If one goes back to the origins of loyalty programmes, they initially focused on building loyalty through rewards designed for high-frequency travellers. Rewards were transactional and focused on what you could get for money or nights spent. Then things began to shift to more of a ‘club’ mentality – offering more tangible, instant benefits for all travellers. Now, we’re seeing a combination of the best of both worlds, and getting to the core of what customers want – a programme centred on personalised relationships and rooted in customised experiences.
That’s largely because the dynamic has changed.
As Brian Greenberg, entrepreneur and CEO of True Blue Life Insurance says: “In today’s market, the customer dominates the playing field.”
The challenge, therefore, is in getting to know the customer better and maximising the impact that effective tools such as data gathering can offer.
It’s also now more about personalisation and authenticity, with brands unable to get away with avoiding these key facets of any business relationship.
Again, this comes back to the dynamic changing and a shift in the power balance, with customers now significantly more equipped to make smart decisions, particularly when it comes to their spend.
“With the abundance of loyalty and rewards programmes available, members have become even more sophisticated, savvy and discerning about the brands they will choose to frequent and with which to stay engaged,” says Mark Weinstein, Senior Vice- President, Customer Experience, Engagement, Loyalty & Partnerships at Hilton Hotels.
The reference points of customers are also changing. It’s become less about members looking for the best loyalty programme within the hotel or travel category. Customers are now expecting and holding suppliers accountable to be on par or surpass the experiences they are having with the best and most recognised brands in the world.
That is making the loyalty landscape pretty competitive and demanding for suppliers.
“Distractions for them are plentiful, so to earn their attention, consideration, engagement and – eventually – loyalty, you have to cut through the clutter and make the process and value proposition simple … and personalised,” says Weinstein.
Suppliers in the travel space have just had to move with the times and adapt their programmes, but this more demanding environment has actually done them some favours, as it’s forced even the biggest brands to take a step back and really take a close look at what their customers want, along with that essential element of getting to know them better.
“Loyalty isn’t just about a benefit or programme element – it’s about connecting with customers,” says Jimmy Eichelgruen, Director: Sales – Africa, Middle East & India for Delta Air Lines.
This has resulted in Delta expanding the ways its customers can earn and redeem miles to create an ‘ecosystem’ of partnerships that bring value to their customers.
“Not just when they travel,” says Eichelgruen, “but every day.”
AIRLINES
According to a piece in the Los Angeles Times, some analysts estimate that as much as half of all airline profits come from frequent flyer programmes. Delta’s SkyMiles is thought to be the top earner at an estimated $21 million, according to a report released last year by management consulting firm On Point Loyalty.
No surprise, then, to hear that Delta has been investing heavily in its SkyMiles programme over the past few years.
As a result, it now has a programme that offers benefits such as: miles that never expire; no blackout dates for award tickets on any Delta flight; miles that can be redeemed to travel to over 1,000 cities with Delta and its partners; and benefits such as complimentary upgrades to Delta One (business class) on all domestic flights.
SkyMiles is also complemented by partnerships that provide more ways to easily earn miles on everyday purchases with brands such as Airbnb and Lyft, along with new ways to easily redeem miles on everything from attending once-in-a-lifetime events through SkyMiles Experiences to enjoying a premium drink at Delta Sky Club.
The airline loyalty space is particularly competitive and all the major players have been active recently.
Among them, British Airways, which has focused on the technological component of its loyalty programme and in July launched a new app for members of its Executive Club.
Members can now use the app to discover new ways to collect and spend Avios, find new offers and see personalised ways to spend Avios based on the member’s Avios balance. The Executive Club Reward app complements the British Airways app, which is designed to help all BA customers book and service pre and post-travel needs.
The new app has a simple, intuitive design to help members navigate its different features. These features include the ability to access and make purchases through the BA Avios eStore – an important way many members collect Avios. Customers can also see different ways they can spend their Avios including a helpful tool which says how many more Avios are needed until a member can book reward flights to different destinations. As well as this, customers can see the latest Avios deals, view their last five transactions, and buy Avios, view account details and access their statement via different links.
Members of the BA Executive Club have a multitude of ways to collect and spend Avios. This includes flights with BA, Iberia and an additional 11 oneworld and partner airlines, including American Airlines, Qantas and Japan Airlines, collectively offering flights to more than 1,000 destinations across the globe. Members can also choose to cut the cost of BA and some American Airlines flights using Avios as part payment.
As with Delta, BA also offers an ‘experience’ option, with members given the opportunity to spend Avios with 60,000 additional partner hotels and on 50,000 extra sight-seeing experiences and validated excursions around the world. Through the BA Executive Club, members can also collect Avios on everyday spending with more partners across retail, travel and credit cards, and continue to collect with hundreds of retailers on the BA Avios eStore.
The fact that airline ‘big hitters’, such as Delta and BA, have developed offerings that speak to ‘experiences’ says much about how brands are now viewing the loyalty space and how it has evolved.
Further to that, it’s going beyond travel.
Last year, Qantas Loyalty brought in more money than the airline’s international ticket sales, but when you drill down to see that it has 12 million members, you start to understand why.
The programme allows you to pay for almost anything with your Qantas points, from a casual dinner out and a movie to your groceries. You can also earn points in unexpected ways, such as on your home loan every time you pay down your mortgage.
“There are more than 200 partners in the coalition program, which gives members the opportunity to earn points or use them – and with some partners, they can do both,” says Olivia Wirth, Qantas Loyalty’s CEO. “This means they’re engaged in the program and benefiting from it every day.”
Digital technology is the backbone of many of Qantas Loyalty’s initiatives.
“Not only are we using it to offer members a more seamless travel experience through their mobile devices, but it’s influencing the partnerships we’re offering,” says Wirth. “For example, we’ve embedded the Uber experience in the Qantas app, so customers going to and from the airport can book their ride through the same app they’re using to check in online. And they earn points on their Uber booking at the same time.”
In 2013, the carrier introduced Qantas Cash, a reloadable card that earns points with every purchase. It can be used in Australia or abroad and loaded with up to 11 different currencies all from your smartphone. In 2016 it next introduced Qantas Assure, where members can accumulate points on their health and travel insurance, as well as by logging in their everyday physical activity through the Assure smartphone app.
“Data is at the core of the program and provides us with insights that demonstrate what our members want,” says Wirth.
And data is why airlines need to figure out how to keep loyalty members on board and active. As consumers increasingly lead their lives with the help of their mobile devices, carriers will not only be able to create targeted travel messaging, but will be able to use that information, along with other technology, to create their own profitable marketplaces that members will actually want to use.
HOTELS
There have been many changes in the hotel space, as well, and the big groups all seem to continuously tweak their offerings, as they seek out that ‘sweet spot’ that’ll keep members happy and – more importantly – loyal.
For example, Hilton is one of the most active groups and this year alone has introduced five enhancements to its Hilton Honors Program Benefits:
– Increased Elite Tier Bonuses – a simplification of how members earn points, making it easier for them to earn more points on hotel stays.
– Milestone Bonuses – members now earn bonus points when they achieve certain numbers of eligible nights during each calendar year.
– Elite Rollover Nights – Elite rollover nights provide a faster way to earn Elite status.
– Elite Status Gifting – Once a member reaches 60 qualifying nights in a calendar year, they may gift Gold status to another member. After reaching 100 qualifying nights in the same year, that gift is automatically upgraded to Diamond status.
– Breakfast Benefits – In addition to enjoying breakfast perks, Gold and Diamond members also enjoy complimentary Continental breakfast or a F&B credit at all of Hilton’s properties, including luxury properties like Waldorf Astoria Hotels & Resorts.
Best Western Rewards is another big player and has grown from 180,000 members to more than 35 million since its inauguration in 1988. This year has also seen changes to its programme:
– BWR Chat Bot – this will be used to not only enhance communication of the benefits for BWR members, but further raise overall awareness and visibility to the rewards programme for all guests. The platform will be a customer interaction tool on Facebook’s Messenger platform.
– Points for Dining – members are now able to earn BWR points while dining at any of the more than 11,000 network restaurants in the U.S. and Canada as well.
– Points as Cash – BW Rewards Pay will enable BWR members to instantly redeem their points as cash through their smartphone mobile wallets at all merchants accepting Apple Pay/Google Pay.
“Since BWR’s revamp in 2017, we have done everything possible to remain a frontrunner in the loyalty space, avidly listening to our customers and tailoring our program to deliver the richest rewards in the industry,” says Dorothy Dowling, Senior Vice- President and Chief Marketing Officer at Best Western Hotels & Resorts.
A key issue in the hotel loyalty space appears to be whether or not to allow programme members to spend points earned outside the specific hotel brand ‘community’.
But, with consumers demanding more flexibility and less friction in their loyalty programme experiences, a hotel’s point currency needs to be flexible enough to offer value that represents the member’s current life stage and needs. After all, not everyone wants an extra night’s stay in exchange for their loyalty, or they may have other high priority near-term needs that aren’t travel-related.
Again, that’s a focus on personalisation and meeting the exact needs of the loyalty programme member.
THE INTERNATIONAL VIEW
Here, Craig Bright of Business Traveller UK provides a more global perspective of what’s being done in the loyalty programmes space, focusing specifically on the airline and hotel sectors.
Significant changes have been taking place in the airline and hotel loyalty sector over the past 18 months – not all for the better. Devaluation has been a major buzzword, particularly for airline loyalty members who’ve seen their benefits eroded in the industry-wide shift to rewarding revenue over miles.
A similar story echoes in the hospitality sector, as numerous brands have revamped their programmes – often unfavourably for lower tiers – and major hotel group mergers have led to a dilution of rewards as more members fight for the top perks.
However, amidst the crackdown on traditional benefits a silver lining seems to have emerged, as loyalty programmes begin to focus on alternative ways of adding value and catering to customers’ desires. The traditional “rooms, flights and upgrades model” is giving way to more lifestyle and experience-focused offerings.
“Guests are no longer looking for a loyalty programme that focuses only on points – they also want aspects that make the travel journey and experience more meaningful and seamless,” says Carina Chorengel, Senior Vice- President: Brands and Marketing Hyatt Asia-Pacific, which in 2017 relaunched its Hyatt Gold Passport programme as World of Hyatt. “In particular, members are looking for experiences that are tailored to the individual.”
EAT AND EARN
While some loyalty programmes, such as Hyatt and Hilton, have seen their reward schemes undergo substantial revamps, others have launched entirely new lifestyle-orientated programmes.
In 2016, Shangri-La Hotels and Resorts invited guests to join “The Table”, a new F&B programme that focuses on dining experiences across the group’s portfolio and allows guests to earn or redeem points by eating and drinking at any of the hotel’s participating restaurants. The Table is also fully integrated with the normal Golden Circle loyalty programme.
Asia Miles has also got a strong F&B-focused offering. The platform, which bills itself as Asia’s leading travel and lifestyle rewards programme, has an extensive list of restaurant partners where members can rack up points simply by tucking in to dinner. This has recently been further extended to encompass food delivery services such as Food Panda, and even grocery shopping in ParknShop.
SHOPPING FOR MERIT
Global and online retail opportunities are another area where loyalty programmes are rapidly diversifying, by forging joint ventures with various industry partners. Japanese carrier All Nippon Airways (ANA) last year announced a new ANA Global Service to supplement its existing ANA Mileage Club programme.
“ANA received comments that the menus, especially for redeeming miles outside of Japan, were limited,” a spokesperson for the airline said. “After a detailed review, we figured that it would be a good solution to partner with [loyalty commerce companies] Points and Collinson Latitude, who provide worldwide services.”
One of the focuses of the partnership is the introduction of the retail-focused ANA Global Mileage Mall and ANA Global Collinson Latitude’s own loyalty-focused online retail platforms, Earn Mall and Redemption Store). Redemption offers include hotels, car rental, merchandise, gift cards and experiences.
Other companies are introducing ways of spending points not just via their own retail channels, but on established independent platforms. In February 2017, Hilton’s loyalty programme Hilton HHonors (rebranded to Hilton Honors) saw the introduction of “Shop with Points at Amazon”, meaning members can use their rewards at one of the biggest online e-commerce retailers in the world.
Such low-threshold redemption options make it easier for those who have a low point balance to make use of their earnings, as well as adding diversity and choice to how people can enjoy their rewards.
MOMENTS THAT MATTER
But perhaps the biggest expansion of lifestyle-focused redemption offerings takes the form of giving guests experiences. Hyatt’s World of Hyatt platform, introduced in 2017, promotes “building memorable experiences”, with a variety of options such as an immersive three-day excursion to Tokyo, which can be paid for through a combination of points and/or cash.
“World of Hyatt is about celebrating our members by understanding the people, places and experiences at the heart of their world,” says Mark Hoplamazian, President and CEO of Hyatt Hotels Corporation. “The more we understand them, the better we can care for them and design unique experiences with them in mind.”
Hilton Honors has also started to focus on these sorts of unique experiences for its members. Last year during Grammy week, for instance, it launched “Music Happens Here” – an integrated music programme providing members with one-of-a-kind concert experiences as well as private meet-and-greets with artists.
Starwood Preferred Guest (SPG) was one of the first to foray into experience-based loyalty rewards with the launch of the SPG Moments platform back in 2006. Having since been acquired by Marriott International, this platform has now been linked with Marriott’s Experiences Marketplace (launched in 2017) and been further expanded with Marriott’s investment in price-comparison platform Placepass in March of last year. This opened up the Placepass website’s more than 100,000 travel experiences to guests booking through the Marriott or SPG website, with activities such as VIP visits to filming locations of the British TV series Downton Abbey, wrestling with a retired sumo wrestler in Tokyo, and exploring Dubai’s sand dunes by camel or 4WD vehicle.
BUCKING THE TREND
But though experiential redemption options appear to be ever more commonplace, not all loyalty programmes are following suit.
Three years ago, Wyndham Hotels and Resorts relaunched its Wyndham Rewards programme with one key aim – to simplify the earning and redemption process, with a clear focus on using points for rooms. This included creating a flat rate for redeeming rooms across all properties, regardless of brand tier and with no blackout dates.
According to Noah Brodsky, Senior Vice-President Worldwide Loyalty and Engagement, loyalty members primarily want to use their points for room stays rather than supplementary purchases, and the process should be straightforward. The result? A 90% increase in the number of nights redeemed in the first year of the programme’s relaunch.
However, even Wyndham Rewards’ revamped system, with its clear focus on room night redemption, has built in experiential perks with its Go Free Plus award nights.
“When members redeem [a Go Free Plus night] in one of our top 25 destinations around the world – and that includes Shanghai, Beijing, Hong Kong – not only do they get a free night but we give them additional value towards local activities. At our Diamond level, you get two free tickets – for every night you redeem – to a local attraction or event,” says Brodsky.
“People are in this programme for free nights,” he adds. “Many of our competitors encourage guests to use their points for other things – gift cards or airline miles. We certainly have those options, they are an important part of the programme, but the best use of our points is for hotels. That’s a huge shift in customer behaviour that we’ve seen.”
CONCLUSION
A move towards offering experiences as rewards for loyalty appears to be the biggest shift in global travel loyalty programmes, but regardless of this shift, some of the fundamentals remain the same, as brands and entities continue to look for effective ways to reward customers and retain their business.
Sure, the loyalty space has changed dramatically in the past 10 to 15 years and it’s more about personalisation and knowing your customer, but that just ties into the basics of just who is at the heart of any loyalty relationship.
As Amazon CEO Jeff Bezos says: “We start with the customer and we work backward.”
More than anything, extraordinary customer service earns trust and loyalty.