation of an airline is built around repeat customers, around brand loyalty, and around maximizing ticket yield. AIRLINES DON’T HAVE A LOYALTY PROGRAM. THE AIRLINE LOYALTY PROGRAM….. HAS AN AIRLINE!”
Companies like American Express have long understood the power of the loyalty scheme, pairing their successful Membership Rewards scheme with numerous high profile and aspirational loyalty programmes like Avios, Hilton and Virgin Atlantic’s Flying Club. They know that the repeat custom, commitment and loyalty customers of these programmes show are the kinds of customers they want. A recent conversation between Jeff Campbell, Amex CFO, and Bloomberg indicated that cardmembers were stockpiling points to spend after the pandemic. Amex has also introduced temporary incentives to maintain customer loyalty and spend. Even with what is likely to be a somewhat battered and beaten travel industry post-Covid, Campbell remains positive.
“We’d be crazy to dramatically pivot the whole company because of what we view as a fairly temporary change in the way people are going to spend. The human urge to travel — to gather, to explore — is insatiable.” Jeff Campbell, Amex CFO
So how can the industry recover and return to its 2019 fortunes and meet this impending insatiable desire to travel?
The Travel Industry Needs to Up Its Game
Technology will play a big part in the future of these types of membership programmes, and according to Ross-Smith – “It’s only a matter of time before a non-airline, technology player steps into the CEO role of an airline. Tech companies are driven by metrics like customer lifetime value, they’re experts at serving the right ads, at monetizing the impossible, and could – if they wanted to – generate more revenue from airline membership bases than airlines currently bother to explore.”
To begin their recovery, the travel and hospitality industry needs to diversify and work out new ways of generating income. It needs to recognise the power of its customers and data to unlock new ways of building business. Customers need something more than before to lend their valuable loyalty.
Customers want to see the value they get for being a member of a loyalty programme, whether that’s causally related to travel or because of incentives like special VIP events for members-only. The status of various memberships has been somewhat diluted over the years but could present a strong income stream if done right. Benefits of membership also need to keep up with the times and extend their reach beyond the confines of their own network. The top tier of customers’ needs more to keep them engaged, and this means being able to see the benefits of membership as frequently as possible.
Consistent and reliable experience with your core business is essential. Members will not tolerate poor service and will go elsewhere. No amount of shiny additional benefits will make up for lack of service or quality.
Choice and commitment is a two-way street. Travel and hospitality companies need to demonstrate their ability to deliver extraordinary service to their members. One such way is looking at acquiring smaller companies to add to their own loyalty portfolio. This is great for customers in terms of choice but also puts the control back into theses business’ hands, loosening the grip third-party intermediaries have on their membership bases.