Industry Insights: 4 Questions with IAG Loyalty

This edition of “Industry Insights” features an interview with Rob McDonald, chief commercial officer at IAG Loyalty.

According to McDonald, the demand for loyalty programs is at an all-time high. The industry faces the dual challenge of keeping reward programs relevant while innovating in response to shifting market trends. Heading into 2024, strategic partnerships and a push for broader, more flexible loyalty options can help brands cultivate stronger consumer relationships.

Here’s our conversation.

SkiftX: What are the biggest opportunities in the industry in 2024?

Rob McDonald: The demand for strong loyalty programs is higher than ever — some have called the era we’re currently in “the golden age of loyalty.” Globally, most brands now have a loyalty program, which wasn’t the case five years ago. This shift offers insights into customer behaviors and opens avenues to capture a larger portion of their overall spending.

In our own business, members are collecting and redeeming Avios, our reward currency, in record numbers. Avios collection is up by 20 percent and spending by 25 percent versus records that were last achieved in 2019. We’ve had more than 2 million members join our programs in 2023, which is unprecedented.

The pandemic accelerated consumers’ already growing understanding of loyalty. From our 2022 study into loyalty behaviors during the UK’s cost-of-living crisis, we found that 92 percent of people think loyalty programs provide extra value in these times. Additionally, 55 percent are finding new ways to collect points, and 53 percent prioritized their annual holidays over celebrating their own birthday.

The fundamentals of loyalty remain the same: Programs must be easy to use and offer rewards that make members feel special. That’s what we’re aiming for, and it resonates with our members. There’s a significant opportunity to take advantage of this in 2024 and beyond.

SkiftX: What are the biggest challenges or watch-outs?

McDonald: Staying relevant and keeping the program fresh is critical. Consumers’ needs are rapidly evolving, so we must understand what’s important to them to ensure what we offer is relevant and differentiates us from others. Once we have this understanding, it’s important to show our members that we know them and that the relationship is worth maintaining.

Another challenge is ensuring our programs are not isolated — meaning they shouldn’t be limited to use on a single carrier or in one place. For example, Avios can be used on flights, car hire, hotels, and with partner airlines — this flexibility is important. Additionally, offering more ways to redeem is essential. This involves creating easy ways to collect Avios and providing rewards with real meaning that members can use.

SkiftX: How will your brand push the industry forward in 2024?

McDonald: We’re constantly challenging ourselves to look at more and new ways to create even more value for our 40 million+ members worldwide. Our approach in this regard will not change. We’re entirely focused on our customers, giving them the best choice, making the currency even easier to earn through more partnerships and better tech, and building out the best possible rewards for them.

We’re going to keep pushing what partnerships can look like — every day, we receive inquiries from brands looking to collaborate. We’re excited about the prospects of expanding the Avios currency even further and shaping the future of loyalty.

SkiftX: What’s your secret travel hack?

McDonald: It’s not exactly a secret, but it’s a great hack nonetheless: maxing out Avios! There are many ways for customers to build their balance quickly — by shopping online with British Airways, buying with a co-brand credit card, and even boosting their Avios. These methods are incredibly easy and can quickly turn into a dream holiday or even help stock up on their favorite bottles of wine.

This content was created collaboratively by IAG Loyalty and Skift’s branded content studio, SkiftX.