8 big reasons why loyalty will transform the customer experience

9th FFP Loyalty Conference 2013

© 2013 L.E.K. Consulting LLC. All rights reserved.© 2013 L.E.K. Consulting LLC. All rights reserved.

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8 Big Reasons Why Loyalty Will Transform the Customer Experience

Dan McKoneL.E.K. Consulting


© 2013 L.E.K. Consulting LLC. All rights reserved.

Today’s travelers have a revised set of expectations for loyalty programs

o Expect programs to offer them options

o Value personalization and personal recognition

o Want rewards that fit them

o Active users of loyalty programs (in constant pursuit of rewards)

o Expect “hassle-free travel”

o Accustomed to standard offers

o Never given the chance to choose

o Used to “one-size fits all” approach

o Passive users of loyalty program (by-product of when they travel)

Today’s travelers’

expectations

Yesterday’s travelers’

expectations



Loyalty programs are adapting to a more sophisticated traveler

to provide a better, more personalized customer

experience…



o Loyalty programs are increasingly integrated with everyday living

o Data analytics help identify chances to customize the guest journey

o Loyalty-data-driven segmentation can better match needs to guests

o Customized optional services can change the guest experience

o Personal recognition drives loyalty among the most valuable members

o Loyalty alliances enhance the reward incentive

o Experiential offerings can drive aspirational behavior in loyalty

o Feedback can be a powerful tool in enhancing a member’s experience

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8 big reasons why loyalty will transform the customer experience


© 2013 L.E.K. Consulting LLC. All rights reserved.© 2013 L.E.K. Consulting LLC. All rights reserved.Source: Company websites, L.E.K. Analysis

EarningOptions

RedemptionOptions

Hotel Points Airline Miles

Extending the customer experience to new areas, both within

and beyond travel

1 Loyalty programs are increasingly integrated with everyday living



Guest journey

2 Data analytics help identify chances to customize the guest journey

Trav

elTravel

Off-site activitiesHotel stay

Check-inSettleLobby

Search

Booking

Flight(s)

Airport

Car Rental

Entertainment

Restaurant

Sleep

Shower

Leisu

re

Mee

tings

Rest

aura

nts

Conf

eren

cesRoom

service

Chec

k out

Fitness

Car retu

rn

Flight(s)

Feedback

Airport

Rewards

Elite customer

recognition

Tailored comfort (e.g., luxury pillows)

Preferred food & drink made available

Saved preferences & profile-based suggestions Tailored

loyalty packages

Meals on-the-go offered

Room preferences

known

Recommendations based on prior

trips



Business traveler segments

Sam

ple

need

s th

roug

hout

the

jour

ney “Remember

my preferences”

“Better room”

“Too rushed to eat“

“Do it for me”

“Better than home”

“Enable my work habits”

“Segment 2” “Segment 3”

Reco

gniti

onPr

oduc

tivity

Food

“Treat me elite”

“Special selections”

“Frictionless leverage”

Target guest need states with well designed

experiences

Higher guest satisfaction and harder-

to-copy offerings

Brand distinctionand true loyalty

Loyalty-based intelligence enables customized “options”, sharpening brands

3 Loyalty-data-driven segmentation can better match needs to guests

“Segment 1”



Customized optional services can change the guest experience

Guest segment member on a trip

E.g., wasted time, unfulfilled

expectations, etc.

Archetypal guest travel experience

Desired outcome

Poor experience

Delightful surprise

Step in guest journey

Step in guest journey

Optional service

Optional service

2

1

Need states occur during steps in

the guest journey

OR

4

Pain point



5 Personal recognition drives loyalty among the most valuable members

Recognize elite travelers…

Give them the experience they want based on known preferences and behavior and

make them feel special

Customized travel suggestions

Greet them by name

Personalized benefits and perks


© 2013 L.E.K. Consulting LLC. All rights reserved.© 2013 L.E.K. Consulting LLC. All rights reserved.Source: The Wall Street Journal, COLLOQUY Loyalty Awards, The Points Guy, company websites

“This enriches the experience for our most valuable travelers, and gives both Delta and Starwood an opportunity to target frequent travelers who aren't already part of our programs, enabling us to capture greater share of the global, high-end traveler…"

Frits van Paasschen, CEO of Starwood

Benefits to mutual members:• Bonus points/miles• Perks reciprocity for elites

6 Loyalty alliances enhance the loyalty reward incentive


© 2013 L.E.K. Consulting LLC. All rights reserved.© 2013 L.E.K. Consulting LLC. All rights reserved.Source: The Wall Street Journal, COLLOQUY Loyalty Awards, The Points Guy, company websites

Experience Exclusivity

Free events

Hotel room upgrades

Super-elitestatus

Starwood Ambassador

Exclusive convenience

perks

7 Experiential offerings can drive aspirational behavior in loyalty

Free lounge access

Delta Porsche escort

American Airlines Concierge Key



How would you rate the helpfulness and courtesy of service staff during your room service order?

Excellent Very GoodGoodFairPoorN/A

Incentivize feedback (e.g,

with loyalty points, coupons,

etc.)

Measure customer

experience to uncover specific

issues

Real-time feedback at

different points of journey

React to feedback to make the

experience more enjoyable

8 Feedback can be a powerful tool in enhancing a member’s experience



Rich intelligence about the journey means the experience can (finally) be personalized!