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3 ways implementing a customer loyalty program increases your travel agency’s revenue

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If you’re in the travel business, you are always on the lookout to grow your revenue by attracting new customers and reactivating existing ones. After all, what’s the use of creating those luxurious travel packages if there’s nobody to enjoy them?

You probably noticed it’s more difficult to attract first time travelers, but did you know that selling to a new customer is actually 5 times more expensive than selling to an existing one? Also, attracting a first-time customer is becoming more and more demanding in the sea of travel agencies finding their place in the market.

Despite increasing market saturation, there are still ways to rise above the competition. Customer loyalty programs give first-time customers a reason to pick you and give existing customers a reason to return.

Is launching a customer loyalty program worth your time?

Loyalty programs have been around for more than 30 years – and they are here to stay. A study by Nielsen found that 60% of consumers consider loyalty programs an important factor in their buying decisions. Furthermore, consumers are likely to spend 46% more with businesses that have established loyalty programs.

So what are some of the biggest challenges travel agencies are generally facing?

  • Motivating existing customers to purchase again
  • Attracting new customers to your business
  • Bringing attention to higher margin products

Let’s look at the role of a customer loyalty program in completing those goals.

Modern customers are attracted by value, meaning and the feeling of gratitude. It might seem logical to assume that a new client will book their next trip with the agency that gives them the best price. However, a high-grade loyalty program with long-term benefits could be one of your company’s competitive advantages, resulting in a 24% higher conversion rate for the travel agency.

Similarly, existing customers will return more likely if an agency recognizes their loyalty beyond a simple ‘thank you’. With the insight your travel agency has into client’s previous trips and based on their preferences, you can create targeted new offers and promotions. Business travelers and luxury guests will be particularly charmed by awards – and quite willing to repeat purchase.

Finally, higher margin products that usually pass under your customers’ radar will become more appealing if they score your customer a bunch of loyalty points, which they can exchange for perks and extras on their trip.

Loyalty programs increase both the value of your customer relationships and your revenue, and it seems like the real question to be asking here is not whether you should have a loyalty program but how to get customers to sign up for it.

You are in luck – in the day and age when data privacy is a hot issue, it’s comforting to know that 75% of travelers are still willing to share personal information in exchange for loyalty points, promotions, or priority service.

The right way to do loyalty programs

The loyalty program as we know it today was launched in 1981 by American Airlines. Soon after, other airlines and businesses in the hospitality industry picked up the new trend.

Nowadays, most loyalty programs still insist on the repeated purchases as the ultimate result, but a minority of them succeed in building long-term relationships with customers and developing a psychological attachment.

Many companies are busy giving discounts to achieve the short-term increase in revenue and the client’s satisfaction level. Unfortunately, they don’t realize that they are not winning long-term loyalty.

Mark Bonchek, founder and CEO of the consultancy Shift Thinking, thinks the only way to develop long-term loyalty in customers is by cultivating an attitude of gratitude towards them.

So, how can you make the customer feel appreciated?

Understand individual behaviors

When JetBlue airline realized that most of their customers book tickets for economy class and that 75% of travelers are ready to pay for extra services, they thought about how to use that information to increase spending in this customer group.

They came up with this solution: they will offer customers ways to earn points by purchasing extra options, like additional baggage or a meal upgrade.

On top of that, for every $1 a traveler spends, they will receive 3 points – or 6 points if they purchased online. Are also trying to direct your traffic from your branch office to your website? Implementing a similar loyalty program might produce results.

Offer valuable incentives –  but not at your expense

Perhaps you’re worried about offering valuable rewards to your customers because you think you can’t afford it, but there is a way both your agency and your customer can win.

One hotel provider may offer one night free of charge every time some client purchases a five-night stay. Let’s say the price of each night is 60€. The point is to offer the free night during the time when occupancy rates are low.

That way, your client appears to be getting a gift of 60€. In fact, the room would possibly go unused instead.

Award customers with experiences

Did you know that business travelers prefer to accumulate points to redeem them during their vacations, while tourists prefer immediate gratifications such as complimentary upgrades and welcome drinks?

Research also shows that customer satisfaction increases by 31 times when loyalty points can be exchanged for a range of perks, like gift cards and tickets for events or special classes.

Experience using loyalty program module in Lemax

A travel agency using specialized software with an effective loyalty program module for managing their business process will experience multiple benefits. Firstly, an agency will simplify the setup of the number of points customers can receive or use per purchase. More importantly, they will grasp opportunities they might not recognize otherwise.

For example, one Lemax user increased their revenue by taking advantage of a simple feature. Using the overview of all loyalty members and their points total in the system, an agent can easily sort out the members who have nearly qualified for a loyalty discount.

The next step is encouraging the clients to collect the missing points. Do it by offering deals in the price range necessary to cover the missing points gap. Your clients, unaware up to that point, suddenly feel compelled to collect the missing points and unlock the loyalty award.

Launching a loyalty program is an investment

Loyalty programs can be very effective in increasing a travel agency’s revenue but companies often launch them without clear goals. Are you trying to reactivate existing customers or attract new ones? Unless you identify the reasons for introducing a loyalty program, you will only reap short-term results.

But if you carefully think your loyalty plan through before launching it, you will certainly see a positive return on investment. Dedicate the time and allocate the resources necessary for a loyalty program you would sign up for yourself.

Most importantly, remember that an agent should nurture their relationship with the client through every stage of interaction.

Make your clients feel appreciated with valuable benefits on top of an excellent service. In return, they will reward your travel agency with loyalty – and extra figures on the agency’s bank account.

Interested in launching a customer loyalty program?

Learn more about our loyalty program module

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