Airlines: 4 mistakes to avoid with loyalty programs

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Capitalize on increased airline travel and build customer retention with loyalty programs

In 2018, a record 4.3 billion passengers traveled with an airline. Although most passengers chose to travel with well established companies, low-cost airlines continue to encroach on the market, accounting for 30% of the year’s worldwide traffic.

Almost all airlines now offer loyalty programs or frequent flyer programs to their passengers. Most of these programs allow passengers to accumulate points to be redeemed on future trips. As more than one in ten travelers (13%) would choose a particular airline for its loyalty program, it’s important they be leveraged properly.

How can airlines ensure that travelers stay loyal to them? Here are 6 mistakes to avoid with airline loyalty programs.

1 - Not nurturing a relationship with the customer

As 63% of customers would not hesitate to change their consumption habits to reap the maximum rewards of a loyalty program, airlines should incentivize spending with them directly in order to build trust and encourage a passenger to come back time and again. 

In fact, true customer loyalty is based on an authentic bond created between the customer and the company. This emotional connection exists in all stages of the customer journey, in which customers feel connected to their favorite brands. 

Using collected data, airlines can identify visitor preferences, travel history, favorite destinations, payment methods and more to offer their customers a tailor-made, relevant experience in real time.

2 - Offering insufficient rewards

Accumulating miles via loyalty program mainly allows you to obtain free tickets to certain destinations. Other rewards vary depending on airline, but remain substantially similar, such as free baggage add-ons, seat upgrades, lounge access and other ancillaries. 

To acquire and retain travelers, companies must attribute more value to loyalty programs. McKinsey suggests offering experiences to loyal customers including hotel stays, vouchers for luxury retailers, and concert tickets. To truly tailor personalized offers delivered in real-time, for example free meals or drinks for restaurants or coffee shops in the vicinity to customers that can be redeemed via app. 

3 - Neglecting business travelers

In the future, there will be more options for business class passengers to enjoy a personalized experience based on price, convenience and comfort. Business travelers are a valuable customer segment, which is why companies must take them into account when implementing any online strategy, including loyalty programs. 

In fact, Investopedia found that “Business travelers account for 12% percent of airlines' passengers, but they are typically twice as profitable. In fact, on some flights, business passengers represent 75% of an airline's profits.” For business passengers, show that you remember their preferences with personalized offers that they can utilize such as free drinks in the business lounge and discounted hotels.

4- Propose programs that are too complex to use

To differentiate yourself from other loyalty programs, prioritize simplicity. The key to the success of a loyalty program is convenience. In fact, the easier it is for a traveler to participate in a program, the more likely it is to do so.

One of the solutions lies in the adoption of blockchain. For example, if a passenger wants to use their miles to rent a car from one of your partners, blockchain will make the transaction transparent and instantaneous, eliminating any friction in the verification process. In a context where loyalty programs aim to offer a differentiated experience, blockchain appears to be a powerful tool for improving customer retention. 

Conclusion

Online travel booking platforms can collect a lot of data. Analyze and use them to offer personalized experiences for each of your travelers. Create relevant content, offer the right rates at the right time and pamper your loyalty program members to keep them, and make sure they continue to choose your brand on future trips.

Many companies have already begun to improve the customer experience through the use of Artificial Intelligence (AI) tools, but this must now be applied at each stage of the journey and in loyalty programs. The goal? Make the process so simple that the traveler does not even have to think about it.

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