Whether you’re a business owner or a professional in the B2B sector, understanding the key terms and definitions used in travel loyalty programs is crucial for making informed decisions and maximizing the benefits they offer.
Travel loyalty programs have become increasingly popular, allowing businesses to build lasting relationships with their customers while providing them with valuable rewards and incentives. However, navigating the terminology associated with these programs can often be overwhelming, with complex terms like points, miles, redemption, conversion, and more.
In this blog post, we break down the essential terms and definitions of travel loyalty programs, empowering you to grasp the intricacies and make confident choices. By understanding these key concepts comprehensively, you’ll be better equipped to evaluate loyalty programs, select the most suitable options for your business, and effectively communicate with your customers.
Travel Loyalty Program Definition
Understanding loyalty program terms begins with a basic travel loyalty definition. A travel loyalty program is an engagement and retention strategy that rewards customers for continued spending with a specific travel brand through travel-based rewards and discounts. Loyalty programs incentivize customers to spend more with your brand in an increasingly competitive travel industry.
Understanding Travel Loyalty Program Jargon
Because travel loyalty programs have become popular among mainstream travel providers (think the Delta SkyMiles Loyalty Program or World of Hyatt Member Benefits), there’s a need to demystify loyalty program terminology for consumers and small-scale travel providers alike. But beyond the basic definition, what are the benefits of joining a travel loyalty program?
For consumers, travel loyalty programs enable members to access exclusive travel experiences and unlock discounts that make some aspects of travel — like flights or hotel stays — more attainable. For travel providers, loyalty programs attract and incentive customers to dedicate more of their traveler wallet share to the brands that reward them for increased spending.
Travel Loyalty Definition: Currency
Loyalty program currency refers to the medium that is exchanged for consumer spending. Like other types of currency, such as the US dollar, loyalty program currency is assigned different values for each transaction. These values make up the framework for what program members earn and receive.
The most popular types of currency earned in a travel loyalty program include:
- Miles-based currency is common among airlines like United MileagePlus.
- Points-based currency is common among cruise lines and hotel chains like Marriott Bonvoy.
- Rewards-based currency is standard among online travel agencies like KAYAK Explorer.
Likewise, there are several terms involved with managing loyalty program currency, including:
- Expiration Policies refer to the specified date range for redeeming currency.
- Transfer and Conversion Options refer to the guidelines for allocating currency to another rewards member or transforming them to a different currency (i.e., miles to points).
- Tracking and Account Management refers to how members can monitor and redeem their current currency.
Travel Loyalty Definition: Earning
In the travel rewards glossary, earning refers to members’ actions to receive program currency. In most cases, a program member will likely earn currency for spending with the travel brand. There are several earning categories, like:
- Booking flights through a travel loyalty program, like American Airlines AAdvantage.
- Scheduling hotel stays through a loyalty membership program, like Best Western Rewards.
- Spending on a branded credit card through a partnership between a financial institution and a travel loyalty program, like American Express and Hilton Honors.
Even with these avenues for earning, many members may wonder, “How can I earn loyalty currency without traveling?” The answer is through partnerships and promotions, such as spending with the above American Express credit card, even if it’s not on Hilton hotel stays. Alternatively, members can earn currency for continuous engagement by taking a customer survey or leaving a review.
Travel Loyalty Definition: Redemption
With the basic framework of a travel loyalty program explained, it’s time to discuss redemption. Currency redemption refers to how your program members utilize their earned currency for continued spending or engagement with your brand. Redemption is vital to maximizing the value of loyalty currency because it provides a tangible reward for the digital points or miles accrued.
Various redemption options included a travel loyalty program may include but are not limited to:
- Flight redemption, such as using earned currency for one free flight.
- Hotel redemption, such as using earned currency for a free hotel stay.
- Transportation redemption, such as using earned currency toward a rental car price.
- Merchandise and retail redemption include using earned currency to pay for items while on a cruise.
- Experiences and activities redemption, such as using earned currency to access exclusive sports and recreation at a resort.
In addition to the above redemption options, some members may ask, “Can I redeem loyalty currency for experiences other than travel?” The answer is yes! Your members can also select donation redemption, in which a percentage of your sales profits or a portion of their earned currency can be allocated to a charity that aligns with your business, such as a safe tourism organization.
Travel Loyalty Definition: Tier Levels
Beyond the basic framework of a travel loyalty program are loyalty tiers, which give the program additional structure. Tier levels refer to separate rankings within the program, with higher-value benefits awarded to members who have accessed higher tiers. The more members participate in the loyalty program through purchases or engagement. The easier it is to advance tier levels.
Tactics for members to earn tier currency and progress through tier levels may include:
- Leaving an online review
- Following your brand on social media
- Completing a member satisfaction survey
- Inviting a certain number of friends to join the loyalty program successfully
- Making a specific number of purchases or earning a specific amount of currency
Most travel loyalty program tiers utilize a specific naming convention for each level, such as Silver, Gold, and Platinum. There’s typically a ‘welcome reward’ at the beginning tier, and each higher tier has progressively more generous rewards. Tiers help improve customer lifetime value (CLV) by incentivizing customers to earn exclusive perks simply by remaining loyal spenders.
Travel Loyalty Definition: Elite Status
The last phrase in understanding loyalty program terms is elite status. The concept of an elite status within travel loyalty programs typically refers to members deemed ‘preferred customers’ by travel providers. These individuals receive exclusive benefits not available to the general public (or other loyalty program members) or are only available for an additional fee.
Achieving elite status provides travel loyalty program members with exclusive privileges, including:
- Enhanced travel experiences
- Upgrades and enhancements
- Bonus rewards and earning accelerators
What’s the difference between elite status and tier levels? Certain travel loyalty programs allow members to reach the top membership tier to become elite members. Other travel loyalty programs, like rival airlines, only designate individual flyers as elite status if they have a history of very high spending.
Travel Loyalty Program Jargon Demystified
As you can see, understanding loyalty program terms does not have to be complicated. Here at arrivia, simplifying travel rewards programs is what we do. Our experts in white label travel solutions enable travel providers of all types and sizes to implement a robust travel rewards program that drives continuous customer loyalty.
Discover how arrivia streamlines travel loyalty rewards today!