Transactional loyalty schemes risk ‘losing emotion’, sector hears

Transactional and revenue-based loyalty schemes are no longer “engaging consumers emotionally”, delegates heard at Aspire’s Leaders of Luxury conference.

 

Delivering a session focused on how airlines, hotels and travel brands can successfully foster loyalty among their clients, Nicky Kelvin, senior director at The Points Guy, said: “Loyalty used to feel more about recognition and now it feels like a company’s trying to score you.

“The rewards you’re given are so closely based on what you’re spending, rather than the decisions you’re making.”

 

Kelvin acknowledged the benefits of revenue-based loyalty programmes for companies, including transparency for finance teams, the ability to track customer spend and rewarding high-value customers.

 

However, he argued that the positives were “business-sided” and brands were “losing emotion”.

 

He said: “The risk is that customers are left feeling like they’ve transacted with you and they’re just being rewarded for spending cash, rather than because they chose you.”

 

Kelvin emphasised that when a customer recognises that loyalty is purely transactional, they’re attachment and affection towards a brand changes.

 

He said: “There’s a theory to say that people who are high spenders are just hitting what they need and then looking elsewhere. If you’re not feeling emotional attachment as a customer, you’re just going to transact too.

 

“There’s that feeling of wanting to post [online] about stuff, book more and do more [with a brand], but all of these things start to reduce when it becomes transactional.”

 

To bring emotion into loyalty schemes, therefore making them more successful, Kelvin argued that brands must use personalisation.

 

However, he warned that “delivering something you think is personal, but doing it in a perfunctory manner, actually ends up being a negative”, such as “generic” notes or welcome gifts in hotel rooms.

 

To support this, Kelvin cited a Deloitte study which found that brands claim 61% of additional experiences they’re giving to their clients are personalised, yet just 43% of those customers recognise them as such.

 

Further research by Gartner found that when customers experienced great personalisation, they were 1.8 times more likely to pay a premium.

 

Meanwhile, the study showed that if brands delivered something that didn’t feel truly personalised, whereby it’s excessive or poorly executed, guests were twice as likely to feel overwhelmed.

 

Kelvin said: “It’s not difficult to find out what people like and ask questions ahead of time. You have lots of data on your customers, but you have to be incredibly delicate in the way you use it.”

 

He emphasised that the gesture “doesn’t have to difficult or expensive” but rather make the customer “feel something”.

 

Looking ahead, Kelvin advised travel brands to “keep those rewards that customers value, but try and make it less transactional”, to reduce the maths involved in customers calculating their rewards and to measure “remembered experiences” by asking “who mentioned that thing at the end of their stay? What are they posting about on social media?”

 

He concluded: “Look at the data that’s around you and focus in more on the actions that are really resonating.”