How can airline loyalty programs create truly loyal customer advocates who boost profits?

In Airlines by Paul GilbertsonLeave a Comment

Create highly personalized offerings for a wide range of travelers, leveraging customer insights and new cognitive technologies

For decades, loyalty programs have been a source of great strength for airlines. These programs have enabled airlines to gain a larger share of wallet from the passengers who use them, and introduce a level of service differentiation to frequent fliers by providing access to specialized products and services.

However, historical success has not insulated travel loyalty programs from the constant need to innovate. Too often, the programs are viewed by customers simply as a means to obtain discounts and can exacerbate price-based competition, while doing little to foster deeper, more meaningful customer-to-airline brand advocacy.

To gain true customer loyalty, airline loyalty programs must reward travelers for more profitable decisions, incentivize a broader set of interactions between travelers and airlines, and implement a diverse set of loyalty personalization opportunities.

The IBM Institute for Business Value Travel Loyalty series outlines a clear vision for how airlines can get more from their loyalty programs by making them dramatically more engaging, cognitive, and collaborative.

The conclusions and recommendations contained in each of the reports in this three-part series are based on a survey of 3,833 global travelers. Here is a brief summary of each of the three Travel Loyalty reports:

  1. Discount discontents: Travel loyalty programs are working fairly well for most travelers, but that is mostly because the incentives and rewards travelers get from these programs are so valuable. For most travelers, loyalty program participation does not deepen the connection to travel brands, so our most important suggestion in this report includes specific mechanisms through which travel providers can more intimately engage with travelers
  2. Cognitive connections: Travel providers who either have engaging loyalty programs today or are following the recommendations we set forward in discount discontents will accumulate loads of data on customer preferences and patterns. Cognitive systems can convert this raw data into actionable insight, which travel providers should make available to each and every customer touchpoint. This will form the basis of step-change improvements in traveler personalization.
  3. Loyalty’s legacy: Once travel companies can deliver insights about each customer to their full set of customer touchpoints, travel loyalty will be well positioned to consider extending these insights beyond the enterprise and into the broader travel ecosystem. These exciting possibilities put travel loyalty at the center of a transforming airline business model, and might well compel some airlines to play a more active role in regional and global loyalty coalitions.

To read on about how reimaging airline loyalty programs can help airlines form meaningful, insight-driven, and lucrative relationships with travelers, download the reports from the IBM Institute for Business Value Travel Loyalty series.

Visit us at ibm.com/travel

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