Attracting customers and cultivating loyalty, especially under the prevailing uncertainties in the travel industry, is a demanding process. As people begin to travel, globally, again, brands within the wider travel ecosystem, from airlines and airports, accommodation, and mobility providers, to payment services and insurers - need to adapt to new customer dynamics. At the same time, intense competition and a degree of loyalty disillusion bring challenges to loyalty strategy.
By way of illustration, let’s take a deeper look into a typical Frequent Flyer Programme (FFP) database: members can be divided into three distinct groups. The significant long tail of members with low engagement is the biggest one. It consumes a lot of loyalty managers’ attention – disproportionate to the commercial return: trying to make the programme widely relevant and encourage more activity from all the members that form this diverse group. Call them the pool of hope. At the other end you have your top segment with very high engagement: the best customers, very loyal and heavily rewarded for it. A brand’s elite members arguably present a different challenge as the objective is to keep the program fresh and engaging beyond miles or points. There are well-established strategies for that.
There is a third group, not really recognized as segment in its own right yet. It is that potentially rich source of future elite members, often hovering around elite qualification. I call them ‘The Next 10%’. Nestled between the long tail and the top segment, these are ‘latent loyals’ with decent commercial value and some brand affinity who, given appropriate incentives and service propositions, can very well make it into the top segment. At the same time, they are equally easy to lose to a competitor. Loyalty managers do well to devote a lot of focus on this member cluster and employ innovative loyalty strategies to shift them in the right direction.
In my experience, those with some pre-existing brand attraction are three times more likely to respond to an offer or proposition that rewards their loyalty and incentivises them to become even more so. One emerging successful path is through a paid loyalty strategy: Provide outstanding value that is intrinsically linked to continued and deepened brand engagement. Paid loyalty allows customers to instantly benefit from a clear set of services and rewards – not just the future promise. If the fee is right, the overall programme performance will skyrocket, and members will be content and loyal at the same time!
Of course, paid loyalty may be the best, but isn’t the only way to attract ‘The Next 10%’. An airline, for example, could provide targeted, conditional trial offers, such as top-tier benefits when booking a specific route or a specific schedule. Tactical points acceleration promotions can also be considered or even outright status purchases; however, I would recommend against the last one, as the strategic challenges outweigh the tactical benefits significantly.
The recent, second edition of the ‘Asia Pacific Travel Recovery Report’, developed by Collinson in partnership with CAPA, revealed interesting insights. For instance, 67% of travel industry experts believe loyalty and earn/redemption programmes with a broad partner footprint are significant in keeping brands front of mind while customers are either grounded or slowly returning to travel. And they are absolutely right. Yet, many loyalty programmes are yet to broaden their relevance and appeal beyond the core brand, putting at risk sometimes decades of investment in loyalty.
‘The Next 10%’ are a vitally important source of program longevity and those loyalty professionals who succeed in turning them into true loyals will thrive. The travel market is recovering at speed, and the time to act is now.