Revamping Loyalty Program in Travel Industry: A Case Study

Abstract

The travel industry is highly competitive, with countless airlines, hotels, and travel agencies vying for customer loyalty. Loyalty programs have been a staple in this industry for decades, aiming to incentivise repeat business and build lasting relationships with customers. However, with changing consumer preferences and technological advancements, traditional loyalty programs often struggle to maintain their effectiveness.

Evolution of Travel Loyalty Program: Beyond Traditional Rewards

Loyalty programs in the travel industry have evolved significantly since their inception, as consumers now seek more than just basic rewards such as flight upgrades and hotel stays. Today, these conventional incentives are considered the minimum expectation. Travelers now desire added value and personalised benefits from loyalty programs.

A substantial 73% of travelers express the expectation that companies should have an understanding of their individual travel preferences and behaviors.

In addition to conventional rewards, travelers are seeking enhanced convenience and tailored perks. Examples of these desired perks include receiving vouchers for complimentary cocktails at their preferred hotel's bar or coupons for services at a spa they favor. These added amenities contribute to a more enjoyable and satisfying travel experience for consumers.

Creating an emotional bond with travelers enhances their experiences and encourages repeat bookings. This aligns with the core value proposition of loyalty programs.

Based on our discussion with an industry expert working at a leading MNC, quoting “Imagine being rewarded for your loyalty with a memorable travel experience. In 2018, we arranged complimentary birthday cakes or meals for our clients traveling to Bali or Australia. With the introduction of our loyalty programs, we've elevated the travel experience for our clients to new heights. Not only do our members enjoy exclusive perks like complimentary upgrades to premium accommodations, priority boarding, and access to VIP lounges, but they also receive personalized attention throughout their journey.

“Loyalty programs are the bridge between a company's offerings and its customers' hearts.”

To achieve this, travel companies must address data collection limitations. While abundant data exists, it often needs improvement. Therefore, travel companies require solutions that harness customer data intelligently to modernise their loyalty programs.

Choosing the Right Loyalty Program for Your Travel Company

Travel companies can implement various loyalty programs to attract and retain customers. Here are some common types of loyalty programs that a travel company can apply:

Points-Based Programs: Points-based programs are a staple in the travel industry because they offer customers tangible rewards based on their travel activities. Customers appreciate earning points for flights, hotel stays, or car rentals, which they can later redeem for free flights, hotel nights, or upgrades.

“Points-based loyalty programs establish a mutually beneficial scenario: customers gain access to rewards, and businesses foster a loyal customer base with noticeably immediate and personalised results.”

Tiered Programs: Tiered programs are excellent for encouraging customer loyalty and spending. By offering different tiers with progressively better rewards and privileges, travel companies motivate customers to foster long-term loyalty.

Co-Branded Credit Card Programs: Co-branded credit card programs are collaborations between a business and a financial institution to offer a credit card linked to the business's loyalty program. Unlike conventional point-based programs, these credit cards enable users to earn points or miles through everyday purchases, which can later be redeemed for exclusive perks, discounts, or cashback options to cardholders.

These reward programs are becoming more common, especially for travel companies. Companies are doing this to encourage people to use credit cards and to make customers stick around by giving them special rewards.

Subscription Programs: Subscription-based loyalty programs, like those you find in the travel industry, have been successful in different areas, like OTT platforms. They give special perks and keep customers coming back, which helps companies make steady money and build strong relationships with customers.

While these four loyalty program types are popular and effective in the travel industry, a travel company needs to tailor its program. Tailoring it how?

Based on your customer base - define your audience, filter if they are online or offline users it is online/offline, what services they are taking from you, whether they are business or leisure travelers, which is the most traveled destination, what is the most frequent mode of travel, what are their other interests, are they using a particular brand, what kind of VAS attracts them, or whether they are more focused on discounts.

Understanding their personality and accordingly launching a suitable program - ‘The New Norm or New Normal'.

For example, giving early access or special invitations to exciting activities can make customers feel valued. Also, suggesting activities based on what they like can make their experience better. Offering discounts on outdoor gear fits well for adventurous travelers and makes them happy.

Furthermore, encouraging them to share their experiences on social media helps create a community feeling. Doing these things makes customers feel appreciated and keeps them coming back for more, which is great for businesses.

Case Study: Winged Liner - An Airline Company's Loyalty Program Transformation

Winged Liner, an airline company, faced fierce competition in the aviation industry. Seeking to boost customer retention and gain a competitive edge, the company decided to implement a loyalty program. This case study explores the before-and-after scenarios, highlighting the impact of the loyalty program on Winged Liner.

Before Loyalty Program Implementation:

Challenges

1. High customer churn rate: Winged Liner struggled to retain customers, with many passengers flying with competitors for better deals.

2. Limited customer engagement: The airline lacked a mechanism to engage passengers beyond their ticket purchase.

3. Inconsistent revenue streams: Revenue fluctuations made it challenging to plan for long-term growth.

Customer Experience

1. Standardised services: Passengers received a one-size-fits-all service with little personalisation.

2. Lack of incentives: No rewards or incentives were offered to frequent flyers.

3. Missed cross-selling opportunities: The airline couldn't effectively promote add-ons like priority boarding, lounge access, or in-flight services.

After Loyalty Program Implementation:

Program Overview: Winged Liner introduced "WingFlyer", a comprehensive loyalty program designed to address the above challenges. This loyalty program is based on a point system, where passengers earn points for each flight they take with the airline.

The WingFlyer loyalty program offered by Winged Liner has four tiers, starting from Member (Pink) and progressing to Frequent Traveler (Silver Card), Senator (Gold Card), and Club Member (Black Card).

Customers can join the program by enrolling online through the company's website and using a dedicated mobile app available on iOS and Android platforms. The program operates both online and offline, offering various benefits and incentives at each tier to enhance the customer's travel experience and loyalty to the airline.

After implementing the "WingFlyer" loyalty program, here's a concise overview of the results and the impact on the customer experience:

Results of the Loyalty Program

- Increased Customer Loyalty: The WingFlyer program significantly boosted customer loyalty. Passengers earned points for each flight they took, which incentivised them to choose Winged Liner repeatedly to accumulate points. This resulted in a substantial reduction in customer churn.

- Steadier Revenue Streams: The loyalty program where customers earn points for flying with the airline brought in steady money from membership fees and more bookings from loyal flyers. This helped the airline make consistent money and plan for future growth better.

- Enhanced Personalisation: The program allowed the airline to collect and leverage passenger data to offer tailored recommendations and services. Passengers enjoyed a more personalised travel experience, with offers and services aligned with their preferences.

- Effective Cross-Selling: The loyalty program facilitated successful cross-selling of add-on services like priority boarding, lounge access, and in-flight services. This generated increased ancillary revenue for the airline.

Customer Experience

- Rewarding Loyalty: Passengers were rewarded for their loyalty with the ability to earn and redeem points for various benefits. This included complimentary upgrades, lounge access, priority boarding, and other exclusive perks that enhanced their overall travel experience.

- Streamlined Booking: The airline's website and mobile app provide a user-friendly and personalised booking experience. Loyalty program members enjoyed priority access to these features, making it more convenient to book flights and redeem rewards.

- Personalised Offers: Passengers received personalised offers and promotions, such as discounted flights, exclusive upgrades, and access to premium services. This not only enhanced their travel experience but also made them feel valued by the airline.

Conclusion

The travel industry's loyalty landscape is evolving rapidly, and traditional programs must adapt to survive. The case study of Winged Liner's successful loyalty program revamp highlights the importance of customer-centricity, simplicity, digital integration, data utilisation, and continuous improvement. By implementing these strategies, travel companies can rejuvenate their loyalty programs, build stronger customer relationships, and thrive in an increasingly competitive market.

Disclaimer: The case study serves for informational purposes solely. It is based on hypothetical scenarios and general industry observations. Any resemblance to real events or entities is coincidental. The strategies and outcomes outlined are illustrative and may not mirror specific business experiences.