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Expectations of personalization evolve beyond sources including online purchases, in-store
LOYALTY 2.0: FROM INCENTIVIZING
TRANSACTIONS TO CREATING VALUE
The loyalty landscape in the travel industry is Loyalty programs shift from being an incen-
evolving. Brands like Airbnb, JetSmarter, Lyft, tive to a strategic imperative
and Uber provide travelers with a wide range of
diverse and competitively priced options, which Today’s loyalty program members expect to
has changed expectations and behaviors. The receive more than points when interacting with
impact on loyalty is clear: Hotels are no longer a brand. The transactional benef its of points
competing with the loyalty programs offered by alone no longer lead loyalty. Brands have begun
other hotels; rather, they’re competing with a to reconsider the role of loyalty offerings in the
wide range of travel products that create value company’s overall growth strategy and rethink
in different ways. Traditional point-based loyalty what it truly means to be loyal across all aspects
programs are no longer enough, and companies of their business. Loyalty must become fully
risk losing market share to innovative competitors integrated into the brand’s business strategy
that offer more flexibility and personalization. and culture.
Customers expect more. They want diverse ways Intense competition means travel brands
to redeem points, deeper engagement, quick- are fighting for attention with each member
er gratification, more flexibility and relevance,
and easier processes. Today’s travelers are more Travel brands are not only competing with their
empowered and in control than ever before. They own industry for loyalty dominance. They’re also
seldom book all their travel through one compa- being compared to stellar loyalty programs in other
ny, and often opt to book separate components industries. The Colloquy Loyalty Census found
of a journey based on where they can find the that the average U.S. household is enrolled in
best deal. Unfortunately, many legacy loyalty more than 18 loyalty programs and actively using
programs require their members to consolidate eight. Consumers are constantly, if subconsciously,
their travel activities within a single program in comparing each of these loyalty offerings — the
order to truly take advantage of benefits. value of their benefits, ease of use, how quickly
the points can be redeemed, and so on. Within
With so many booking options available, why the travel industry, redemption is more complex.
would travelers book with only one brand? As It takes the average traveler multiple hotel stays
we look at the future of travel loyalty, we see that to earn a free night; contrast that with getting
success awaits those companies that simplify and immediately redeemable points on credit card
democratize points and benefits for all travelers. purchases or earning a complimentary drink at
Here are three key trends prompting this need your favorite coffee shop. The program rewards
for disruption in loyalty offerings: occur much faster in other industries’ loyalty
programs, increasing the perceived value for
the individual.
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one-to-one communications enrollments, and even from registered devices
like Fitbits. The program supports real-time
The messaging strategy commonly referred to enrollment through multiple channels; points
as one-to-one communications — which offers can be earned through in-store purchases as
personalized promotional offers — is evolving. The one would expect but also through activities,
next phase will consist of a more holistic custom- like when a customer takes his or her blood
er experience strategy that’s personalized with pressure or meets his or her daily step goal. Each
the best choice for individuals across all points interaction with the brand, and each member
of interaction, creating a more identity-based experience, is fully personalized.
marketing f ramework. Members expect each
and every interaction and experience with the The loyalty marketing journey is a marathon not
brand to be personalized, and when it’s not, the a sprint. In order to ensure the success of loyalty
value of the loyalty program to these members offerings, brands must deliver personalization
diminishes substantially. Members now expect and create offers and rewards that are relevant
even their points redemption options to be to members’ unique needs. Companies must
customized to fulfill their specific needs. determine how to shift from transactional reward
The Loyalty Path Forward structures to experiential fulfillment, all while
ensuring exclusivity for the most elite loyalty
program members. And it has to be an iterative
It’s time for travel brands to pause and evaluate process that constantly collects feedback along
their loyalty offerings. In order to thrive in the new the way.
loyalty ecosystem, companies must simplify their
programs. For example, an airline can simplify Loyalty is a way of doing business and the overall
its program by basing loyalty statuses on the brand experience needs to live and breathe both
frequency of flights taken, instead of taking both inside and outside of your organization. Stop
miles and dollars into consideration. A business focusing on your loyalty program and focus
traveler flying weekly between Boston and New instead on driving loyalty through your way of
York is not going to accumulate that many miles doing business. After all, loyalty is a business
since these trips are short, but he or she should mindset.
have the opportunity to earn elite loyalty status
based on the high frequency of his or her travel.
As travel brands evolve their loyalty offerings,
they should look at other companies that are
managing the aforementioned change triggers
well. Walgreens is one such brand. It leveraged
Epsilon’s technology to support its loyalty program,
Balance® Rewards. The platform integrates
customer data for each member from multiple
By Tad Fordyce
Senior Vice President of
Loyalty, Epsilon
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