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New Deloitte Survey Finds Airline Loyalty Programs Should Encourage Real Loyalty

Survey reveals 72 percent of high-frequency business travelers participate in multiple programs


News provided by

Deloitte

Aug 20, 2013, 07:45 ET

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NEW YORK, Aug. 20, 2013 /PRNewswire/ -- Deloitte today released "Rising above the Clouds:  Charting a course for renewed airline consumer loyalty," an inaugural survey that provides insights into consumer travel behavior and loyalty program satisfaction in the airline industry. The survey indicates airline loyalty programs are not as effective as they could be in driving loyalty among their core audience of frequent travelers. A surprising 72 percent of "high-frequency" business travelers participate in two or more programs, while more than one-third participate in four or more.

(Logo: http://photos.prnewswire.com/prnh/20120803/MM52028LOGO-a )

"Our survey findings demonstrate that airlines should consider taking a hard look at how they are engaging with their loyalty program members if they want to cultivate genuine brand loyalty," said Adam Weissenberg, vice chairman, Deloitte LLP and U.S. travel, hospitality and leisure leader. "With increasing competition and heightened consumer pragmatism, airlines may need to focus on personalizing the customer experience in a way that makes individual travelers feel special."

Where's the Loyalty?
Considering airlines use reward programs to drive brand loyalty exclusively, a remarkable 50 percent of overall respondents are enrolled in two or more airline loyalty programs, with one-third of overall respondents participating in two or more programs. Participation in multiple programs among business travelers increased to nearly 44 percent.

Furthermore, the survey shows two-thirds of overall respondents are receptive to the idea of switching to a competing loyalty program -- even after achieving the highest status level with their current program.

Do Loyalty Programs Matter?
The survey indicates the share of wallet for a "preferred" airline is significantly low. Only 44 percent of all travelers and 40 percent of business travelers fly at least three-quarters of their air miles on their "preferred" airline, while nearly one-third of business travelers fly fewer than half of their air miles on their "preferred" airline.

Perhaps even more worrying for airlines, the survey reveals that the importance of loyalty programs appears to be surprisingly low. Travelers overall – and business travelers specifically – ranked loyalty programs as only the 19th and 18th most important attribute when selecting an airline (out of 26 attributes), respectively. However, despite their low nominal rankings among overall respondents, loyalty programs remain valuable to high-frequency business travelers, ranking as the second most important attribute – even higher than safety. As such, loyalty programs still remain a viable way for airlines to drive customer loyalty, particularly if those airlines can differentiate their programs to stand out from the rest.

One Size Doesn't Fit All
According to the survey, characteristics one type of traveler views as being important in a loyalty program, another may view as less important. For example, 76 percent of high-frequency business travelers view more opportunities to earn and redeem points as vital, as opposed to just 64 percent of all respondents. Meanwhile, only 40 percent of all respondents believe access to airport lounges to be important whereas 68 percent of high-frequency business travelers value such access.

Additionally, the survey reveals significant differences about how passengers plan and book travel. An overwhelming 83 percent of respondents visit price comparison sites to book travel and 72 percent consult family members when planning a trip. In comparison, respondents' social media usage was far less popular – with only 13 percent using social media networks to research or plan and just 27 percent using an airline application. Results are similar when it comes to how airlines engage with passengers with 80 percent of all respondents preferring email while just 26 percent favor engagement via social media.

Because the survey's overall findings reveal both subtle – and not so subtle – differences in the behaviors and expectations of the flying consumer, they underscore a need for differentiated, more targeted approaches to building loyalty. Still, at a time where brand loyalty is under more duress than ever before, what can airlines do to tackle these issues, and strengthen their loyalty programs?

"Bottom line: airlines should consider making their loyalty program rewards personally meaningful," Weissenberg advised. "For example, our research showed that only 38 percent of respondents had a positive reaction when asked whether they would serve as an airline brand ambassador. Airlines need to keep in mind that a flying passenger has the potential to serve as an airline's most effective marketing tool. They should consider providing customized experiences for individual travelers, and encourage loyalty with unexpected and in-the-moment, accessible rewards, to help them not only redefine and reshape the customer experience, but also ultimately build lasting relationships with their customers."

A full copy of the survey is available on Deloitte's website at: www.deloitte.com/us/airline-customer-loyalty.

About the Survey
The web-based survey was commissioned by Deloitte and conducted by an independent research company between Oct. 18 and Oct. 23, 2012. The survey polled 4,000 hotel and airline customers, based on hotel stay and/or airline travel during the past 12 months.

About Deloitte's Travel, Hospitality and Leisure Practice
Deloitte's THL sector offers a broad range of services to travel, hospitality and leisure clients, including assisting clients with branding, operational planning, asset ownership and development, promotion and emerging technology. For more information about Deloitte's THL group, please visit http://www.deloitte.com/view/en_US/us/Industries/travel-hospitality-leisure/index.htm.

About Deloitte
As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

SOURCE Deloitte

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