What is the purpose of a loyalty program? The simple answer depends on the brand or company implementing it. For some, the main goal is customer retention. For other companies, it will be about recognizing and rewarding high-value customers. Still, other companies may see their loyalty programs as a mechanism to drive revenue growth.
However, overall, the goals that every brand has for their loyalty initiatives are likely to evolve over time. This is one of the key trends we identified in our 2024 Travel Loyalty Outlook report. This means the loyalty goal is shifting and moving towards increasing customer lifetime value (CLV).
How can brands best leverage their loyalty programs to achieve their goals? What are the challenges that can prevent loyalty strategies from maximizing CLV? And what are those challenges? What technology can help overcome this?
Evolving loyalty goals
First, let's examine the factors behind the shift in brand loyalty priorities. Our survey of over 100 loyalty professionals in the US found that 29% of brands now believe increasing CLV is the most important goal of their loyalty strategy, compared to 16% in 2021. It was found that there has been an increase since. A 2021 study conducted during the year of the pandemic found: Loyalty provider's main objective was to attract new members. Given the immediate uncertainty surrounding travel-related businesses, brands naturally focused on growing and retaining their customer base to stay afloat.
As that uncertainty fades, brand priorities will shift to longer-term (and profitability-related ) I have moved on to my goals. The brand's tactical goals for next year's loyalty program also reflect its strategic goal of increasing customer lifetime value through increased engagement.
Looking to the future, our research shows that you can: Incentivize existing members to move up in the tiers, increase total spend through loyalty programs, and introduce new benefits and redemption options. The top three loyalty program objectives all demonstrate a results-oriented loyalty orientation.
Challenges brands face in achieving loyalty goals
Of course, achieving these results is not guaranteed, and brands' self-reported challenges represent a major hurdle in the race to maximize CLV. For example, the top loyalty program-related challenge cited by survey respondents was maintaining appropriate customer service levels (26%), followed closely by demonstrating the value of benefits to program members (20%). Ta.
If brands cannot rely on loyalty programs to convey value to their members and support them when they need it, it will be difficult to retain customers long enough to increase their lifetime value to the brand. Become.
Brands also struggle to align loyalty program features with customer expectations. Our research shows that 21% of consumers in travel rewards loyalty programs are frustrated by the difficult or complicated process for earning and redeeming points and miles; Only 14% of brands find this frustrating. Fortunately, loyalty program technology focused on travel rewards and booking features can help close this expectation gap.
Where does travel fit in?
Travel has long been an effective reward in loyalty program portfolios. That's why most programs (95%) offer them in some form. Our survey data also shows that American consumers are looking for different ways to reduce travel costs. This includes lowering the total cost of travel by redeeming points (46%), booking discounted travel through the program's booking portal (31%), and securing travel agent discounts using membership. Yes (29%).
This makes travel rewards an essential tool for delivering value to members and increasing CLV for your brand through more frequent and consistent loyalty program engagement.
Loyalty technology designed to drive CLV
However, not all travel benefits are designed and deployed equally. For travel loyalty programs to drive engagement and maximize CLV, they must leverage flexible loyalty currencies, employ effective marketing strategies, and maintain high-quality customer service.
A flexible loyalty currency allows programs to change the value of points, consolidate new savings, and accumulate bonus points and miles from margins earned on other travel products. Loyalty programs can take advantage of this flexibility to reward or incentivize members for desired actions, such as reaching higher membership tiers. Full-service marketing capabilities allow loyalty programs to more effectively communicate their value to members and eliminate mismatched expectations. And quality customer service is the key to keeping your members interested for years to come.
Note that when it comes to customer lifetime value, “years to come” is the appropriate phrase. Brands can only maximize this important metric by focusing on long-term customer satisfaction and affinity. Loyalty programs with an attractive portfolio of travel benefits have the flexibility to engage and reward members in a variety of ways, and offer superior customer support, which is a key tool for maximizing CLV. Masu. To truly optimize your loyalty strategy, brands simply need to identify the right travel loyalty partners to help them achieve their most important goals.
The opinions expressed by SmartBrief contributors are their own.
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