woman walking on pathway while strolling luggage

The need for greater value in customer loyalty programs

This article was based on the interview with Andy Hermo of iSeatz by Greg Kihlström for The Agile Brand with Greg Kihlström podcast. Listen to the original episode here:

Loyalty programs have become a popular marketing strategy for businesses across various industries. These programs aim to incentivize customers to continue patronizing a particular brand by offering rewards, discounts, and other exclusive benefits. However, recent data suggests that loyalty programs may be falling short in delivering the value that customers expect.

According to a report titled “The Tipping Point for Travel Loyalty in 2023” from iSeatz, only 51% of consumers visit their loyalty program website first when making travel booking decisions. This statistic highlights a disconnect between what customers want and what loyalty programs are providing. Additionally, 63% of loyalty providers believe they are their members’ first choice, indicating a lack of awareness about customers’ preferences and their customer experience.

One of the main challenges that prevent customers from always going to their loyalty program provider first is the limited options available. Loyalty programs often focus on offering basic rewards such as air, car, and hotel bookings. However, customers are looking for more variety and optionality in terms of what they can earn and redeem their loyalty points on. If loyalty programs fail to provide a broad range of options, customers are more likely to seek convenience elsewhere.

Another challenge is the perceived value of loyalty programs. Customers expect to save money and get more value from their loyalty programs. However, if they feel that they are not getting the best value compared to other options, they are likely to look for alternative booking options. The iSeatz report found that 43% of surveyed consumers valued saving money on travel the most. This highlights the importance of getting the value equation right for loyalty programs.

The lack of value in loyalty programs can be attributed to both communication and the actual benefits provided. Loyalty programs need to effectively communicate the value they offer to customers. This includes highlighting the discounts, rewards, and exclusive benefits available. However, it is also crucial for loyalty programs to ensure that the discounts and rewards provided are substantial and competitive. If customers feel that they can get better deals elsewhere, they are less likely to remain loyal to a particular program.

Customer loyalty programs need to prioritize delivering more value to customers. This can be achieved by expanding the range of options available for earning and redeeming loyalty points and ensuring that the discounts and rewards provided are competitive. Effective communication about the value proposition of loyalty programs is also essential. By addressing these challenges, loyalty programs can enhance customer satisfaction, increase customer attention, and improve lifetime value.

House of the Customer by Greg Kihlström is now available.
House of the Customer by Greg Kihlström