Though recent rising inflation and interest rates have taken their toll on consumer spending in the U.S., there is one thing consumers are certain about: Travel is a priority. In 2024, consumers plan to spend more on leisure travel, and they’re willing to cut back on other areas of personal spending to do it.
It’s a ripe opportunity for the travel industry—and for travel loyalty programs.
The discounts, upgrades, and exclusive access offered by loyalty programs will look even more attractive to travelers careful about spending and looking to get more out of their destination dollars this year.
Loyalty programs have a crucial bottom-line impact on the travel industry. A well-designed travel loyalty program can increase spending, enhance customer engagement, and create opportunities for upselling and cross-selling. In addition, a strong loyalty program can turn happy customers into brand advocates. Their positive word-of-mouth and five-star online reviews create an advantage in the competitive travel industry and help to attract new customers.
In this article, we’ll cover best practices for building a loyalty rewards program that supports your business's customer relationship management strategy.
Key Strategies for Building an Effective Travel Loyalty Program
You can create a loyalty program that resonates with customers, encourages repeat business, and establishes a strong emotional connection between your brand and loyal travelers by making these strategies the cornerstones of your travel rewards program:
74% of consumers say brand loyalty is about feeling understood and valued. Travel businesses can foster these feelings by tailoring experiences and special offers to individual customers—in other words, through personalization. One path to more personalized experiences is through a mobile app that enables customers to select their preferences. For instance, several cruise lines have apps that enable passengers to choose their meals, drinks, and entertainment options before they board the ship. Some hotel loyalty programs offer a similar approach that allows guests to stream personalized content on the television, control their room’s temperature and lighting, and place room service orders. Strategies that create a sense of exclusivity can make your customers feel valued and appreciated.
A tiered reward structure provides incentives based on your customers’ loyalty levels. Tiered rewards motivate customers to progress through various levels by engaging more with the brand. Each tier typically comes with increased travel rewards and benefits, which encourages customers to spend more to reach higher tiers and unlock better benefits. As a result, tiered rewards can drive higher customer spending and increase the average transaction value.
In addition, by offering increasingly attractive rewards as customers move up the tiers, loyalty programs build stronger emotional connections with customers. Higher tiers often have exclusive access to premium benefits, services, or events. This sense of exclusivity makes customers feel special and valued, further reinforcing customer engagement and loyalty to your brand.
Tiered rewards also make it more viable for a customer loyalty program in the travel industry to segment customers and tailor marketing strategies and promotions to specific groups, addressing the unique needs and preferences of each segment.
Collaborating with other travel-related businesses can create added value by expanding the range of benefits and loyalty points options available to your loyalty program members. You can form partnerships with airlines, hotels, car rental companies, and other travel services to offer a comprehensive loyalty ecosystem that meets all of your customers’ needs through your program.
You can leverage data analytics, AI, and automation to offer personalized experiences at scale through your customer loyalty program. Choose partners with these capabilities, too. For example, Switchfly’s AI-powered personalized hotel recommendations narrow the field of nearly 700,000 hotels worldwide to a closer match with customer preferences. After introducing this personalization feature, Switchfly saw travelers review nearly 3X more hotel options and spend an additional five minutes on the platform, which led to a 23% increase in hotel bookings. Find out more in this case study.
The Role of Data Analytics in Optimizing Travel Loyalty Programs
Data analytics have a pivotal role in optimizing travel loyalty programs. Leaders in the travel industry use data analytics to drive informed decision-making, enhance personalization, and maximize overall program effectiveness.
- Collecting and analyzing customer data, which enables insights into customer preferences, behaviors, and spending patterns.
- Providing and using actionable insights to refine loyalty program offerings. By analyzing historical data, companies can forecast future trends and then proactively tailor loyalty program rewards to align with evolving customer expectations.
- Delivering personalized offers and experiences, often in anticipation of customer needs. Advanced analytics tools can provide real-time insights, allowing companies to dynamically adjust loyalty program offerings based on immediate customer interactions and preferences.
- Continuously improving program performance. This includes evaluating the effectiveness of different rewards and incentives within a loyalty program to optimize the value proposition and ensure the program remains relevant and attractive to customers over time.
Case Studies: Success Stories of Travel Loyalty Programs
Here are just a few top loyalty program examples:
Global hotel brand giant Marriott International offers Marriott Bonvoy, one of the largest hotel loyalty programs in the world. Members can earn and redeem points for stays at a wide range of hotels in Marriott’s 8,000-property portfolio, choosing from luxury brands like the Ritz-Carlton and St. Regis or more budget-conscious brands like Fairfield Inn & Suites and Moxy.
Marriott Bonvoy has different elite status tiers: Silver, Gold, Platinum, and Titanium. Each tier offers progressively more benefits, including bonus points, room upgrades, and lounge access. Marriott Bonvoy has partnerships with various airlines, credit card companies, and travel-related services, offering members additional opportunities to earn and redeem loyalty points. The hotel loyalty program offers personalized offers and promotions based on members' preferences and stay history, and Bonvoy members often get special rates and exclusive discounts when booking directly through Marriott's channels.
Alaska Airlines may not be the largest airline, but its Alaska Airlines Mileage Plan is ranked the best airline loyalty program for 2023-2024 by U.S. News & World Report. Alaska Airlines has formed partnerships with nearly two dozen partner airlines as well as many rental car companies, hotel brands and retail shops. Alaska Airlines earned the top ranking for several aspects of its loyalty program, including the ease of earning miles and redeeming free flights for basic members.
How Switchfly Can Help Enhance Your Travel Loyalty Program
Switchfly is a travel commerce platform that provides technology solutions for travel companies to enhance their booking, loyalty, and ancillary revenue management processes. The pioneer in travel rewards provides a comprehensive loyalty program solution to help travel companies design and grow their customer loyalty programs.
With Switchfly, loyalty rewards programs can leverage best practices that drive customer engagement, retention and spending, including:
- Personalized recommendations for travel experiences based on customers’ spending patterns, search history, and preferences
- Tailored marketing, promotions and offers based on tiered rewards
- End-to-end travel experiences with bundled vacation packages that include customers’ preferred combination of airline, hotel and rental car bookings
- Personalized booking experiences in the language and currency based on where the customer is
Plus, Switchfly’s solution is 100% turnkey travel loyalty management. You don’t need to dedicate internal resources, and Switchfly’s loyalty program software integrates seamlessly with your tools for fully-branded travel loyalty experiences.
Investing in Travel Loyalty Programs
Travel loyalty programs give customers tangible reasons to choose your business over others in the travel industry. When you utilize data analytics to optimize your program, you gain valuable data insights for targeted marketing, which can ultimately help you enhance customer satisfaction and loyalty. Investing in a loyalty rewards program can contribute to your business’s sustained growth and long-term success.
Switchfly is the leader in helping companies offer travel rewards and benefits that employees are excited to use. To discover what’s possible with Switchfly, connect with us today.