Customer Loyalty and Advocacy Programs in the Travel and Transportation Industries
This article was produced following a conversation with two Catalant experts on the challenges and opportunities that exist in the the travel, transportation and logistics industries.
The relationship between hotels and Online Travel Agents (OTAs) such as Expedia, Travelocity and booking.com is a murky one. With the accessibility of the internet, it's easier than ever to compare prices and book an affordable flight or hotel entirely online without directly contacting a hotel or airline. OTAs are attractive shopping alternatives for consumers, however, they can negatively affect a hotel or airline's bottom line via large commission rates.
A lot of strategic thinking goes into keeping customers loyal to hotels and airlines and away from OTAs. It’s not always possible to do this and, actually, some companies benefit greatly from these kinds of websites, for example, small hotels with a limited budget for digital marketing efforts. However, one of the most effective marketing strategies to facing this challenge is via customer loyalty and advocacy programs.
Modern marketers in the travel industry have been working hard to create special promotions and experiences that turn loyal customers into brand advocates. By building stronger relationships with their customers, they're able to generate more leads, boost customer acquisitions, improve conversion rates and contribute positively to their company’s bottom line.
Starwood Hotels & Resorts
Many recent refinements have changed the customer travel experience, making warmer, more personal experiences through customer loyalty programming. A great example of a highly successful customer loyalty program is Starwood's Preferred Guest (SPG). With SPG, customers have the opportunity to earn Starpoints. In the past, they could do this by staying at any of their hotels or resorts throughout the world. But now the hotel giant, recently purchased by Marriott International, has significantly enhanced the ways in which customers can earn points.
Focusing directly on how a room is booked, the SPG website explicitly explains that points can be earned for every dollar spent “at hotels or resorts booked through Starwood Web sites, hotels, call centers and their travel agent or corporate booking tool.” Even money spent purchasing products and services with partner credit cards can provide guests with points. The points can then be used to receive free night stays and upgrades, flights, VIP access to special events and more.
Starwood also recently announced that customers can earn Starpoints for every dollar spent with Uber during stays in their hotels. There’s even an option to link an Uber account and accrue points when customers are not traveling away from home. Tons of people are using Uber anyway — why not rack up some points while you're at it? Talk about incentives.
In terms of brand partnerships, Starwood isn't stopping at Uber. The hotel chain also partners with Delta airlines to give their customers Starpoints for flights on Delta — and Delta returns the serve.
In addition to earning Starpoints, customers who are Medallion members through Delta's Skymiles Medallion rewards program have the opportunity to receive other exclusive perks. For example, when Medallion members stay at a Starwood hotel, they earn a bonus Skymile for every dollar spent. Plus, they get other benefits like a VIP check-in line, late check-out times, free internet access and room upgrades. Platinum members can even get priority boarding and free checked luggage.
And speaking of Delta, the airline also recently responded to the increased demand for customized travel experiences by investing in a data-related technique to introduce a new tracking system that massively improves the customer experience. The airline is now providing checked luggage with radio-frequency identification tags intended to eliminate the chance of lost luggage. Delta projects the new system to have a 99.9 percent accuracy rating. That's an incentive to stay loyal to Delta, don't you think?
Driving Successful Programming
Loyal customers and advocates have emotional connections with brands. They not only buy repeatedly, but they also publicly support the brand by recommending it to friends and family, writing positive reviews and posting good feedback on social media. They have potential to generate tons of leads and contribute greatly to a company’s bottom line.
Well-organized programs will inspire customers to support the company’s marketing efforts.
The key to successful programing is to focus on what the customer wants and needs — case in point: frequent flyers need their luggage to make it to their end destination. As a marketer, you should base your loyalty programs on customer feedback and implement suggestions whenever possible. Keep loyal customers and advocates involved in the company’s decision making. Work to truly understand your customer's emotional expectations and then recognize and reward their participation.
Through customer loyalty and advocacy programs, marketing teams can face challenges head on. Prospective customers trust current customers more than anyone else. Loyalty and advocacy is becoming increasingly critical to create new opportunities for growth in value and business development.
It’s extremely important for brands to develop customer loyalty and advocacy programs. For fresh outside-in thinking, consider tapping into a pool of on-demand experts to help you build your next program. To learn more about the benefits of working with on-demand knowledge talent, download the June 2017 commissioned study conducted by Forrester Research on behalf of Catalant Technologies.