• The changing game of customer loyalty

    Joel Wartgow
    shutterstock_88831762Many businesses recognize and reward their most valuable repeat customers to ensure that they remain loyal to the brand, which ultimately drives revenue. The travel industry is very familiar with this concept. Air, hotel and car suppliers have become well known for taking care of their loyal customers, offering rewards that give them incentive to continue to buy.

    These programs are evolving – becoming less focused on the quantity of what a traveler purchases and more focused on what they actually spend. To put it simply: The more premium services one purchases, the more you earn.

    Regardless of how a traveler earns with a supplier, most companies prefer that a traveler makes decisions based on their company’s policy and their trip objectives rather than their earn potential with any given supplier.

    Breaking it down

    I group loyalty programs into three categories. The cruise industry offers great illustrations of the differences.

    Frequent buyer: Rewards are linked to the number of purchases. For example, you earn a point or credit each time you take a cruise, regardless of where you go, what you spend, or how long you cruise.

    Usage based: Rewards are linked to the amount a consumer uses. This is the traditional frequent flyer program, or anywhere you get credit for amount spent, like on a credit card loyalty program. For example, you earn one point or credit for each dollar you spend. In the cruise industry, you would get credit for the number of days you cruise.

    Quality based: Rewards are linked to what you buy, with more rewards for upgraded or premium services (or less for discounted or “sale” services). This favors consumers who might not purchase as much in quantity, but do purchase services that deliver higher revenue or margins. We see this with cruise lines where you could earn as much on a 4-day cruise in a suite as on a 10-day cruise in a standard room.

    Being that some suppliers are moving to quality based programs, allowing travelers to earn more rewards by purchasing upgraded or premium services, as opposed to usage based programs that reward points based on the amount a consumer uses (i.e. miles flown), it may be time for travel managers to pay more attention to their travelers’ purchasing behaviors to determine if supplier loyalty is impacting the success of their program.

    Additionally, travel managers should explore building loyalty to their own programs as a way to control the influence of supplier loyalty. Recognizing travelers for supporting the travel policy is a good way to start. Showcasing the efforts of the most compliant travelers in a public setting (and potentially rewarding them for their behavior) is an even more effective way to encourage desired behaviors. Using a Travel Gamification program can be an effective way to do this.

    The next level of building traveler loyalty is to identify and recognize those travelers that are making the best possible decisions for the company, which I like to refer to as super compliance! Travelers will often be presented with two or more travel options that may be considered in compliance with their company’s travel policy, but only one of those options is the best option.

    If the traveler does not receive a benefit for selecting the best possible choice, and the options they’re presented are all considered compliant, they are more likely to be influenced by their supplier affiliations. If they can be rewarded for making the super compliant choice you can start to build program loyalty.

    Follow Joel Wartgow on Twitter @JoelWartgow.

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