Four trends shaping airline loyalty program expectations and success
Spurred by a rapidly changing digital landscape and dynamic market context, expectations from loyalty programs have changed for both business and leisure travelers. While loyalty played a crucial role helping airlines weather the pandemic, what new realities should airlines consider to fulfill member expectations moving forward?
Let's explore four key trends that are shaping airline loyalty today and into the near future.
1. Traveler and staff empowerment
It's no secret that in the early days of the pandemic airlines and travelers experienced a high degree of friction managing massive flight cancelations and intricate travel restrictions. Airlines with advanced automation and digital capabilities were able to deliver smoother customer experiences, while those that didn´t struggled. The end take is that self-service and assisted channels make or break customer satisfaction. And an airline´s bottom line.
As airlines increased their digital capabilities and consumers spent more time online, travelers now expect smarter, more intuitive, and more proactive engagement experiences. They also expect to be able to choose which channels they use to interact with an airline and be recognized across all. And while we witnessed a noticeable improvement in self-service channels, much room remains to improve in the assisted channels. While furloughs, staff shortages, and churn are part of the problem, so is the complexity of the tools and training required for agents to successfully service travelers.
Airlines that deploy smart and intuitive tools across channels are better placed to win the customer experience challenge. For loyalty, that means giving program members a broader range of services, access to empowered agents who have a 360-degree view of the members who reach out, AI driven automation to resolve common requests faster.
2. Changing audiences and relevance of benefits
The pandemic has fundamentally changed the traveler profile. While business travel was historically the bastion of airline profitability, it´s still far from pre-pandemic levels. Traditional high value travelers still haven´t recovered, forcing airlines to mine deep into the 80% longtail to re-discover non-traditional member segments. As new segments emerge, the relevance of loyalty benefits must align with each group´s expectations.
Travel patterns have changed, to unlock loyalty´s full potential moving forward airlines need to uncover new segmentation opportunities and the personalized benefits those segments most value.
3. Partnerships and "shared customer experiences"
Partnerships and co-branding opportunities are instrumental to increasing an airline´s loyalty program reach and revenue generation potential. Expanding travel and non-travel everyday earn and burn opportunities for members is a key value enabler of any loyalty program. While partnerships in this area aren´t new, there is still a lot of room for "out of the box" innovation and deeper integration between parties.
Delivering smooth, consistent, and value-added customer experiences requires shifting the mindset to beyond transactions-based relationships. "Shared customer experiences" involve deeper connections between partners, such as deep linking benefits by member status. Within this context, data-sharing to generate customer insights is as important as having the right tools in place to act on those insights in a way that ensures compliance and improves the overall customer experience.
4. Real-time incentivization
With the amount of time being spent online and the cost of traffic acquisition increasing simultaneously, more efficient, and cost-effective ways of driving conversion need to be nurtured. The ability to leverage historical and contextual data to generate personalized offers and recommendations, in real-time, is an increasingly effective – and expected – way of driving conversion.
Dynamically packaged offers that prioritize accrual or redemption opportunities over discounts while members actively engage with loyalty applications increase ROI, reduce conversion costs, and protect airline revenues. Proposing relevant value-added and data-driven offers is as important as ensuring that they are frictionless to purchase and consume.
Driving change with a flexible but secure technology backbone
As these trends continue to shape consumer expectations, having the right underlying technology to accelerate digital transformation and innovation is critical. Airlines need flexible technology to quickly integrate and deploy new capabilities and effectively test and learn how new products, services, and features perform.
Yet, despite the many advantages increasingly sophisticated digital retailing capabilities unlock, they also increase member and airline exposure to cybercrime. And that´s why trust, security, and compliance need to go hand in hand with the deployment of advanced digital and data processing capabilities. This is where we see increasing responsibility on technology providers to ensure the right safeguards are in place to create a dynamic but safe business environment.
About the author:
Associate Vice President, Loyalty Management Solutions at IBS Software
Binay Warrier has more than 16 years of experience solving challenges for the world's largest and most respected brands in Travel. He leads the loyalty and customer-centricity practice at IBS and is a trusted advisor for some of the world's best travel loyalty program operators. Binay is a self-confessed points junkie, a passionate frequent flyer, and an aero-modeling enthusiast.