A travel loyalty program is a leading consumer preference and an essential prerequisite for acquiring and retaining customers in 2023. An outstanding 84% of consumers are more likely to spend with a business that operates a loyalty program over a competitor, which can explain why the average consumer belongs to more than 16 loyalty programs at any given time.
Yet, while the average American may be enrolled in numerous loyalty programs, they actively use less than half of them. Regarding actual program value, nearly two-thirds of established loyalty programs fail to deliver on consumer expectations.
Here is how to build a travel loyalty program for your business to engage customers and retain them long-term.
What is a Travel Loyalty Program and What is its Value to Businesses?
A travel loyalty program incentivizes customers to spend more with a business in exchange for ‘miles’ or ‘points’ that the customer can later use toward travel. Travel loyalty programs, like frequent flyer or cruise line reward programs, enable members to reduce travel fees and gain exclusive access to experiences through the loyalty ‘points’ collected.
A travel loyalty program is necessary to remain competitive in your field. A top-performing travel loyalty program has been found to boost revenue from customers who redeem program rewards by up to 25% annually. A robust travel loyalty program can increase the purchase frequency for your business, the average basket size, or both.
Types of Travel Loyalty Programs
The basis of any travel loyalty program is to provide extra incentives for customers to spend with a specific business. These incentives are typically quantified by a set number of points, miles, or other benefits-based currency that serve as the framework for what customers earn and receive. The most common travel loyalty programs include points-based, value-based, and tiered programs.
- A points-based travel loyalty program enables customers to earn points from making purchases, leaving reviews, participating in surveys, and other behaviors redeemed for a discount on travel fees, complimentary travel upgrades, or exclusive travel experiences.
- A value-based travel loyalty program can be flexible when it comes to savings. Some platforms will donate a percentage of a business’s sales profits to a related charity or organization that aligns with a customer’s values, such as sustainable travel initiatives or safe tourism associations. On the other hand, some other travel loyalty programs will work with you to configure the platform based on where you want the value to be added (on your end, the customer’s end, or donated to charity).
- A tiered travel loyalty program organizes loyalty benefits into separate rewards tiers, with higher value benefits offered to customers in higher program tiers and the ability to move into higher tiers as customers make additional purchases or complete certain activities.
Regarding which rewards or incentives are most effective for travel loyalty programs, all signs point to a flexible loyalty currency rather than a static value or points-to-cash equivalency. Combining existing rewards, like bonus points, with cash increases a program’s attractiveness and can improve point redemptions by up to 25% to drive business profitability.
Create a Tiered Rewards Program to Build Engagement and Encourage Loyalty
Most tiered travel loyalty programs utilize a specific naming convention, like Silver, Gold, and Platinum, to designate reward tiers. Loyalty members are often assigned to the lowest rewards tier upon sign-up and move up through the tiers with continued purchases or online engagement. A flexible loyalty currency, like points-plus-cash, enables members to climb tiers more easily.
When it comes to engagement and long-term retention, the best type of travel loyalty program is a tiered rewards program. Unlike a points-based or value-based travel loyalty program, a tiered rewards program incentivizes customers in two ways: first, with the benefits accessed at the initial rewards tier, and second, with the ability to access more significant benefits at a higher rewards tier.
Research demonstrates that 82% of customers who participate in a loyalty program will purchase more often in search of additional rewards. A tiered-based travel loyalty program awards these consumers — who increase purchase frequency or engagement with the business — more valuable incentives at a higher rewards tier. It’s a win-win for both the company and the customer.
How to Structure Your Travel Loyalty Program for Success
Proper structure is integral to the success of your travel loyalty program. For the most significant odds of program adoption and long-term retention, first, opt for a tiered travel loyalty program to drive continuous customer engagement. Next, identify which rewards to implement at each program tier, decide how to create the most direct user experience, and establish a clear value proposition.
Here is a look at these steps to help structure your travel loyalty program for success.
1. Determine Relevant Loyalty Rewards
In an arrivia survey, “value for money” was consistently the most important consideration for travelers. Because all travel loyalty programs share travel-related rewards as the incentive for specific customer behaviors, you must conduct market research to locate which benefits are valuable and relevant to your target audience to encourage ongoing program participation.
Based on your customers’ shared demographics or interests, relevant high-value travel loyalty rewards may include:
- Deep discounts on airfare, car rentals, and hotel stays.
- Exclusive travel opportunities to curated resorts and unique tour activities.
- Non-public base pricing on itineraries across land, air, and sea travel.
2. Design a Simple User Experience
By its very definition, a travel reward is earned through a customer’s effort, whether making a new purchase or completing a satisfaction survey. When it’s time to redeem travel rewards, no customer wants to feel like they need to put in additional effort just to access the benefits they’re owed. So as you build your travel loyalty program, keep a simple user experience in mind.
- Explain each reward tier and the different benefits available at each tier.
- Inform customers of all the ways to earn travel rewards and be clear on the expiry dates of each benefit.
- Utilize visuals to indicate tier progress and personalize communications with loyalty program members to inform them of their tier status.
3. Demonstrate a Clear Value Proposition
A defined loyalty program must have a clear value proposition or an explanation of the benefits it promises to deliver to members.
For example, the value proposition of your travel loyalty program refers to why a customer would want to join the program in the first place. It’s essential to demonstrate your value proposition upon sign-up to encourage customers to remain, loyal members long-term.
Techniques to demonstrate and market the value proposition of your travel loyalty program may include:
- Detailed landing pages that list the potential benefits and rewards tiers available through your program.
- Personalized email marketing campaigns that translate a customer’s recent purchases into potential reward points.
- Testimonials from actual travel loyalty program members that explain how your rewards have created unique travel experiences.
Best Practices for Developing Your Travel Rewards Program
In a market where almost all companies (90%) have a loyalty program, creating a travel loyalty program that stands out is essential. To develop a program that provides excellent value and relevance to your customers, consider these five best practices: conduct thorough market research, ensure an accessible member experience, continuously promote your program, and maintain transparency in your program’s rules and rewards.
Use Data to Optimize Your Travel Rewards Program
Like any business initiative, the success of your travel loyalty program will rely on consumer data. Collecting and analyzing consumer data can help optimize your travel rewards program by identifying which channels bring in new customers, which rewards types are redeemed the most, and which rewards tiers help retain loyalty members for the longest time.
This consumer data reveals user preferences to guide necessary adjustments to your travel loyalty program. For instance, if social media is the most popular channel to direct new users to your program, you might ramp up marketing activities across social networks. Likewise, if data shows that members redeem airfare rewards the most, you may consider promotions around air travel.
Offer Unique Experiences that Appeal to Your Target Audience
Consumer data is also beneficial to understanding which experiences appeal most to your target audience. With the initial market research you performed when determining relevant rewards for your target audience, use the shared demographics and user preferences to identify unique travel experiences that appeal most to your desired consumer. Ensure you include various travel options, from bargain airfares to discounted cruise fares and car rentals.
Create a One-Stop Shop for a Traveler’s Every Need
Your customers will expect your travel loyalty program to be accessible, so strive to create a one-stop shop for a traveler’s every need. In addition to a comprehensive overview of your loyalty program’s travel rewards and membership tiers, provide the ability to book travel through your loyalty program website and include top-tier customer service for any hiccups along the way.
If customer engagement and retention are a top priority for your travel loyalty program, strive to partner with a technology provider that offers a white-label booking site with single sign-on capabilities. In this way, you never have to direct members to a separate non-branded site to complete travel booking, and the built-in customer service capabilities can boost user satisfaction.
Develop Relevant Promotions to Attract and Retain Members
Hand-in-hand with unique experiences for program members are relevant promotions. By understanding the types of travel opportunities of high value to your audience, you can develop offers or specials that drive customer acquisition and retention. For instance, if your program data demonstrate that loyalty members redeem sea-related travel perks more frequently, you can run specific promotions such as “earn up to 4x the points on cruises booked before June 1.”
Promote Your Travel Loyalty Program for Maximum Impact
If you’re unsure how to promote your travel loyalty program, look no further than your market research. Consider which channels drive the most traffic to your program’s website, such as social media or email, and design eye-catching campaigns. Remember to highlight the value proposition of your travel loyalty program in your marketing materials for optimal new customer acquisition.
As for your existing customers, harness intelligent marketing solutions — like retargeting advertisements for social media and search engines — to encourage long-term retention. These paid ads collect information from a customer’s digital footprint to create targeted travel content with messaging that best addresses that member’s current wants or needs.
Build Your Travel Loyalty Program with Arrivia
When executed correctly, a travel loyalty program can help boost business revenue by up to 25% annually.
If you’ve yet to offer a travel loyalty program, you might be unsure what “executed correctly” means — and that’s where arrivia comes in. With our comprehensive travel offers and rewards, arrivia is your complete travel booking, benefits, and solutions partner.
As a white-label travel loyalty program, arrivia can help build a custom rewards membership tailored to your business goals and personalized for your customer preferences. Between our robust single sign-on booking technology and always-on customer service, your members are always in good hands. And with in-house marketing services, expect more members expeditiously.
Request a demo today to learn how arrivia can streamline travel loyalty rewards for your business.