As we know, there are various types of loyalty programs. And these include programs tied to banks, retailers, gas stations, etc. Among the promoted programs? Travel-related programs. They offer loyal customers free rooms, airline travel, upgrades, and more. This post focuses on travel programs. Certain U.S. travelers like loyalty programs — and use them.
Background
Often, firms go to great lengths to attract loyal shoppers. And with the competition today, that is not easy. In some instances, shoppers dislike loyalty programs. Period. In other cases, they use the programs infrequently. So, firms need to get their acts together. The goal: active customer loyalty.
Consider these posts:
- What People Want from a Loyalty Program.
- Better Communicating with Loyal Customers.
- Coming Up Short with Loyalty Programs.
- Better Customer Experiences.
- Angry Customers Matter.
Click the infographic.
Certain U.S. Travelers Like Loyalty Programs
Travel loyalty programs offer tangible benefits. To wit, earn specified points. And receive a reward. Yet, travel programs are NOT in the top tier of loyalty programs. Surprising? Maybe. Maybe Not.
“Travel loyalty programs are popular with travelers. But they don’t have the same following among consumers overall. And this applies to young people. A survey of Internet users in North America from CrowdTwist found retail programs had the highest adoption among those 18 to 37. Meanwhile, travel and hospitality programs were in the middle.”
Thus, the bottom-line question: Travel-related firms have to work to increase use of their loyalty programs. So, what could they do to attract young adults?
On the plus side, travelers like loyalty programs. In particular, they use hotel and airline loyalty programs. And business travelers have higher engagement than leisure travelers.
For further information, we again turn to eMarketer:
New data from Phocuswright and Acxiom found that 4 in 5 U.S. travelers were members of a travel-related loyalty program. Naturally, the point of such programs is to help drive revenues and add to the bottom line. eMarketer estimates that digital travel sales in the U.S. will total $189.62 billion this year. And that figure will grow to $219.69 billion by 2021.”
“The Phocuswright and Acxiom survey found that business travelers were more committed to loyalty programs than leisure travelers. This was across pretty much every segment of the travel market. The obvious reason: They are apt to travel more frequently. For instance, 62% of business travelers had signed up for a hotel’s loyalty plan, compared with 54% of leisure travelers.”
A statistic that stood out to me about loyalty programs is that American homes are part of about 29 loyalty programs but only actively use 12. If you have 29 loyalty programs, how loyal are you really being? Firms need to change the way these programs work because its purpose is not being met. My mom has a “loyalty” card at 3 different supermarkets just because it is easy to get. Maybe if firms started charging for membership or loyalty cards like Costco does, they would see their customers actually staying loyal to one place.
Similar to the previous comment, I agree that the value of loyalty programs has decreased, just because of how easy it is to receive. Customer loyalty is important, of course, but the key word is “active” customer loyalty. Companies must make consumers active, and the article explains that it is a must.
Loyalty programs seem to be important to the overall maintenance of customers. Around 3.3 billion people are using loyalty programs, so there is the obvious base need for the programs. For airlines it seems to be more useful for keeping their loyal customers.
I think a major reason that travel customers are struggling to get a younger audience is because young adults don’t have a lot of time to travel. During the school year, classes and work take up much of our time. During the summer, internships take up even more time. Additionally, it’s difficult to find others who have the time and money to be able to travel with you. The best period of time to travel would be after college and before you start working, but you wouldn’t buy a loyalty program just for that time period. Most young adults also can’t afford a loyalty program.
The fact that businesses use more loyalty programs than leisure travelers in general does not surprise me, although based upon looking at the bar-graph it doesn’t seem to be highly significant across all categories as I would have expected. It seems that there is about a 10% difference between the two generally. My parents, being leisure travelers, crave the variety in hotels and flexibility in choosing airlines for example, as it is part of the experience. Traveling strictly to Hiltons, for example, could get boring for leisure travelers. Additionally, since they are leisure travelers, there may be negligible savings due to infrequent travel. Businesses, however, are generally more concerned about profit and if there is a need to go to a country often, they certainly will look for the better deal when they can get it, if that means relying upon one hotel or airline provider, then this certainly would be the chosen avenue. It would be interesting to see the “Leisure Travelers” category of the bar-graph broken down into “Habitual Leisure Travelers” and “Infrequent Leisure Travelers.”
Loyalty Programs are interesting because although they are easy to get, similar to a quick survey, consumers like myself often avoid getting them for the simple reason that it will take a couple extra minutes of my time. Loyalty programs for travel related expenses seem ideal as they can be strongly beneficial both ways. Specifically for airlines or hotels, they would make good profit with customers who return to their business for loyalty rewards points. Equally, many consumers who fly or travel often can significantly benefit from a loyalty discount. It seems like a win-win for both consumer and company.
Loyalty programs are really important to maintain businesses` customers. As for me, i use and start a loyalty program wherever and whenever i can, even if i`m not purchasing. It s good to keep the customers up dated.
The drastic difference between leisure and business travelers is likely the business traveler’s expectation of doing this often. Where the leisurely traveler may think they’ll only use the service once or twice, and never get a chance to use any loyalty benefits, the business traveler assumes, or knows, that they will be doing this many times over, sure to gain some benefit from it.
The problem with these statistics is that while many consumers may have joined loyalty programs, consumers may not actually be loyal. I know personally that my mother has joined numerous loyalty programs only due to a monetary reward for signing up. However these programs have not affected her buying habits towards these brands. While I’m sure companies have their own statistics to show an increase of overall revenue after the introduction of loyalty programs, I do think that their loyalty programs can be improved upon to be more effective.
Good observations.
One distinction which I find interesting is how restaurants have a higher amount of active loyal members than leisure travelers. Certainly one of my favorite things to do when I go out to eat at a restaurant is to discover new restaurants and often try something different. This makes it difficult for me to remain loyal to a particular restaurant. Moreover, when traveling, there is also a particular charm in exploring, particularly with the advent of Airbnb and other home sharing services. I might be tempted to try to correlate the trends in each market together, but the infographic apparently disproves my feeling.
Perhaps the reason for higher engagement in the restaurant industry is that leisure consumers spend more time thinking about restaurants and eating, than thinking about spending time in a hotel or airplane?
I think the reason most millennials do not have travel loyalty programs is because they do not have the time or money to travel. I know that my time for traveling is limited unless I decide to study abroad or intern abroad. Even if that were the case, I probably would not participate in a travel loyalty program because I know I wouldn’t be traveling for long. If the traveling loyalty programs offer more incentives for college-aged individuals, then I think they can extend their reach.
I think that anyone who has an interest in anything is going to like loyalty programs catered towards their likings. They’re going to spend the money anyways, and if they can earn things by doing so, then that will encourage them to keep purchasing. Relating to travelers and loyalty programs, you would have to be a frequent travel to really earn lots of benefits, which takes time and money. Much of the younger population have limited time and money, which can effect how much use they would get out of the loyalty program. Looking at the chart, restaurants and retail get the highest percentage, and I can completely agree with that. As someone who falls in the 18-22 category, almost all of my money is spent either shopping or eating out.
Personally, I think loyalty program is not rigorous. If the loyalty cards are easy to get, it will lose the value of this card. So I think company need to change the way loyalty program work.
The reason why customers would like to use loyalty program is that customers want to take benefit from it and company can also take advantage of increasing loyal customers. However, competition between companies is intense, and they need to consider how to attract more customers.
As someone who found a passion for traveling over the summer break, it is same to say that I will be joining some of these reward programs. What I will not be, is loyal to a small group of travel companies. My travel decisions are based mostly around price. Plus, I would have to spend a crazy amount with one business just to get the little benefits that the programs actually provide.
Sometimes, loyalty cards have nothing to do with loyalty. If they’ll be offering me a 20% discount straight up then I will sign up for it because I’m at gain. I remember so many stores I went to where I signed up for loyalty cards and just made a purchase for once. There are many companies that does not offer a loyalty card but customers are very loyal towards the brand. This comment doesn’t signify that loyalty cards aren’t good but draws a distinction between the two.
Since Hotels have the most number of consumers who have signed up with their loyalty programs in U.S., I have talk about some experience with the loyalty cards which are offered by some Chinese Hotels. Usually these Hotels have three levels of membership cards. The lowest level membership, silver card, golden card. However, when I compare the price offered by some websites (Chinese websites like expedia and priceline) with the price on the official websites of the hotels, I find an interesting result. If you use those traveling websites to book the hotel, the price is usually low than the price which the lowest level membership card can give you but higher than that silver card and golden card can offer. The problem is that you often need to spend a certain number time in the hotels under the same brand within a year if you need to upgrade you membership card. So, some loyalty cards seems kind of useless and can’t keep travelers to stay in the same brand hotel. Those travel websites seem more attractive to me than the loyalty cards.
I believe loyalty programs are important for companies these days because of growing competition in the market. The key to keeping you’re customers coming back is to make sure that they were satisfied with your services. Loyalty programs are a great way of doing this especially for traveling.
I can relate to the use of loyalty programs as described in the article. I often sign up for such programs but rarely end up using them because I either forget I have them or I visit the store/website infrequently. I think that airline loyalty programs are very important to many frequent flyers. Many people have learned to take advantage of these programs. I have read articles and watched videos about how people have learned to use the system to their advantage in order to get first class seats or free flights.
By looking the chart, I think the loyalty programs like airplane, hotel loyalty programs, would have more benefits for the business travelers than the leisure travelers. Because leisure travelers usually would compare different airplane companies’ price and choose the cheapest one, the leisure travelers may not always choose the same plane company so they can’t get the enough benefits from the loyalty programs. On the other hands, business travelers would travel more frequently than the leisure travelers and they are more likely to choose the same airplane company every time. They would get the benefit form the loyalty programs more.
Loyalty programs usually benefit the customer in the long run. From what I found working retail is that just the thought of “signing up” for a loyalty program is what discourages customers. It is almost a reflex to say “no thanks” whenever I’d offer them the program. I don’t blame them either because I am guilty of the same thing. It may have possibly been how the loyalty program is presented to them, the trick is doing so in a way that peeks the customers interest.
Personally if I am traveling, I will go with whatever is the cheapest deal I can find during that time. I am very bad at trying to stick with one company, since I like to see what is out there. On the other hand, my dad sticks exclusively to Hilton/Hampton hotels, always flies United, and does not ever differ. I believe it depends on the type of traveler, and the characteristics of a person. I personally don’t think that at this current time I would join a loyalty program.
I believe that travel companies might have the wrong idea when trying to target young people and earn their loyalty. Young people, myself included, have less brand loyalty and care less about building points over time; we want the cheapest deal with the best value for every dollar spent right now. This is especially important with airlines and hotels because young people have lower incomes than their parents, and therefore generally cannot travel for leisure frequently. Thus, loyalty programs do not make much sense for young travelers, as building up points takes a very long time before any sort of tangible reward or discount is seen. A more effective loyalty program for young people would be one that offers a small discount every time an airline or hotel is used, where the discount percentage increases after a certain number of purchases with the loyalty membership. Thus, there is more of an instant reward with lower pricing every time a flight or hotel is booked, and young people would be more likely to go back to that one brand.
Interesting. 🙂
We live in a competitive environment. With such educated customers its not that consumers are not loyal, but just have such great access to information that they can find the best deal. Its an easy way to keep customers around. It creates incentive to “stick around.” The better deal ay not exist today, but will pay off in the future!