Executive Q&A: Why Covid-19 Will Bring a Shift Toward Personalized, Experiential-Based Loyalty Programs

This sponsored content was created in collaboration with a Skift partner.

The Covid-19 pandemic has taught the travel industry a number of lessons about what’s been working and what hasn’t been working when it comes to how the sector traditionally operates. For example, it has exposed the fact that travel and hospitality brands need to start thinking differently about loyalty programs than they have in the past. Because travelers are less likely to take trips and hit their loyalty and rewards statuses right now, the transactional-based system that has long been in place is no longer enough.

During Skift’s Online Loyalty Summit, in a session on Travel’s Loyalty Renaissance: Moving From Points to Personalization, Farhan Mohammad, global head of travel and hospitality at Salesforce, explained that this year will likely see a shift away from the activity and spend-based loyalty programs of the past toward more personalized, experiential-based loyalty programs. The brands that can evolve their programs to drive engagement with the help of actionable data are the ones that are going to come out on top and survive this pivotal moment in the industry.

Joining Mohammad during the session was Jon Glick, partner, customer experience and loyalty at PwC, and Corbitt Burns, director of Rapid Rewards at Southwest Airlines. Both Glick and Burns agreed that engagement, fueled by personalized digital interactions, is one of the most important metrics for successful loyalty programs right now, and that strong, relevant customer data is what it will take to create those moments.

SkiftX spoke to Mohammad to learn more about how travel and hospitality companies should be thinking about what loyalty means to travelers today, as well as the challenges and opportunities that the Covid-19 pandemic has brought to travel and hospitality brands when it comes to building valuable, long-term relationships.

SkiftX: How do you think the Covid-19 pandemic has impacted consumer trust and loyalty demands in the travel industry?

Farhan Mohammad: Travelers are truly putting their health and safety in the hands of travel brands right now. Understandably, they’re demanding to know if the brand can be trusted to effectively address and manage their concerns. The pandemic has proven that transparency has become the foundation for maintaining consumer trust going forward. Salesforce’ Trends in Consumer Trust study found that 95 percent of customers are more likely to be loyal to a company they trust, while 92 percent are more likely to purchase additional products and services from them.

To enable that trust, a brand’s communication needs to be timely, relevant, and tailored to the specific individual. Travelers no longer have the patience for a brand not knowing who they are or why they’re traveling, so generic emails stating a brand’s health and safety policies are no longer enough. For example, if I’m in a high-risk age group, and I’m traveling to an area that has seen an uptick in Covid-19 cases, an airline or hotel could send me a personalized message acknowledging that they know that about me, and offer me the opportunity to cancel and rebook my trip without any penalty. The brand may lose the short-term revenue in this case, but they’ll build long-term loyalty from me as a customer, which is more valuable in the end.

SkiftX: How will this affect the travel loyalty experience, both short-term and long-term?

Mohammad: For the short-term, hygiene and safety are definitely the new loyalty. Travel and hospitality companies need to be thinking like healthcare companies and put the well-being of their customers first.

When it comes to the long-term, it’s the same thing we’ve been saying for years now: travel and hospitality companies need to understand who their customers are through actionable data and proactive, targeted communication. Travelers need to be looked at as more than just a member in a loyalty tier. Instead, they should be treated based on their overall value to the company.

SkiftX: Are there any old ways of doing business that travel companies should leave behind as they prepare to regain customer trust and adapt to new loyalty demands in the new normal?

Mohammad: Coming out of this pandemic, customers are not going to travel as much as they did in the past, and they likely won’t hit the loyalty status thresholds put in front of them. This means that travel and hospitality brands need to break free of these legacy loyalty programs and find new ways to make the traveler feel that their flight or hotel stay is just as important and meaningful as it was pre-pandemic.

In the past, brands typically provided activity and spend-based rewards programs to customers. However, numerous studies have shown that these transaction-based loyalty programs do not have long-term engagement with customers. Instead, experience-based programs offer a much more significant lift in customer sentiment and satisfaction. The brands that can provide more personalized, experiential programs will come out of this challenging time much stronger.

SkiftX: How will data play a role in traveler loyalty, especially knowing the privacy concerns of some travelers?

Mohammad: Today’s travelers expect providers to anticipate their needs, proactively engage with them, and surprise and delight them — and they’re willing to share their personal information in exchange for a more bespoke, pain-free experience. Salesforce’s Consumer Trust study showed that 78 percent of customers are likely to trust companies with their data, as long as they use it to fully personalize the customer experience they provide.

Airlines, hotels, and other travel providers have access to so much data today — it’s all about knowing what to do with it to make it useful. By building out full 360-degree customer profiles, using social, mobile, geo-locations, historical booking information, customer preferences, 3rd-party data, and even household and decision-making influencers, brands can deepen their customer connections and develop true long-lasting relationships with them.

SkiftX: How can travel brands best prepare for this?

Mohammad: To best prepare, travel brands should be thinking about the five areas of traveler expectations. Firstly, traveler loyalty is dependent on the overall experience they have with a brand — and travelers won’t hesitate to switch brands if their expectations aren’t met. In fact, more than 80 percent of customers said the experience a company provides is as important as its products and services, according to Salesforce’s State of the Connected Consumer study.

The second expectation is based on real, meaningful connections. Today’s travelers are socially connected, and they want the travel and hospitality brands they interact with to be as well. This means engaging with their travelers digitally and socially on the channels of their choice, such as Facebook, Twitter, Instagram, and WeChat, as well as truly understanding the tremendous influence their passengers and guests can have. A few tweets about a bad experience from a social influencer can wreak havoc with a brand’s reputation.

Thirdly, travelers want to be understood. They expect their providers to anticipate their needs and delight them, whether they’re traveling for business or leisure, alone or with their family. They don’t just want you to know what they are going through — they want you to recognize their intent and sentiment as well.

The fourth expectation centers around hyper-personalization. Travelers want their providers to put forth intelligent, relevant communication and offers in exchange for access to their data. They’re typically happy to share their information in a trustworthy way to receive a more personalized experience in return.

Finally, travelers expect cohesive and proactive engagement across all channels. Providers no longer get to dictate how the customer contacts and connects with them. Instead, customers need to be met at their channel of choice, whether that be via email, text, or social. They also expect engagement and responses to their needs to be in real time, before they become a problem.

SkiftX: What do you think an ideal travel loyalty program should look like in 2020 and beyond?

Mohammad: In the future, the most successful loyalty programs will be hyper-personalized, contextually relevant, experiential, and intelligent. Rather than tying rewards to activity and tiers, members will be rewarded based on their lifetime customer value. Artificial intelligence will help drive profitability and brand advocacy through real-time, prescriptive promotions and offers based on factors such as location, preferences, partner rewards, and customer lifestyle. Most importantly, an ideal travel loyalty program will be a connected experience that’s integrated into a brand’s customer relationship management platform, allowing everyone from sales, to service, to marketing, to create the best possible and most relevant experience for the traveler.

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