Formation.ai’s new report, Brand Loyalty 2020: The Need for Hyper-Individualization, shows that brands aren’t doing enough to help build loyalty with their consumers. The report also states the need for hyper-individualization.
Christian Selchau-Hansen, founder and CEO of Formation.ai, unpacks the importance of brand loyalty for the travel and tourism agency in a Q&A with TravelPulse.
TravelPulse (TP): Why are loyalty programs so important for brands, especially travel and tourism brands?
Christian Selchau-Hansen (CSH): Our recent study found that 73 percent of consumers are more likely to engage with a brand that offers a loyalty program over one that doesn’t. In an era of uncertainty for the travel and tourism industry, engagement is crucial to customer retention long-term. Loyalty programs are often thought of as simply a way to increase purchase frequency, but there are numerous opportunities to leverage loyalty programs to activate and reinforce experiences that improve a customer’s view of the brand and help meet business objectives.
After the pandemic travel lag, hotels are looking to fill rooms and encourage repeat visits, while a majority of customers are looking for a safe and comfortable stay. Hotels can offer guest points or rewards to customers who fill out a pre- and post-stay survey regarding the cleanliness of their room and overall experience, reinforcing to the customer the commitment to safety while motivating the guest to make a repeat visit. This win-win offer addresses both operational challenges and customer motivations, and is only possible through a robust loyalty program.
TP: Formation.ai’s new report, Brand Loyalty 2020: The Need for Hyper-Individualization, shows 79 percent of consumers agree that personalization drives brand loyalty. What kinds of tactics could travel and tourism companies be doing in order to help grow consumer loyalty?
CSH: Our report also found that 77 percent of consumers don’t think brands are doing enough to earn their loyalty. The gap is in relevance as the majority of personalization efforts are not achieving the level of relevance that consumers require. This gap means there’s a significant opportunity for travel and tourism companies to invest in hyper-personalization and that those investments will create more engagement and thus, more loyalty.
From there, brands can encourage valuable long-term customer engagement by rewarding key behaviors, like prepaying checked baggage or signing up for pre-board notifications. The rewards should also be personalized, so that the more a customer interacts with the brand, the more they benefit, leading to repeated engagement. Customers are more likely to become loyal to a brand if its offers are relevant and valuable. Blanket coupons are often dismissed by shoppers, so brands should personalize offers and rewards to inspire customers to return and continue to engage.
TP: What is hyper-individualization and how can it be useful to the brand and the consumer?
CSH: Most brands utilize personalization in some shape or form. Companies can easily put a user’s name into an email or recommend a product by referencing past purchases — “I know you traveled to Florida, so I’m going to show you more flights to Florida.” But this kind of personalization is just the tip of the iceberg when it comes to adding real relevance. Hyper-personalization moves beyond basic segmentation models to enhance messaging and offers on an individual level.
For example, take two customers in a hotel loyalty program. One customer used to travel on a weekly basis for their job, but hasn’t searched for a room since the pandemic began. Meanwhile, another customer, though entry-level, is actively searching for room availability. This likely indicates that the second customer is eager to start traveling, while the first has not yet reached that point. Rather than making a broad assumption about these two guests based on the historical segment they fall into, hyper-personalization empowers companies to recognize how different customers engage with offers and incorporate data reflecting local markets, regulations, and timing. Through 1:1 personalization at scale, brands can create relevant offers that recognize each customer’s unique motivations to strengthen and deepen the customer relationship.
TP: What features of a loyalty program are most attractive to a consumer? In other words, what are the main features that draw consumers to join loyalty programs?
CSH: Loyalty programs in travel have always been about providing value for a deeper level of engagement. The challenge right now is that even travel enthusiasts may hesitate to hop on a plane or stay in a hotel. Consumers are weighing their travel decisions based on a variety of new factors, from government travel rules to safety and health concerns to financial changes. The brands that recognize these changes in customer motivations and offer relevant changes in value to customers will be successful in re-engaging customers when they are ready.
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