January 4, 2019

The current conundrum of loyalty

Ali GeaGea
Head of Partners

The travel industry is flooded with different loyalty schemes. Ever since American Airlines introduced the idea in the 1980s, hotels and airlines have jumped on the bandwagon – from British Airways Executive Club to Hilton Honors, and with each program, comes a slew of complex rules and regulations around both the accrual of miles and how you can spend them.

We know that consumers value reward and loyalty services, and that they can help drive decisions when making a purchase. 89% of people surveyed by Ecrebo, said, “A scheme that was quick and easy to use would influence where they spend their money.” This is a powerful piece of data, and one that could help drive real brand loyalty if airlines and hotels found a way to simplify the redemption of loyalty points.

At present if you want to purchase flights or rooms using your well-earned points, you have to be savvy and knowledgeable of new routes and destinations becoming available in the market, and at which point in time to book in order to secure those limited upgraded seats or suites. It isn’t always as quick and easy as customers would like it to be. On airlines, this is usually due to load factors – the amount of tickets that need to be sold in order to justify the cost of the flight. For hotels, there are often blackout dates during high seasons or certain locations, meaning the more popular routes and times of year are off limits to those wanting to use miles.

In this ever-changing landscape companies are looking for new ways to allow customers to redeem points while protecting their own income streams from dilution, which can prove quite challenging. New concepts such as redemption on vouchers, shopping, and experiences with third parties are becoming more common. But with this, the perception of value also drops. The perceived value of a first-class seat versus a £50 shopping voucher is quite obvious. So, are these types of substitutes undermining companies’ loyalty schemes?

At Upgrade Pack, we believe that digital innovations will soon be able to provide greater access to upgrades through loyalty and reward schemes, which is a real win-win for both customers and providers. Giving exclusive access to upgrades for loyal customers helps hotels and airlines sell otherwise unused inventory and provides real value to their customers. By incorporating technology into the process, we may soon see real time transactions that are generated at the request of a customer via their mobile device. This will deliver that quick and easy service that is in high demand.

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