By Peter Gerstle, Head of Travel Products at Collinson, a global customer benefits and loyalty company
The financial services (FS) and travel industries first became interconnected in the 1970s, when the only people who could afford to travel were those with demonstrably disposable incomes. Driven by FS’ desire to approach this same audience, a beautiful partnership was formed. The travel industry has certainly widened its demographic since then, but that only deepened the two sectors being intrinsically linked.
While you might think it’s a relationship forged around the mutual benefits of international travel and cross-border spend, it actually goes a long way beyond just where people are spending their money. It extends into the how, what, when and why people are spending too. Travellers are, and always will be, one of the most important demographics for banks and payment networks. And that’s why the two sectors coming together all those years ago forged a foundation that will help both recover in this climate.
Consumer trends are changing, and changing at a time when it’s never been so important for travel companies and banks alike to understand the behaviours of the traveller demographic. The pandemic hasn’t just physically asked these people to stay put – we’ve seen it change their mind-set too.
Redundancies and pay reductions, as well as general uncertainty about what could happen next week, mean people worldwide are far more cautious about spending right now. People are clinging to their disposable incomes, and wallets have become smaller. Across sectors, brands will be facing strong competition to get their share of this smaller wallet, and standing out will require a combination of the strongest propositions, the most relevant offers, and an incredibly targeted engagement strategy.
So why is the FS and travel partnership so important in this landscape?
Getting to Know You Better…Together
Well, success right now isn’t just about encouraging people to travel or spend, it means making sure that when they do so, they do with your company, or by using your credit card.
Smart, data-fuelled marketing is of the essence in today’s world. Aggressive, untargeted outreach won’t work in an extremely competitive landscape. Customers will be spending less but will be getting bombarded with more and more brand messages. The brands getting cut-through will be those who ensure every single interaction with their audience counts. That means relevance at scale; sending offers or propositions to customers that you know they’ll be interested in, based on their current behaviour. But, of course, this kind of complex, data-fuelled marketing requires just that. Plenty of data.
So, here’s where the partnership comes in. Just as it was founded on an understanding that they are targeting the same demographic years ago, successful FS and travel companies acknowledge the same today. And both know the more they can understand about these customers, the better. Years ago, the two embarked on loyalty programmes with that in mind – think AMEX and Avios co-branded cards that let members earn points to be spent on travel. These programmes acknowledge that travellers are an important and highly profitable market for FS providers and payment networks, and that engagement with them is key. They turn customers from simply being ‘flyers’ or ‘cardholders’ and use the relationship to pool data that creates multi-dimensional programme members, who can be interacted with based on their own preferences and behaviours.
Evolving the Relationship
As the earning and redemption possibilities for these programmes evolve, so too does the relationship, becoming stronger. As well as the traditional model, where customers are given ways to earn points that can be redeemed for travel, FS and travel companies are working with loyalty specialists to create even more diverse programmes, giving members different ways to both earn and spend their points. This has been especially relevant over the past year to replace lost engagement for brands and has helped create crucial ‘lifeline’ ancillary revenue streams, even while travellers were unable to travel.
Take Emirates Airlines’ ‘Skyward Miles’ programme, for instance. Wanting to ensure members still saw value from its programme last year when the pandemic ground cross-border travel to a near halt, the programme introduced new ways for members to earn miles while shopping online. It also let them enjoy a host of rewards, and benefits that could be used with retailers – as well as with travel companies. Many of the leading global airlines have pivoted to offer similar – and we’re sure to see even more programmes broaden their propositions and follow suit soon. Think allowing members to earn points if they use a certain credit card to pay for their weekly shop, and then letting them spend those points at their favourite coffee shop as a reward.
Knowing You More Every Day
On the face of it, these programmes keep members loyal when they are unable to fly, and they entice them to use one credit card over the others in their wallet for routine purchases, such as groceries or fuel. But there’s another benefit for the banks, payment networks and travel companies involved in them; they provide more opportunities to interact with travellers as they spend day-to-day – which they’ll still need to do, even when spending more cautiously. We know data is king, and these programmes allow companies to keep understanding traveller spending habits and behaviours even at a time when they’re less likely to be booking flights.
Though that doesn’t mean they can’t be used to help power targeted outreach around holidays or other trips in the future. After all, it might not be worth sending a deal on flights to exotic climes for right now, but we know people will travel again. And travel rewards are in the top categories for redemption options when it comes to loyalty programmes. We’re already seeing members of loyalty programmes making longer-term travel bookings, and enjoying earning points in the process. These diversified loyalty programmes still mean people can earn points for that, but while travel finds its feet again, they give FS and travel companies much-needed opportunities to engage and get cut-through with customers, making sure whatever offer is sent to the customer still resonates.
Just as in the 1970s, FS and travel came together under the single insight that people with more money were those who could afford to travel, both still benefit from understanding the traveller demographic today.
Organisations from across the two industries need to keep working together to listen to customers, drive even more insights – and evolve their propositions accordingly. Consumer spending is low, and wallets may be smaller right now, meaning it’s vital to retain existing customers, but there is still an opportunity to attract new customers by coming together with loyalty programmes that use data to put customers at the heart of their initiatives.
So, yes, it’s been a long and fruitful relationship between the two sectors. But it’s a partnership worthy of time and investment – and we’re sure to see it get even stronger over the next few years as more and more companies realise that working together really is the best way to secure custom and drive loyalty.