Travel loyalty programmes in the spotlight
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Do airline loyalty schemes help or hinder agents?
Loyalty rewards schemes are big business for airlines. However, due to the lack of variation – nearly all if not all of the schemes give consumers miles or points in exchange for distance travelled – the ‘traditional’ loyalty programmes are arguably becoming less valuable. This isn’t the case for travel agents and tour operators.
With the points wars of the 90s and 00s behind us we are now seeing more and more airlines consolidate their programmes. Yet there is still a lack of clarity across the industry as to what an ideal loyalty programme should look like and what role travel agents and operators play in it.
Where are we now?
The market has become increasingly competitive with costs rising and carriers vying for market share. From low cost airlines driving down prices at the economy end, to the major airlines upgrading their business and first class offers to luxury status. As a result this has put a different spin on the role of loyalty schemes for airlines. The profit margin is no longer there to reward economy travellers with generous quantities of points. What’s more, according to the Daily Mail, almost half of flyers don’t redeem their points because they think the terms and conditions are too restrictive. By contrast all airlines want to attract, retain and reward the lucrative business traveller. Hence why we have seen BA recently rebalance its Avios scheme.
But what does this mean for travel agents and tour operators?
Research from Deloitte has highlighted that only 40% of business travellers fly 75% or more of their work trips on one airline. This tells us customers are looking for more than just a competitive rewards programme. Today the bedrock of loyalty is in fact the customer experience; from researching to booking to travelling. Customers across all areas of retail now increasingly rely upon technology to ease their buying experience and the travel industry is no exception.
Technology doesn’t have to be a threat
This is great news for travel agencies and tour operators who can use technology to their advantage. Innovative technologies now allow you to get ever closer to the customer to understand their preferences and motivations to then be able to design the customer experience accordingly. In this way it becomes possible to deliver an outstanding personalised customer experience, which in turn will increase sales and loyalty to the business. Travellers, whether on business or not, are emotional beings and they make their decisions based upon how the brand and the experience make them feel. Pricing and route are generally not the driving factors for many travellers.
Loyalty schemes aren’t the silver bullet
So the new reality is that loyalty schemes aren’t the silver bullet – customer experience and value for money (not to be confused with price) are the fundamental bedrocks of every brand experience. Loyalty schemes should enhance the core offering of the brand to deepen customers’ engagement and drive incremental increases in awareness and sales. The door is wide open for travel agents and tour operators – they must now look to use digital technology to own the overall customer experience.
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