Discover Travel Rewards and Loyalty Programs

Insights for this month’s article are provided by Stacey Sutherland, Vice President of B2B Marketing & Strategic Development at arrivia, and Mike Cremin, Managing Director at Alvarez & Marsal.

Question: How can loyalty programs can help strengthen your business?

Stacey Sutherland, Vice President of B2B Marketing & Strategic Development at arrivia, believes in the power of loyalty programs, which aim to increase brand appreciation and purchase frequency. Stacey explains that these programs are defined by an array of unique features that set them apart from more traditional reward systems.

Travel rewards and loyalty programs are a way for developers to show customers that their relationship with them is a priority. And most consumers want travel rewards. According to an arrivia survey of 2,150 Americans conducted in December of 2023, 69% said they planned a trip in 2022, while another 24% had already booked one.

The Benefits of Rewards and Travel Loyalty Programs

Research reflects the benefits of loyalty programs – 70% of customers who enjoy a loyalty program will likely recommend it to others, and successful loyalty programs can increase revenue from customers who redeem points by 15% to 25%.

Stacey provides specific benefits of rewards and travel loyalty programs below:

•    Increased Customer Retention: Rewards and travel loyalty programs effectively retain customers by offering attractive deals that speak to customers. These programs can also maximize the lifetime value of a customer by providing incentives to spend more and buy more often. 
•    Enhanced Customer Experience: Offering a rewards and travel loyalty program offers developers additional chances to engage with customers outside the norm and connect more personally throughout the year. 
•    Brand Loyalty: Developers take care of customers’ vacation stays, but interactions can be infrequent. Offering travel capabilities in-house under their brand will increase member interactions and inspire brand loyalty. Members who can book travel deals directly will associate that added value with the developer’s brand. 
•    Increased Revenue: A loyal customer base is a more profitable customer base. Successful customer loyalty programs give unique customers perks and rewards and become reward/revenue win-wins.

Implementing a Travel Rewards and Loyalty Program

When it comes to implementing these programs, Stacey says it’s easy to offer discount codes to customers to book travel through an outsourced travel provider or third-party website – but it would be much more beneficial to extend the relationship with customers by offering travel incentives through your own brand. Developers should consider offering capabilities in-house under their digital banner to increase engagement, inspire member loyalty and uncover new revenue opportunities.

Critical elements of a successful travel rewards and loyalty program feature products and services with simplicity, flexibility, and personalization. A customer loyalty program should be easy to understand from a customer’s perspective. In an effective loyalty program, customers have the flexibility to choose how they earn or redeem rewards points. Finally, personalization enables differentiation by offering the best benefits to the most valuable customers or those with high potential.

Travel Rewards Program Considerations 
Many companies launch rewards programs without assessing their own needs and the economics of cause and effect. As a result, they have not thought through the links between the value delivered to customers and the value created for the company.

Work with a white label travel solution to bring all of your ideas to market. An integrated white label booking platform, such as arrivia, offers turnkey solutions to help frame, supply, and implement a travel rewards and loyalty program. Businesses implementing travel rewards programs should look for the following from their partnership:

•    Available Travel Options 
•    Global Multi-Channel Customer Support 
•    Marketing Support 
•    AI Capabilities  

It is easier than you might think to implement rewards and loyalty programs and reap the benefits of increased customer engagement and loyalty – you just need the right partner!

Mike Cremin, Managing Director at Alvarez & Marsal, echoes Stacey’s sentiment on the importance of loyalty programs, as he also believes that loyalty programs act as gateways. When implemented effectively, they allow regular interactions with customers, providing an effective way to enhance customer relationships and, consequently, strengthen your business. Moreover, these programs create opportunities for additional revenue streams, such as co-branded credit cards and data monetization. The key transformation involves shifting loyalty programs from transactional tools to ones that cultivate authentic connections with your brand.

Loyalty programs are pivotal in the travel industry, yet they often go unnoticed in the realm of vacation ownership. In a fiercely competitive market, bolstering loyalty capabilities can fortify businesses by:
•    Increasing owner attachment to the brand.
•    Expanding the share of wallet beyond initial investments and maintenance fees.
•    Fostering advocacy, where owners become influential in converting new potential owners. 

According to ARDA’s March 2024 AIF Vacation Ownership Sentiment Index, 71% of owners intend to upgrade their existing timeshare or acquire additional timeshare products within the next two years. To align with the changing needs and expectations of owners, vacation ownership companies should establish consistent, non-intrusive post-sale touchpoints across various communication channels. An effective loyalty program serves as one of these essential touchpoints.

Here are six areas Mike wants brands to consider when building a loyalty program:

1.    Reimagining Customer Value: Instead of merely emphasizing discounts or redemptions, prioritize loyalty to the brand. Develop a brand proposition that resonates uniquely with customers, supported by engaged employees and partners.
2.    Empowering Personalized Control: Design programs that allow customers to shape their own rewards. Align these rewards with individual preferences and values.
3.    Enhancing Consumer Feedback: Create open communication channels with both owners and guests. Leverage consumer testing, data analytics, and AI to gain insights into consumption patterns. Use this information to initiate personalized, relevant conversations.
4.    Balancing Profitability: Strive for equilibrium between perceived customer value and financial performance. Optimize the loyalty program’s impact on profit and EBITDA.
5.    Fostering Innovation: Recognize that loyalty programs require ongoing investment. Offer exclusive or early access to novel experiences. Monetize loyalty data by providing valuable insights to ecosystem partners, driving new growth channels.
6.    Staying Regulatory-Ready: Uphold trust as a core principle. Safeguard business interests and customer rights by actively monitoring and adapting to legislative changes.

Forward-thinking organizations continuously adapt and enhance their loyalty programs, aiming for a delicate balance: customer satisfaction, company profitability, and compliance with evolving regulations. While components like co-branded credit cards can yield substantial profits, vacation ownership companies must transition loyalty from mere transactions to fostering genuine brand connections. Those who succeed will indeed “reap the rewards” (pun intended), while those who falter risk losing competitiveness and market share in this vital and expanding segment of the global economy.