Customer Loyalty: Beyond Earning Miles

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ADOTAS – This month marks the 30th anniversary of the frequent flyer program. The AA Advantage program is still very successful. It’s interesting however, that it and many other travel loyalty programs are aggressively trying to get members to be more active.

The reason for all this activity is simple. Loyalty programs in the travel business provide opportunity not only for the core brand, but they’re good business for the partner brands as well. All brands in a loyalty partnership get exclusive access to their most important asset: Customers.

If customers don’t actively use loyalty programs they’re not as valuable as customers who do. Customers that use their loyalty programs generate data about themselves and in turn, their relationships to brands. So it’s interesting that this key anniversary is marked by so much activity.

First, some background. AA launched an anniversary promotion on May 3. Its 30th anniversary sweepstakes allows program members to enter a sweepstakes every day with 300,000 miles as the prize. Notice that existing members are the target.

Wyndham Hotels recently ran an essay contest to find 10 loyalty club members who would travel twice in the following year and provide feedback the hotel chain could put to good use. The 10 winners were each given 200,000 points to use to take the vacations. Again, current members are the target.

And National Rent-A-Car is tapping its loyalty club members to share their best travel stories through its new “Tales From The Road” Facebook contest. The contest’s first of three rounds, titled “How do you go like a pro?” launched May 2. National will award winners numerous travel-related prizes, culminating with a grand prize offering of Executive Elite status for life in National’s award-winning loyalty program, the Emerald Club, and up to 350,000 airlines miles.

See the trend? According to Colloquy, the average US household is a member of 18 loyalty programs. Of those 18 programs, they are most heavily invested (in terms of time and activity) with less than half, 8.4 programs per household. For these 8.4 programs, these members are actively seeking ways to earn program benefits, whether it is miles, points, discounts or special privileges.

Delivering targeted promotions to these members provide tangible benefits to the loyalty program members and opens up new opportunities for brands to reach a qualified, elite group of consumers with relevant promotions and deals.

For marketers, different loyalty programs offer unique audiences and opportunities. For example, airline loyalty members are typically the affluent segment or elite business travelers.

According to a study done by Colloquy, members of this segment are clear frontrunners with 67.4% participation, eclipsing all other demos, in some cases by more than double. These are male and female heads of households with annual incomes of $125,000 or greater. However, the good news for marketers is that over two‐thirds of all U.S. consumers report that they participate in at least one rewards program.

If you are trying to reach the core women demographic or young adults, retail and grocery loyalty programs are vastly growing to provide opportunities for targeted campaigns. Participation among women was greatest in other retail (2.1 programs), grocery (2.0 programs) and department stores (2.0 programs) categories, according to Colloquy. In fact, all loyalty programs grow at a rate of 11% percent per annum.

Generation X and Millennial business travelers continue to join airline programs at a rate that currently outpaces retirement-age Boomers. Many of these travelers now join multiple programs, which erodes loyalty to a single airline but further inflates membership numbers.

Unlike general ad campaigns, loyalty program members have invested time and energy into collecting miles, points or other benefits. Their desire is to get more targeted offers that allow them to collect more benefits. This type of mindset provides advertisers with an ideal platform to send targeted messages.

Loyalty marketers have a once- in-a-lifetime opportunity to demonstrate program value to the next generation of U.S. consumers, who view programs favorably. According to the 2010 Accenture Global Consumer Survey, 52 percent of respondents opted into customer loyalty programs in 2010, compared with 45 percent in 2009.

Reaching loyalty program members is critical online, and is especially important in the travel category. The 2010 Frequent Traveler Survey from Loylogic indicates that the internet is the preferred medium by travelers, as 58% of travelers prefer to earn and redeem points or check loyalty program balances online, followed by mobile (20%), in store (11%), SMS (4%) and Facebook (3%).

Just by nature of the different choices involved, customers naturally fall into segments. Dive deeper into those segments and marketers can target those customers with greater efficiency. They can also drive closer to that holy grail that everyone is chasing: Greater program activity.

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