LOYALTY SCHEMES
The cost of loyalty
Love ’em or hate ’em, you can’t ignore loyalty schemes – the Marmite of managed travel…
By NICK EASEN
scoring executives to book with them and one are of the underlying reasons for non- compliant spending. That C-suite executive with her head in
L
her hands, looking distraught on a Monday morning? Well, that’s because she’s just read the email that says the company has struck a deal with Virgin and Marriott. All the points she’s accrued over the years have been with British Airways and Hilton. “The loyalty frenzy particularly comes
at the high-end, especially with frequent travellers who have gold status,” says Adam Knights, managing director of ATPI UK. “If you take your righteous hat off, you can ac- tually understand it.” For people who travel all the time, the consistency, ease and better treatment that comes with high-tier status can be a big bonus, he explains. “Of course, taking your family to Antigua business class on your points also helps,” he adds.
OWNING THE CUSTOMER What doesn’t help is that we’re living in age where corporates from travel to retail, food to clothing have all upped their game when it comes to customer retention, engagement
BUYINGBUSINESSTRAVEL.COM
OYALTY SCHEMES ARE A PIVOTAL WEAPON in the travel supplier’s armoury. They are used to encourage point-
and personalisation. “It’s all about owning the customer and their experience,” says Hugh Fletcher, global head of innovation at ecommerce consultancy Salmon. “If you own the interface, you own the customer. If you own the customer, you own the data – and if you own the data, you own the future.” Loyalty schemes in the managed travel business are divisive. The Institute of Travel Management (ITM) annual member survey found a fairly equal split between positive and negative attitudes to loyalty schemes, while more than 76 per cent of buyers felt loyalty schemes mainly – or exclusively – benefit the traveller, rather than the company (see chart, p116). “Let’s face it, loyalty programmes are here to stay,” says ITM chief executive Scott Davies. “They are an essential part of the traveller experience and should be supported, as long as they do not cause disruption to the travel policy or negatively impact a travel programme.” Schemes can improve traveller pro- ductivity or reduce direct company costs: perks, such as lounge access or upgrades, are welcomed by all in the age of slimmed-down travel budgets. “In my experience, most corporates
tolerate the traveller benefiting from loyalty points,” says Ken McLeod, director for industry affairs at Advantage Travel Partnership. “Many travellers have to put
up with delays, late nights, staying away from home and family, so these perks in the main are minimal set against a travellers’ comfort on business.”
EYES ON THE PRIZES The biggest bugbear for managers is that loyalty programmes can lead to executives booking higher priced air tickets and room nights. The fact is the cheap seats don’t cut it when it comes to points – and more points mean more prizes. “This can lead to travellers gaming the
system whereby they book late to ensure they end up with the last seats at the higher prices and more points. Believe me, this does happen,” says Knights. “I believe this is akin to fiddling your expenses; you are actively doing something to cheat your company. It’s as serious as that.” Companies can end up wasting thou-
sands of pounds a year through loyalty-based bookings. These can also undermine a travel buyer’s efforts to optimise budgets and ne- gotiations with suppliers. There are tools out there now to measure advance booking patterns right down at the traveller level so rogue behaviour can be easily spotted and controlled, but managers must be aware of it and manage it accordingly. “For the most part, loyalty programmes operate in an antiquated way. They are
BBT January/February 2018 115
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