Airlines, hotels redraw the loyalty line as customers look beyond rewards

Loyalty programmes are going through an overhaul

Buying customer loyalty has never been more difficult for airlines and hotels, the two big beneficiaries of the booming travel sector in the country. With consumers looking for deals and discounts and a profusion of booking platforms creating an ecosystem that makes customer engagement more challenging than ever before, airline and hospitality brands have been relooking at their loyalty programmes. 

Increased partnerships with multiple players, greater use of technology and a focus on overall customer experience instead of just rewards and miles are among the big shifts in the framework. And what everyone agrees about is that loyalty schemes today have to do more than just reward faithful behaviour. They must deliver personalised experiences and create more engagement opportunities, while building an omnipresent avatar for the brand across all channels. 
 

According to EY that has just launched a loyalty management solution, there must be interoperability amongst loyalty programs. The EY solution, the consulting firm said at the time of launch, allows for a single wallet for members, real time transactions and transparency that enables both, B2B and B2C businesses to reduce operational costs.

Service, experience matter

What do customers look for when they book a flight? A global survey by Google shows that customer service tops the list (60 per cent), followed by an easy-to-use website (55 per cent) and online reviews (50 per cent). Loyalty programmes come in fourth, motivating less than half of the high-value travellers (46 per cent). The report goes on to say that brands should separate their travel loyalty programme from their understanding of retention and customer lifetime value.

 Sharat Dhall, COO-B2C at Yatra Online claims that his platform gets nearly 82 per cent repeat customers. While loyalty programmes have helped, he does not think that they are the primary reason for returning customers. 

Experience is key as are deals, pricing, special packages and so on. He says that the consumer today is conflicted. “People think that they would rather take the deal available right now, rather than going for a pay off later,” he says. 

Hotels have realigned their loyalty programmes to the new realities. Dipak Haksar, chief executive-ITC Hotels and Welcom Hotels, which runs Club ITC, says consumer loyalty or preference for a brand cannot be predominantly linked with rewards. “Loyalty is a function of the consumer’s experience with the brand and how differentiated that is. Equally important is the ability to anticipate and deliver experiences, as and when needed,” he says.

Making loyalty pay

If structured well, loyalty programmes can be big revenue earners even today. At ITC Hotels, loyalty members contributed upwards of 60 per cent of room revenue last year. More than 50 per cent of the chain’s transient business is fuelled by loyalty members, according to the hotel. 
 

Arif Patel, vice president–Sales, Marketing, Distribution and Loyalty, Accor Hotels India says more than half (51 per cent) of guests consider loyalty programmes as an essential element when booking a hotel. He sees such schemes as effective brand differentiators that build stickiness and reduce the cost of distribution as loyal guests are more likely to use a hotel’s direct booking channels and apps.
 

Accor Hotels has integrated its loyalty programme with those from Raffles, Fairmont and Swissôtel Hotels & Resorts, from its acquisition last year. The  programme has more than 50 million members globally, with members in India growing at 35 per cent annually and contributing to over 40 per cent of its businesses.

A network of benefits

Loyalty schemes today operate within a network of brands that complement each other. This means that a hotel’s loyalty programme may find more customers if it ties up with an airline or an online retailer. Customers also want the points redemption process to be easy, although most brands still struggle with the technology.

Aviation is perhaps one of the few industries where loyalty still plays a significant role, says Sanjiv Kapoor, chief strategy and commercial officer, Vistara. But loyalty is not just driven by the miles one travels or the points one earns. He says that earning points is as important as feeling good while flying with an airline. “The degree of loyalty is a sum total of the experiences, behaviour, service, rewards and programmes for loyalty. Brands must focus on both, a programme based approach and softer intangible aspects to drive loyalty,” said Kapoor.

While that is a view held by many, experts say that airlines have to think beyond service and rewards to keep programmes relevant. They must link their offers with that of the rest of the travel network. A spokesperson for SpiceJet says, “We believe in constantly evaluating and reinventing  our products to ensure better value for our customers. Our all new loyalty program comes with a lot of benefits.”

There was a time, distant from the present turbulence that the airline finds itself in, when Jet Airways ran an enviable loyalty programme. So much so that today Jet Privilege is valued at seven times its revenues, according to news reports. But if the airline had to build a loyalty programme today, would it follow the same formula? Unlikely say experts, for if it did, it would not find the same success. Loyalty plays by very different rules and programmes need to realign themselves to the new principles of consumer behaviour.Keeping the flock faithful is a big challenge today.