If you’re in charge of your company’s loyalty program, your role has never been more important. As consumers continue to grapple with inflation, a new report from IAG Loyalty shows how programs can be the pathway to more meaningful customer relationships.
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Ask anyone about their biggest concerns right now, and money will likely be part of the conversation. Global consumer confidence has improved throughout the first quarter of 2023, but higher energy and grocery costs are still creating some big challenges for households around the world. However, the ongoing economic challenge for consumers creates an opportunity for travel companies to create more powerful relationships with their customers through their loyalty program offerings.
To offer a deeper understanding of what the current consumer mindset means for marketing and loyalty leaders in the travel industry, IAG Loyalty has released a new thought leadership paper, “Getting to the Point of Loyalty in a Cost-of-Living Crisis.”
“Loyalty has always been a critical lever when fueling business results for the travel industry, and the findings from our research make it clear that programs are more important than ever before,” Rob McDonald, chief commercial officer at IAG Loyalty, told Skift. “Customers are looking to see how they can make their money go further in ways that matter most to them, and loyalty programs are a clear way of doing exactly that.”
The company’s research shows that 92 percent of consumers are finding extra value in loyalty programs as they try to deal with a higher cost of living. This report offers key insights that can help your business deliver that value for your customers through a successful loyalty strategy:
Understanding the Importance of an Emotional Connection
Eighty percent of the research participants identified as rational decision-makers, while the remaining 20 percent consider themselves to be emotional decision-makers. For example, a rational decision-maker might take a more professional approach to redemption opportunities, identifying specific flights or upgrades that maximize the value of their points. An emotional decision-maker might cash in all their points for a big family holiday, choosing the reward that matters the most for them over the best rate available. However, it’s important to recognize that there is no clear line between being rational and emotional.
“We are not always ‘rational’ or always ‘emotional’,” Dr. Zac Posada-Baynham, a behavioral scientist involved in the research, said. “Instead, when we treat ourselves or our loved ones, we recognize that as an inherently emotional decision. Put simply, we go on holiday to make fun, not to make sense.”
Analyzing Differences by Age
The emotional versus rational discussion varies significantly when it comes to age. While older consumers tend to bucket themselves in the rational decision-making category, a higher number of younger consumers readily admit that their purchasing behaviors are emotional. For travel brands, that spells promising news to build meaningful relationships with the next generation. Since many of them have missed out on traveling due to the pandemic, they are worried about missing out on their prime years to discover the world.
Travel Is a Top Priority — Even When Money Is Tight
Would you rather cut the cord on your favorite streaming service that you use every evening or cancel that four-day trip to Spain? According to IAG Loyalty’s research, most consumers would turn off the screen and board the plane instead. Going on annual holidays was more important than birthdays, streaming services, and live entertainment.
Silvia Espinosa de los Monteros, chief customer officer at IAG Loyalty explained, “People have had three very tough years, so they value their holidays more than ever. This is a behavior trend that is here to stay and something loyalty programs can really help with.”
In this report, you’ll also find:
- How loyalty preferences differ by region and gender
- How consumer behavior changes when points are gifted versus saved
- Why it’s important to connect loyalty with charitable giving opportunities
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