If you travel for work often, you’re likely a member of a number of loyalty programs run by industry brands. If so, you may have noticed changes to some popular loyalty programs in recent times. First, Qantas overhauled their Frequent Flyer program in 2019 to introduce less fees for international reward flights and more seat availability for members, in the biggest overhaul to the airline’s loyalty program in 32 years. And we recently saw AccorHotels become ALL – Accor Live Limitless, with the loyalty program expanding to include Mantra hotels and a significant selection of complimentary partners where members can accumulate and use their points.
It’s a natural process for products and services to evolve over time, however with such significant changes to long-standing and popular loyalty programs, we asked: what’s driving this change? And what can we expect to see in the future? We spoke to John Baty, Product Leader for Corporate Traveller Australia, and two industry heavyweights – Accor and Hertz – for their insights into the changing face of loyalty programs.
The changing customer experience
There are a couple of key drivers behind recent changes, according to John: “There have been a few changes to some of the programs, which all seem to be driven by greater customer engagement and perception of their program.”
This focus is reflected across the industry, with Eoin MacNeill, Vice President Hertz APAC, saying that the customer experience is the main driver behind changes to loyalty programs.
“In 2020, loyalty programs will be driven by activities that improve customer experience. No longer can loyalty programs rely simply on providing points in exchange for service; value has to go beyond this. Through understanding what is important to customers, businesses can improve the customers' experience, adding benefits where it matters to them most,” says Eoin.
It’s a sentiment that’s echoed by Accor Asia Pacific’s Vice President, Henrik Berglind, who says that the battle for direct customers has intensified and they’re facing tough competition, with a lot of new players entering their field and disrupting the market. At the same time, guests are becoming more demanding.
“Our guests want simplicity, immediacy of rewards, more personalisation and they want more than just a hotel – they are seeking experiences and emotions. A large part of looking after our members is ensuring that we understand their preferences and that we can address these,” says Henrik.
As businesses know, it’s more cost effective to retain a customer than it is attract a new one. And this concept is behind the resources put into improving loyalty programs.
“We know that most loyal members stay more often, spend more when they stay and cost us less in distribution fees. Ultimately, we also know that hotels with better loyalty performance have higher returns so it makes sense to deliver the best-in-class loyalty program to drive better margins for our owners,” says Henrik.
The growing focus on member experiences is something that John has seen as well, particularly in hotel loyalty programs.
“Long gone are loyalty programs that just offer room night redemptions and now aim to engage their members; not just the reward room nights, but also experiences and tickets to events, depending on what the member values the most,” says John.
Building lasting relationships
Loyalty programs have gone beyond quick points and entered the world of long-term relationships, with both their customers and with partners, to deliver a superior program.
“Hotels are working more closely with their program partners to be able to offer more options for rewards, to really increase their value to each member. The value of a member being able to use their points on what they need, enjoy doing or experiencing, is reflected in how many of the hotel programs are starting to put their members at the centre of what they offer,” says John.
Accor’s aim is to anchor their ALL program in the daily lives of their members, through partnerships with airlines, car rental, ride share platforms, ground transportation, ticketing, payment, retail, food delivery, local activities and more.
“It means we can be in our customers’ lives more regularly – not just when they travel, but whenever they leave home and that we can build a stronger relationship with our members that is not just transactional, but emotional. Every time our members leave their house - whether to explore the world, attend a sporting event, to eat, drink, or be entertained – we want to be there beside them,” says Henrik.
The chain is providing a range of experiences on a regular basis to their member base to increase the touchpoints they have with their members, even when they’re not staying at one of their hotels.
“We are also increasingly looking at new partners based on our members’ passions – they have told us they love sport, music and dining so we are focused on these three pillars initially but we also have more than 34 transportation partners, with more to come so that members can transfer points to their frequent flyer program, redeem points for ride-share services or car rentals and more,” says Henrik.
Improving services and offerings for loyal customers
Recognising customer pain points and improving the service level and offerings is another way that loyalty programs are improving. In mid-2019, Qantas announced they would increase the availability of Classic Flight Rewards seats available for people to book using points, in response to a common perception that finding frequent flyer redemption seats was quite difficult.
“This is quite a big move, aiming for better engagement from loyal frequent flyers, who were often frustrated when they were unable to find any availability to redeem such seats. The airline is aiming to create more stickiness with individuals, and when it's the individual that receives a better outcome, it's a win-win for both parties,” says John.
Another win for loyal customers is when systems are streamlined to improve their experience. One of the ways that Hertz demonstrates their understanding of customer experience is through their free to join loyalty program, Hertz Gold Plus Rewards, providing members with a complimentary customised service.
“Our members receive pre-prepared paperwork at all participating worldwide locations and the most efficient car rental experience possible. These benefits are apparent, with the ability to bypass the counter at over 50 of the world’s busiest locations, where customers are only required to present their driver’s license to exit. We understand our customers are busy, either travelling for business or keen to make the most of their leisure time, which highlights the value of this timesaver,” says Eoin.
Hertz also incorporates technology to make vehicle collection even more efficient for Gold Plus Rewards members, with a number of locations trialling Hertz Express, allowing customers to access vehicles via a PIN pad on the windscreen.
“Before the start of their booking, customers are sent a text message with the relevant PIN code and information regarding where the vehicle is parked, allowing them to drive away with ease,” says Eoin.
Are loyalty points still important?
Status remains important to business travellers, so loyalty programs that enable them to accumulate points and credits and climb the status ladder will always have a place. However with programs focusing on experience and service, where will points come into the loyalty program equation?
“It is important that loyal customers are recognised and rewarded for their regular and continued business. This is one of the reasons why Hertz Gold Plus Rewards allows its customers with a higher status to earn even more points when they rent,” says Eoin.
When Gold Plus Rewards Five Star® status is achieved, 25% bonus points are awarded on all rentals and 50% bonus points for President’s Circle® members. Other exclusive Gold Plus Reward benefits include access to designated parking bays and exclusive offers and savings on each rental.
For Accor, making their program more attractive for their most loyal guests has included the introduction of new levels of attainment – Diamond and Limitless – and providing enriched benefits for their highest-spending guests, such as suite night upgrades, spa and dining awards.
“These two new status levels give our most premium members better recognition and rewards and increase their satisfaction levels. With ALL – Accor Live Limitless – our members can benefit from the widest range of hotel brands in a single loyalty program, from luxury to economy and the most extensive range of benefits,” says Henrik.
Changing with the times
With the instant access and variety of options that consumers have today, it’s only a matter of time before all loyalty programs turn to focus more on the customer’s wants and experiences. But don’t worry, your points and status aren’t going anywhere.