Nicola Arnese, Amadeus director, customer loyalty solutions, airlines, explains how carriers can use loyalty programmes to drive recovery
Continued government restrictions on travel as a result of COVID-19 are creating a highly unpredictable trading environment for airlines and travel companies.
As a result, companies across industry have been forced to continually adapt and alter their business models to try and stay one step ahead.
In particular, restrictions have created huge unpredictability and volatility in consumer demand purchasing patterns.
This poses problems for airlines who rely on consistency in historical data to effectively anticipate consumer buying habits and retail to customers.
Although these historical data patterns have been disrupted, an abundance of tools and tactics exist that can help airlines navigate this unpredictability.
Loyalty programmes are chief among them and have a critical role to play in driving the recovery by allowing airlines to adopt a more personalised, targeted, and flexible retailing strategy.
Here are three ways that airlines can use their loyalty programs to start effectively encouraging passengers to fly again.
As businesses of all sectors recover from the pandemic, customers are likely to be bombarded by a significantly higher quantity of promotional content.
Little of this content will be personalised and most offers will come via a blanket email approach.
This makes it even more essential that airlines stand out from the crowd.
Loyalty members will increasingly expect programs which are easy to use, that reward their efforts, and are accustomed to their needs and values.
So, how can an airline make these personalised offers? The answer lies in data.
With the authorised use of personal data, airlines can create a powerful loyalty program which provides members with differentiated, personalised offers with added-value benefits, not just mileage and standard offers.
This can ultimately deliver higher conversion rates and revenues.
Recent research from Bain & Company underlined the need for well-run loyalty programmes with a study that showed that loyal customers spend up to 67% more.
They also refer a higher percentage of people who are willing to purchase more products.
These estimates also claim that a 5% increase in customer retention can lead to a 95% increase in profit.
Smart Loyalty Programmes
While macro-data can help identify industry-wide patterns, loyalty programmes are uniquely positioned to help airlines delve deeper into customer behaviours and therefore identify revenue generation and revenue protection opportunities.
Such insights can help airlines retail their products more effectively, understand their customers and ultimately accelerate their recovery.
Early identification and understanding of changing consumer behaviours and priorities are needed to define and build new data-driven segmentation of customers.
These new segments can be informed by details such as organisation/company, industry, preferences, lifestyle and interests
This data can play a crucial role in creating adaptable retail strategies and dynamic promotions that reflect the rapidly shifting market conditions.
This will be key to encouraging passengers to take to the skies again as the industry continues to evolve throughout the pandemic.
Beyond simple ‘earn-and-burn’ recognition, we can see smart loyalty programmes driving higher engagement by providing more spend options, new rewards, targeted offers, and more opportunities for members.
The introduction of further spending options on air and non-air products and services will increase loyalty programs’ value for airlines, while rewards and offers will also offer loyalty members the chance to use their miles on more desirable flights.
The more frequently members can see the added value of an airline’s loyalty currency, the better optimised loyalty programs will become and the more members it will attract.
As several airlines recently launched bonus campaigns to incentivise the purchase of miles, we have seen that certain customers and members will use cash to acquire them.
This ultimately improves airline redemption offers and drives additional advocacy and customer engagement, while leading to renewed operational and marketing revenues.
Encouraging passengers to fly is a difficult task for airlines in the current climate.
Loyalty programmes therefore offer airlines the opportunity to increase revenues, increase customer retention and ultimately deliver a better service for loyalty members.
The industry faces its biggest challenge yet, but this crisis also offers airlines an opportunity to rethink this element of the business and use it as a key tool to drive revenues and recovery.