Loyalty schemes in travel are continuing to push discounts and rewards despite doubts that they work, according to new research from Expedia Affiliate Network.
The hotel distribution partnerships arm of Expedia and loyalty technology firm Points commissioned Atomik Research to carry out a global benchmarking survey in October.
The findings were reported today in a Travel Loyalty Report launched at the EyeforTravel Digital Summit 21018 taking place in San Francisco.
The report reveals 84% of the 523 respondents drawn from offline and online agencies, TMCs, airlines and loyalty companies said they have seen increased loyalty since 2015.
However, when asked what they think was the reason for this trend 70% put it down to a stronger economy a factor most cited among UK respondents (88%).
Those who took part in the survey from the UK were also among those most likely to cite increased marketing budgets (72%).
EAN points out that both these factors are subject to change that is outside of the control of the loyalty programmes themselves, raising doubts about their sustainability.
In addition firms were asked what tactics they deploy to drive loyalty.
It found discounts and coupons are still the most popular, with 61% of all survey respondents admitting to relying heavily on them with Brazil most reliant on 72%.
Awarding points and miles is used by 52% of respondents, a tactic particularly favoured in the on 82%.
Despite this 71% of respondents said ‘quality of offering’ has the greatest impact on loyalty, while customer experience and improved breadth of products and services were also valued above discounting methods.
Despite this only half of respondents said they are actively working to improve their product range and customer experience, and only 33% their breadth of products and services.
Ariane Gorin, president of Expedia Partner Solutions (EPS), said: “Today’s savvy travelers are looking beyond price as they choose their preferred brands.
“To drive loyalty, travel companies need to look beyond existing solutions like discounting, vouchers and points schemes.
“Lasting loyalty will be won by companies who really tune in to consumer expectations, deliver a diverse product offering and invest in superior user experiences.”
Stuart MacDonald, vice president and general manager, Points Travel agrees: “Ultimately, the key to winning loyalty is still winning over the customer, and as the survey shows there’s still great value in loyalty points and miles, which remain a top loyalty investment worldwide.
“There’s a reason why the investment in such programs remains so high. Efficiently leveraging proven loyalty tactics, coupled with emerging innovation and data science, continues to drive efficient results.
Other key findings in the ‘Travel Loyalty Report: A wake-up call for sleepwalking loyalty programs’ included:
• The highest percentages in loyalty gains come from respondents in France (94%), China (90%) and Brazil (85%); 74% of US respondents say loyalty has increased;
• The airline industry is the least likely to report loyalty growth, with 71% pointing to an increase over the last two years and 29% reporting no change. Loyalty companies are the second weakest sector for growth, with 79% reporting an increase;
• Only 17% of respondents cited improved user experience when asked to rate factors that increased loyalty and yet 71% said quality if offering has the most impact on the loyalty of customers;
• Among OTAs 91% said they have a loyalty programme in place but just 9% said they have an existing loyalty programme with more than 50% of customers signed up;
• Even though new ideas like personalisation and gamification are believed to be effective, particularly by the airline industry, very few companies are actually doing it (30% and 57%, respectively);
• The most popular was to measure loyalty was social sentiment (61%), but there were significant regional differences: social rises to a high of 80% in the UK, but plunges in parts of APAC, falling to 34% in Korea and 30% in Japan.