In its quarterly review, global loyalty marketing firm Kobie Marketing focused on the airline, travel, and hospitality industries and examined how brands can meet challenges and drastically improve traveler perceptions through their loyalty programs.
Bram Hechtkopf, Vice President of Business Development & Marketing for Kobie Marketing, participated in a Q&A with Loyalty 360 and discussed capturing real-time customer insights, recognizing the importance of big data, and tiered loyalty.
How specifically have airlines cut costs and improved efficiency through the use of Big Data and coalition loyalty programs?
Big data accumulation and analysis helps airlines create a more granular customer picture. By knowing passenger likes and dislikes, airlines can provide tailored experiences. For example, they can cut down on waste or the unnecessary stocking of onboard items like unpopular food or drinks, correlated to the particular route, the time of day and the day of the week. Airlines must focus on a combination of behavioral (tangible rewards or highly liquid, transferable points) and emotional-based rewards (perks and status) while capturing as many customer insights as possible. The goal here is for airlines to know their customers’ preferences by analyzing those customers’ data whether it’s during the booking path, at the gate, in the cabin or as they’re interacting with the brand online. It all starts with two simple questions: What will attract more of the customers that airlines want? And once the customers are there, what will encourage them to spend more and incentivize them to keep coming back?
Can you talk a bit about tiered loyalty? How are hotels and airlines using it and has there been a resurgence in this type of segmentation?
Tiered loyalty groups passengers and guests into segments based on a variety of behaviors. These include level of brand engagement (e.g., do they travel or stay often and tell their friends and family?), typical purchases (e.g., are they booking out of business necessity or are they taking a leisure trip?) and the amount they spend (e.g., does that amount fluctuate or differ between channels?).
These groupings help airlines and hotels visualize where their customers are throughout their purchase lifecycle. The information also helps brands gauge customers’ levels of brand loyalty.
Regarding segmentation, I don’t think there’s been a resurgence within these sectors as tiered loyalty and customer segmentation tactics have been around for decades. What’s different is that big data and pooled data resources like coalition loyalty programs have helped brands segment audiences with greater precision. It used to be that airlines thought of their passengers as First, Business or Economy class customers, however, those ‘traditional’ segments are giving way to others based on more granular details about spend and brand loyalty.
What is the new type of brand loyalty gaining in popularity among hotels and why is this happening now?
Despite loyalty program engagement challenges, hotel brands have enjoyed some of the largest membership growth rates in recent years. The difference today is that guests seek rewards that somehow impact their travel experience -- be it at their hotel or in the air, creating an emotional connection with the brand. To achieve this, hotel programs must listen to what their guests are saying and deliver relevant rewards on their channel/s of choice. The old model of offering discounted or free stays only after a guest has accumulated a certain amount of points has grown stale. Simply put, guests want more and, encouragingly, hotel brands are armed with more data than ever before to give these experience-eager guests what they want, when they want it.
Where are you seeing the missed opportunities for airlines and hotels in the loyalty arena?
For all the attention we give the benefits of big data accumulation, analysis and action, the latest studies suggest airlines and hotels can still do a better job attracting, engaging, and retaining guests. A recent Club Carlson report found that it takes guests up to three hotel stays before they develop a measure of brand loyalty. For leisure travelers, that means loyalty to a hotel brand may take years to develop. I see this shift in loyalty as a response to some of the recent changes in hotels’ programs – for instance, cutbacks on the types of perks offered to guests or alterations to programs’ points structures, making it more difficult for members to achieve meaningful status or redeem rewards. Likewise, airlines have faced nearly-identical challenges.