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Travel loyalty – Discount discontents

How loyalty programs can deepen traveler engagement, improve profits and drive brand allegiance.

From discounts to true brand loyalty

Born out of the competitive crucible of the airline fare wars in the 1980s, travel loyalty programs have enjoyed meteoric membership growth. In fact, they have become a central feature of successful companies across the travel sector. Our recent IBM survey confirmed that many travelers are both happy with, and responsive to, loyalty programs. Nevertheless, too often, the programs are simply complicated discount schemes that exacerbate price-based competition, while doing little to foster deeper, more meaningful customer-to-travel brand engagement. To gain true customer loyalty, travel loyalty programs must reward travelers for more profitable decisions, incentivize a broader set of interactions between travelers and brands, and experiment with a diverse set of loyalty personalization opportunities.

Travel loyalty programs are a highly successful component of the modern travel ecosystem. They are popular with consumers, who willingly sign up for – and use – multiple programs, and are revered by travel executives and shareholders for the revenue and profits they produce. Increasingly, other travel provider departments are benefiting from the traveler insights that loyalty programs deliver to their data-hungry systems and employees.

But in spite of all their many contributions, travel loyalty programs have yet to achieve their full potential. To better understand and identify specific ways travel loyalty programs can be improved, the IBM Institute for Business Value (IBV) and the Economist Intelligence Unit (EIU) surveyed 3,833 travelers from 13 countries between May and August of 2015. Analysis of survey responses enables us to see past the success of travel loyalty programs and explore actions travel providers can take to bring a revolution to these critical corporate engines of customer insight and engagement.

Our research reveals that while travel loyalty programs do a good job of tracking customer spending and rewarding desired behavior through discounts, they do little to develop true loyalty. We discovered that current program models work well for most travelers, but many travelers are also open to experimenting with new models. In addition, our findings show that overall interest in travel is high, and many travelers are eager to engage with travel brands. In this report, we explore the current state of travel loyalty programs and outline three areas in which travel providers can improve customer engagement, drive greater brand advocacy and position themselves to increase profitability.


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Meet the authors

Steven Peterson

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, Global Thought Leader, IBM Institute for Business Value


Raimon Christiani

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, Global Industry Leader for Travel and Transportation

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    Originally published 14 October 2015