While many other US consumer trends are in flux amid higher prices and economic uncertainty, travel demand has remained strong. And according to industry experts, the travel boom shows no signs of slowing down this year.
This presents an opportunity for consumer-facing businesses with loyalty programs. Americans are prioritizing travel, so it makes sense to incorporate travel rewards into the loyalty program framework. At a time when price is a greater consideration for many travelers, the ability to redeem loyalty points toward travel products and services is sure to find a receptive audience.
Unfortunately, though, many businesses aren't seizing this opportunity. According to our recent research report,
Booking, Personalization, Sustainability, and Payments: The Tipping Point for Travel Loyalty in 2023, only 32% of companies with loyalty programs offer travel rewards as part of their earning and redemption options. Compare that to the 43% of consumers who say that saving money on travel is what they value most in their loyalty programs, and a significant expectation gap becomes immediately apparent.
Missing the boat on travel booking
That isn’t the only divergence between consumer priorities and what loyalty programs offer. Even when loyalty programs do provide travel options, they often overestimate how willing members are to book directly through their platforms. Sixty-three percent of the loyalty program professionals we surveyed said that their programs are members' first choice when booking travel, but only 51% of consumers said the same.
This disconnect is at least partly attributable to the fact that 72% of companies believe their travel booking technology is in line with competitors (or even better), but 84% of consumers say they’re extremely frustrated when booking travel within their loyalty program. A frustrating booking experience will inevitably lead to fewer conversions, which results in lost or missed revenue for the loyalty program and the company that runs it.
Making investments that can have an impact
Most of the companies we surveyed cited increasing membership (59%) and boosting engagement (59%) as their top goals for their loyalty programs going into 2023. So why are relatively few companies offering the kinds of rewards that can attract new members (travel rewards) or improving the processes that can keep members interacting and spending within the loyalty platform (booking capabilities)?
The answer may be in how companies allocate their loyalty technology investment priorities.
Overall, there needs to be a much greater alignment between what makes a difference to members and where loyalty tech dollars are being spent. For example, consumers are more than twice as likely to book travel through their loyalty program based on access to payment options like buy-now-pay-later (BNPL), but only 31% of brands plan to invest in BNPL over the next 6-12 months. Nearly a quarter – 21% - of companies don’t know what or when they’ll invest in upgrading their programs or payment capabilities. If companies hope to meet consumer expectations and take advantage of Americans’ persistent travel appetite, these mismatches must be eliminated.
The ongoing travel boom presents a big opportunity for loyalty programs. To make the most of it, companies need to find a technology partner that can offer the travel options and value consumers demand and expect and deliver the quality of loyalty program experiences that will keep them engaged and coming back for more program interactions.
For more information about how consumers perceive travel loyalty and how loyalty programs are meeting (or not meeting) those expectations, download our latest report here:
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