The Evolution of Loyalty

Over the past few months, Switchfly has been part of the conversation on the future of travel industry loyalty programs. In fact, Switchfly has been covered in a whopping 23 articles in August alone! To join the conversation, read our ongoing coverage or contact us directly with your thoughts!

The Highlights

Our Reward Seat Availability Survey showed the clear winners in the airline industry – Southwest, JetBlue, Delta, United and American. When it comes to getting the most out of your airline, being part of a loyalty program is the obvious way to go. Whether you’re an elite member or a price-conscious traveler, using and earning points through a loyalty program means big savings and rewards.

We examined the behaviors of American travelers and their thoughts on hotel and airline ancillary selections. With almost 10,000 travelers surveyed in all demographics, we are thrilled to share our findings with the travel industry.

For decades, miles-based accrual has been the reluctantly-accepted method for consumers to have any hope of scoring a deal on flights. As a result, airlines have been fighting the battle of being seen as outdated and stingy. In the past, points would take years to accrue, were difficult to redeem and sometimes even expired altogether. We are now, however, seeing the impact of consumers’ perception of valueless points – they are going unused. So now airlines, hotels and financial service providers are taking notice and seeing the opportunity to allow their customers to use these points in meaningful ways. When customers are redeeming points, they engage with a brand – and when they engage with a brand, they see value in that brand and are more likely to spend more and more often!

The Future of Loyalty: Points, Programs and Personalization

The ingredients to success in the loyalty space are a strategic loyalty program, points that are perceived as valuable to your customers, and creating a personalized shopping experience.

Points
You cannot discuss loyalty programs without mentioning loyalty points. Points are being used across the retail and merchandising channels and are definitely picking up a lot of steam. Point systems and point programs are rapidly becoming just another form of mobile currency.

Programs
Gone are the miles-based programs. Revenue-based management is the new industry standard.

Personalization
This is becoming the biggest differentiator. It isn’t just about offerings in the right place and right time. It’s now about your membership programs, how consumers are using them and what companies can offer that is unique to a consumer’s profile.

The Importance of a Successful Loyalty Program

According to our very own Daniel Farrar, “For a loyalty program to be considered successful, it has to be customer-centric, well-managed and aggressive in their offerings and rewards. In the travel space, for example, we measure success by the look-to-book conversion ratio. We know that the industry standard has a 3-4% conversion ratio so when organizations are evaluating their own loyalty programs, this conversion ratio can be used to gauge how successful their strategy efforts have been.”