With the proliferation of loyalty programs in the marketplace, wallets are becoming increasingly saturated with membership cards, mobile phones with retail program apps, and key chains with key fobs. In fact, the average American household is enrolled in 29 loyalty programs--the problem, however, is that they only actively engage with 12 programs on average. So, why are so many programs failing to engage members post-enrollment? For starters, loyalty program design can be challenging. One of the more foundational challenges--and perhaps one of the more obvious challenges--is balancing the interests of the customer with the priorities of the business. Striking the right balance here requires a deep understanding of what matters to your customers (deeper than what might be obvious), alongside clear and concise alignment across the entire business around loyalty objectives. The one... Read more
Loyalty Programs and Leisure Travelers: How Can Loyalty Close the Engagement Gap in Leisure Travelers?
Spend-based travel programs are inherently, and effectively, focused on high-value business travel customers who tend to be less price-sensitive than their leisure counterpart. However, a significant portion of guests/passengers in the travel and hospitality industry fall outside of the business segment—with 3 out of 4 domestic trips taken for leisure purposes. Because of the sheer size of this untapped segment, your loyalty program could contribute more to the bottom-line by effectively engaging these overlooked customers. LOYALTY’S FOCUS TODAY: THE BUSINESS TRAVELER. The U.S. travel industry was worth a whopping $947 billion in 2015 (according to the U.S. Travel Organization), with high-frequency and high-spend business travelers... Read more
As of August 1st, American Airlines changed the method by which its (roughly) 100 million members earn miles on their airlines. Instead of the number of miles flown, as was the case for the past decades, it has now shifted to a spend-based model that is built on multipliers applied to the base fare purchased. As United and Delta made this move in 2015, we now have over 250 million members in the airline space earning miles based on spend. High spenders have been rewarded and we see a more transactional style of program becoming prevalent. In fact, the real lesson for other programs is not to simulate the same structure, but to understand the motivation and best practices apparent in these changes. Today, we’ll explore why the airlines made these changes, and... Read more
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