Online travel agencies revisit loyalty plans

According to recent study by Euromonitor International, online travel sales and e-commerce was in growth phase in India in 2017

As online travel sales soar with more and more Indians taking their bookings online, online travel agencies (OTAs) Makemytrip (MMT) and Yatra are revitalising their loyalty programmes. Caught between an aggressive digital play by the airlines and the growing influence of meta-search firms such as Ixigo and Skyscanner among others, the agencies are hoping to attract new customers and ensure brand stickiness with more benefits for more bookings. However many customer groups say that the programmes often promise more than they deliver and online agencies need to address the anomalies. 

The benefits could start with small wallet-credits on purchases and concessions on excess baggage allowances to offers on specific sectors, easy cancellation policies and so on. The objective is to keep customers from bouncing off their sites in search of the best deals.

“As a part of our definitive strategy to increase stickiness and ensure customer retention we have introduced an industry-first subscription-based loyalty programme that has travel-relevant offers based on what high value customers merit the most,” said Saujanya Shrivastava, chief marketing officer, MMT. At Yatra, customer behaviour is being decoded to offer specific cash deals on select routes.

The online pie grows

According to a recent study by Euromonitor International, online travel sales and e-commerce was in a growth phase in India in 2017. Also the overall thrust on creating a digital economy as against a cash economy helped the report said. 

Not only are more travellers taking the online route for search and booking functions, the number of fliers is on the rise too. According to the Directorate General of Civil Aviation (DGCA), in first nine months of 2017 air travel grew 17 per cent. Much of the growth has come on the back of deals and discounts and the competition to win and retain customers has become intense.

Given the increasing conversion to air travel and online booking, travel agents, airlines and meta-search engines want to strike early. Thus in recent months, several airlines have begun luring customers with extra baggage allowance or bonus miles if booking directly on their websites. T

Tracking deals and discounts

With airlines and hotels becoming more active with their digital offerings online agencies have been forced to come up with new and improved reward plans. In the preceding quarter, MMT rolled out new loyalty programmes promising zero cancellation charges on air and hotel bookings, cash-back, free tickets and hotel stays. 

Late last month Ixigo launched a "virtual travel currency" called  Ixigo money. Customers earn a credit for bookings made through its website. The virtual travel currency works across multiple online travel agencies and airline partners, Ixigo said. There is no restriction on booking amount to claim credit and also users can use the entire balance while making their next booking. More and more customers are looking for such flexibility with their travel bookings and the online agencies have a fight on their hands.

There is a large set of customers using eCash and we have observed a significant growth over the last year: Sharat Dhall

At MMT however, the aim is to build the loyalty programme into more than just another discounted fare strategy. “While discounts play a role in trial and inducement, well formulated programmes that deliver value to customers is what will drive repeat purchases,” said Shrivastava of MMT. Rewards are an incentive only up to a point, but as customers migrate up the value chain, benefits and experiences will become the driver for generating loyalty said Brian Almeida, founder of Strategic Caravan, a loyalty management consultancy.

Designed for loyalty

The agencies are paying attention to user interfaces and their value proposition while designing the loyalty programmes. One insight, for instance, has helped MMT design a two-tiered programme called ‘Black’ and ‘Double Black’. Travellers rarely fit into a single category definition and the programme is aimed at acknowledging the differences. “The digital world is weighing the customer experience and recognition benefits over rewards,” added Almeida.  

Double Black members have to pay a one-time fee and benefits include full refund upon cancellation for the first ten flight and hotel bookings. The company said that over 16,000 customers have enrolled. The Black programme is a spend-based invite-only programme and has no joining fee. Members stand to earn free flights and hotel stays as rewards. So far 73,000 customers have enrolled. 

“We know that customers like to shop around for best travel deals. The idea behind programme of this nature is to provide offerings that are truly valuable to individuals with mid to high travel frequency. Many corporates get free cancellations, but individuals don’t and many individuals who aren’t part of big corporates don’t get free cancellations for their own business travel,” Shrivastava added.

Yatra.com offers eCash (credits) on bookings and it is making it easier for patrons to claim reward benefits. Customers can now transfer the credits to their family and friends and convert them into shopping coupons. “There is a large set of customers using eCash and we have observed a significant growth over the last year,” said Sharat Dhall, COO (B2C), Yatra.com.