June 19, 2024

Written by Matthew Biboud-Lubeck, Vice President EMEA, Amperity

The digital world has permanently changed the relationship between travel brands and their customers. Travellers are providing brands with more and more data in exchange for unique, personalised experiences. Yet despite this, the traditional loyalty program model appears to be failing to meet the demands of the next generation of travellers.

As McKinsey points out, reaching the top tier of a loyalty program, traditionally, was a facet of many travellers’ personal identities. Now, many loyalty program members now seem more inclined to play the field. According to its 2023 survey on travel loyalty, younger generations are more likely to consider and transact with multiple travel players. Gen Zers and millennials consider about 1.7 times as many brands as do baby boomers and the Silent Generation and transact with about 1.3 times as many brands.

Faced with fierce competition and a rapidly changing landscape, travel brands must innovate and win back their customers’ allegiances – or risk getting left behind at the terminal.

 

The game is changing for travel loyalty

For many travellers today, loyalty means much more than having a membership number or collecting points. To reap the most benefits from a loyalty program, members often feel obligated to commit to one brand. The reality of their lives and personal preferences are often very different.

Going all in with a brand makes sense for a traditional road warrior or a family whose primary vacation preference is going to Disneyland Paris four times a year. But those types of behaviours are increasingly becoming outliers. A majority of travellers want something different – different experiences for different travel occasions with different travel companions in different types of destinations.

Consumers’ expectations for loyalty are changing in a number of ways. They now expect brands to streamline reward interactions, allowing them to earn and redeem rewards quickly and easily, while also offering a variety of reward options to choose from – not to mention exclusive, differentiated benefits in exchange for their spending.

 

Loyalty that takes flight

For a peek into the balance travel brands are trying to strike, look no further than the recent updates to airline loyalty programs. These changes intend to recalibrate rewards so that elite members will feel truly special. But the flipside of that choice may be that lower-tier members feel devalued, and therefore, may not be as loyal to the brand.

Some experts predict that the future of loyalty might not look like an allegiance to a single brand at all. Instead, it will look more closely like a ‘choose your benefit’ or an à la carte service, offering flexibility as a perk. Loyalty members who traditionally remained loyal to one carrier in efforts to gain status and earn upgrades along with other perks may no longer see a reason to spend thousands of dollars to reach the “exclusive” next tier.

This seems to be the case with many younger travellers. A recent Morning Consult study found that just under half (46%) of Gen Z travellers said that it was “absolutely certain” or “very likely” they would patronise hotel brands in whose loyalty programs they were already enrolled. Moreover, 33 per cent said that they don’t trust these brands, despite being members of the programs.

These trends underscore the opportunity for travel brands to benefit by taking an open-minded approach to customer acquisition and retention. This would see them focus less on increasing loyalty membership for its own sake and more on earning travellers’ trust and winning their loyalty on a more personal level.

Loyalty programs are paying more attention to the less frequent leisure traveller, which requires staying top of mind through lifestyle marketing. Members still expect miles and points, but they also want recognition and experiences. This requires an intimate understanding of who they are.

 

Out with old and in with the AI-powered new

The old way of attempting personalisation was just “guessing” at it. Brands would make broad assumptions. For example, if guests were in one demographic, then they might like what a brand has to offer other people in that cohort. In practice today, personalisation means building a customer data strategy based on a unified, cohesive view of every traveller who comes through their purchasing funnel.

By leveraging new AI-powered technologies, travel brands will be able to create clear, holistic customer data strategies that enable them to build more direct, personal relationships with all of their customers, including those who are already in their loyalty programs and otherwise. Successful efforts to do so will lead to more bookings, additional cross-selling opportunities and higher lifetime value.

Of course, leveraging AI is relatively simple in concept but much more complex in execution. AI is only as good as the data it’s learning from. And it’s only as useful as the decision-making power that it’s given. The vast majority of consumers have accepted the fact that by virtue of being online, they are giving up personal data. The flip side is that now they expect companies to use that data to help improve their experience. The rise of AI in the public consciousness has only accelerated these preferences.

 

Travellers to brands: “Do whatever it takes to make my trip better”

Travellers no longer fear AI. They want companies to work faster and smarter to use it to the customer’s advantage. According to a 2022 survey of travellers worldwide, nearly 75 per cent said they were either “very” or “somewhat” interested in AI that would analyse their data as a means to provide more personalised offers and customer service.

Among those, approximately 30 per cent said they’re happy with whatever it takes to make their trip better. Perhaps more tellingly, about 45 per cent said they were interested, but with the caveat that they are given the opportunity to consent for its use with the explicit purpose of using that data to present better offers and advertisements or provide more personalised service.

Personalisation must be a holistic experience throughout the entire customer journey from online booking to customer service. However, the siloed nature of data and the lack of trust in its accuracy make it challenging to provide seamless personalisation at each touchpoint. Bridging these gaps requires a comprehensive understanding of the customer journey and the ability to infuse data into the personalisation process.

 

AI to replace the white-glove treatment

The introduction of AI, in general, and now generative AI, more specifically, has levelled the playing field for travel and hospitality companies. In the pre-internet days, the highest levels of service came from ultra-luxury, up-market brands that could afford to dedicate personal assistance for every individual need – the white-glove treatment, if you will.

Now, at every level of hospitality, from budget to 7-star, brands can communicate on an individual level in ways that their customers feel most comfortable. That’s not only creating better traveller satisfaction, it’s driving innovation faster across the entire industry. As our Head of Generative AI at Amperity Joyce Gordon says, “Brands with a good data foundation will be able to use generative AI and create personalised experiences that will quickly become ubiquitous, and they’ll shape customer expectations.”

She believes we’re going to see a lot of rapid innovation in the GenAI space over the next two years that is likely even faster than previous paradigm shifts we saw with internet, e-commerce and mobile adoption.

In practice, individual travellers don’t understand or experience the health of a company’s data program. They care about:

  • finding the right information at the right time as they plan their travels
  • enjoying a seamless travel experience in the moment

And they want to be appreciated by companies they’ve patronised after a stay and in between trips. By using all the data they have at their disposal, especially first-party data, brands have the opportunity to build direct relationships with a much wider base of customers.

 

“Brands can offer experiences that feel authentic if they use your first-party data,” says Gordon. “For instance, if a brand has purchased all of this third-party data and I’ve never been to their site and now suddenly they know all of these things about me, that feels creepy.

“It’s like the person you go on a date with who has stalked all of your social media. But if I’ve shared this information with you in the past – for bookings and for experiences where I know that information has been used – and if you use it well, it’s almost a relief.”

 

GenAI: Better data means better results

The conversational capabilities that GenAI enables will be an important game-changer. It’s more natural to provide preferences in a back-and-forth dialogue than checking a bunch of boxes or filling out one-way, predetermined form fields. That said, Gordon warns that the No. 1 issue holding brands back in deploying generative AI-powered agents is in fact that data foundation. A virtual agent powered by ChatGPT might seem cool, but if it doesn’t have any knowledge of the customer at the outset of a conversation, it’s going to feel robotic.

“Better data means better results in the world of generative AI,” Gordon says. “If you’re in a conversation with a chatbot, it’s actually more frustrating if it feels like you’re talking to a human, but it doesn’t have any of the personalisation that a real travel agent would be able to provide.”

In addition to customer service chatbots, which are the most common uses of generative AI today, below are several ways that generative AI will support the travel experience of the future.

 

5 Ways GenAI Will Support Future Travel Experiences

  1. Personalised booking: Given a generative AI-powered chatbot assistant vs. an open-ended search bar or filtering tool, travellers can react conversationally to suggestions, feeding more data back to the booking engine to create better and more specific recommendations.
  2. Ancillary offerings: Suggest the right add-ons based on real-time interactions and past preferences. Travelling by yourself? Here’s a deal including a massage. Going with your three kids? Pre-purchase those flight snacks.
  3. Automated creative generation: Of all the possible images and descriptive information a brand has on file, generative AI can respond to interactions with the user and serve up the options which will resonate best.
  4. Customer insights and recommendations: Understand patterns of actions customers typically take and give real-time recommendations for when customers want to redeem loyalty points, upgrade, etc.
  5. Simplified technology: The modes of how brands ask questions of their data itself will radically change, becoming more natural language-driven vs. code-based.

 

The future of travel is here and it’s personalised

Whether or not they admit it – or fully understand what’s happening – travellers are craving personalised, curated information at every turn. In the world of predictive search, social media feed algorithms, e-commerce recommendation engines and now GenAI, the bar has been set extremely high for travel companies to step up and provide similar levels of service to meet the demands of their customers.

The good news for travel brands is that their customers are already willingly sharing detailed information about themselves. No matter how much a person regularly shops at a pet food store, they’re not offering up intimate information about their day-to-day lives from work to family to individual wants and needs in the same way they will to enjoy a travel experience.

With the tools available to aggregate and activate traveller information into a CDP (customer data platform), travel brands can create truly personalised relationships with their customers today. Getting started is easier than it seems. Because there’s so much data out there, there’s a temptation to think big and try to boil the ocean. By starting with what they have, travel companies will realise they have a lot to work with.

 

They can use customer data to make better business decisions, such as:

  • Optimising their pricing strategies
  • Developing new products and services
  • Targeting their marketing campaigns more effectively

 

This can lead to increased revenue and profitability.

The most exciting part of building a strong customer data strategy today is its potential for tomorrow. The physical and digital worlds are continuing to blur, and the ability to connect data intake and analysis to reflect this reality will give travel brands a significant advantage in their ability to serve their customers of the future.

 

Optimise your customer data initiatives to achieve the goals below:

  • Build out first-party data collection. Expanding privacy restrictions are making it harder to use data provided by third parties, which comprise a majority of the customer data travel brands have today. Brands that evolve their data strategies and focus on first-party data will have a huge opportunity to provide better service using information they’ve received directly from the customer.
  • Reach beyond loyalty members. Combining data from loyalty programs with other sources helps to better understand each customer, effectively repositioning “loyalty” around the person instead of the program. By targeting customers with the greatest potential value – in the moment and over a lifetime, regardless of status – brands can start to formulate a more accurate foundation for their customer data and personalisation strategies.
  • Build a unified view of the traveller. Brands now have the ability to utilise platform technology that breaks down silos and collates data together into a unified view of each customer, which will enable them to develop detailed customer profiles and support personalisation efforts.
  • Drive personalisation to every customer touchpoint. There is a huge opportunity to use customer data to customise experiences for travellers throughout their journeys – and today’s consumers are clamouring for this. The next frontier will be using AI to learn what customers want and need without asking.

About the author

Matthew Biboud-Lubeck, Vice President EMEA, Amperity

Matthew is the vice president of EMEA where he is responsible for the commercial expansion of Amperity, a leading customer data platform trusted by brands like Reckitt, Under Armour and Wyndham Hotels & Resorts. Lubeck joined Amperity in 2017 to help launch the company and has served in a number of key roles building sales, customer success, and marketing functions. Matthew established Amperity’s LGBTQ employee resource group (ERG) and is a trusted advisor and customer-centricity change agent to the C-suite across leading consumer brands.

Prior to Amperity, Lubeck spent 10 years with global beauty conglomerates Estee Lauder Group and L’Oréal as Group Head of Customer Data Strategy and Analytics, leading 30 brands across luxury, mass and salon professional divisions to better use data & unlock incredible beauty experiences, establishing L’Oreal as an industry leader. He resides in London with his husband and young daughter.

 

About Amperity

Amperity delivers the data confidence brands need to unlock growth by truly knowing their customers. With Amperity, brands can build a first-party data foundation to fuel customer acquisition and retention, personalise experiences that build loyalty, and manage privacy compliance. Using patented AI and ML methods, Amperity stitches together all customer interactions to build a unified view that seamlessly connects to marketing and technology tools. More than 400 brands worldwide rely on Amperity to turn data into business value, including Alaska Airlines, DICK’S Sporting Goods, Endeavour Drinks, Planet Fitness, Seattle Sounders FC, Under Armour and Wyndham Hotels & Resorts. For more information, visit amperity.com or follow us on Linkedin, X, Facebook and Instagram.