Sore point: managing loyalty schemes

Speak to most travel buyers about loyalty schemes and it won’t be a positive experience. They can influence travel policy, the company’s relationship with suppliers and impact staff retention if travellers are prevented from earning and burning points. Travel managers would prefer it if they went away. 

These schemes – the likes of Hilton Honors, Marriott Bonvoy, American Airlines’ AAdvantage, British Airways’ On Business and United’s MileagePlus – are here to stay. They are multi-billion dollar businesses and give a direct connect with the end user and change behaviour in the supplier’s favour. According to research by Queue-it, a virtual waiting room tool, 84% of consumers are more likely to stick with a brand that offers a loyalty programme.

The revenue airlines earn from the credit card partners in the schemes far exceeds the profits they earn from operating flights according to point.me, which rates Flying Blue, the loyalty programme from Air France and KLM, as the best programme out of 60 surveyed in terms of ease of earning, value, bookability, change fees and the like. 

Factor in that consumers are not active in less than half the number of programmes they belong to, according to figures from Code Broker, and airlines and hotels are winning hands down. 

Balancing act

The best travel managers can do is find the balance between the risk of travellers booking outside policy and rewarding travellers for time away from family. While some airline schemes reward the corporate, no hotel schemes do. 

The way these schemes are managed depends on the size of the client, according to Ann Thomas, Senior Account Manager at Clarity. “SME clients are a lot more flexible and agile when it comes to loyalty schemes and have a less restricted policy, so as long as travellers stay within policy/the rate cap they can keep their points,” she says. 

“Having no loyalty schemes would make my life easier”

Some schemes generate points back to the corporate – such as British Airways’ On Business – and these are easier to sell in and obviously more popular. 

“Companies pool the points and use them for incentives for the best booking behaviour, for example, or for an Employee of the Year,” says Clarity’s Thomas. 

Deeper understanding

One outspoken buyer is Eloise Ferrara-Neched, Procurement Manager for Travel, Events & Marcomms at Royal Mail Group Procurement.

The majority of Royal Mail’s traveller redemption activity is from hotels and the organisation does not prevent employees from earning points but encourages travellers not to book based on these schemes. 

“It’s a hard one to get to the bottom of,” she says. “Having no loyalty schemes would make my life easier. We look at MI and if they’ve booked over policy they have to justify it.”

Very often Royal Mail’s preferred property is of a higher standard than the redemption property, she says. 

Ferrara-Neched is going to survey which facilities are being used during hotel stays – a pool, gym or bar for example – to better understand traveller booking choices.

“I want to find out why they’re booking what they’re booking. They might get a better meal [at a room owned by their loyalty scheme] but otherwise the rooms are on a par,” she believes.

“The argument for accepting these schemes is that travellers are away from their family but that’s their job and they’re paid quite well to do it so it’s not an argument to stay in a Hilton rather than a Travelodge, where our big volume is,” she says. “Travelodge have super rooms, they’ve really upped their game.”

She would like a fairer system, in which there is a benefit for both company and traveller or better still, where Royal Mail allows the travellers to receive say, 70% of the points they have earned and the remaining 30% can be diverted to good causes, to the company’s charity, for example. 

“What I don’t know is what that 30% would convert to,” she says. “I don’t agree with loyalty schemes but I’d like to divert some of them and be clever about how you apportion them.” 

Good causes

Buyer Carol Fergus at Fidelity has a similar idea and would like to see airlines come together to promote a percentage of points going towards paying for SAF to help spread the use of this more planet-friendly aviation fuel. 

Already, Fidelity ensures that a proportion of points go towards SAF under Lufthansa’s PartnerPlusBenefit programme. “That’s my goodwill credit back,” she says. 

Fergus would like to see this initiative gain momentum but is aware of the challenges.

“There needs to be a change in behaviour from all airlines so it’s not the company saying this,” she says. “All the airlines need to do it and that would take the pressure away from the buyer, but I don’t think that’s going to happen any time soon.” 

“I don’t agree with loyalty schemes but I’d like to divert some of them and be clever about how you apportion them”

Like Ferrara-Neched, Fergus chooses to manage loyalty schemes, saying that they are “too much of an aggravation otherwise in terms of the noise I get from travellers”.

She’s cognisant that they influence policy, relationships with airlines and sway traveller decisions but is pragmatic in her travel strategy.

Fidelity manages loyalty schemes through its strict travel policy of cheapest on the day. Travellers can keep any points they earn on the company’s preferred airlines and hotels and can burn for personal use. “I don’t promote loyalty schemes and travellers can redeem their points to have a better travel experience, as long as we don’t lose visibility of the ticket or impact the business travel cost.”

Wellbeing focus

In a new twist, an independent TMC, Principal Travel, has introduced its own rewards scheme and believes it’s the first of its kind.

Aimed at SMEs, the scheme rewards travellers with wellness ‘treats’, such as security fast track, airport lounge access and even spa packages. Points can be earned for all aspects of a trip, including flights, hotels, car hire, meetings and events, alongside suppliers’ own schemes.

“We’re taking a dual-pronged approach,” says the TMC’s founder and CEO Ingrid Sanderson

While travellers benefit personally, the scheme also encourages them to book more aspects of their trip with their TMC, helping organisations track travel spend and track their people. It also makes employees feel valued, boosting productivity and loyalty in a world where it’s increasingly tough to attract and retain talent.