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It’s Becoming Much Tougher to Achieve True Customer Loyalty

Kaligo Travel Solutions is operated by Kaligo Pte Ltd., the global leader in innovative travel and loyalty technology. Established in Singapore in 2014, with offices across APAC, Europe, and the Americas, Kaligo Travel Solutions enables more than 50 of the world’s leading loyalty programs to drive engagement through rewarding travel experiences.

With core product lines and expertise in e-commerce, small business, financial services, white label accrual and redemption platforms and cutting-edge API solutions, Kaligo supercharges the world’s leading loyalty programs to drive spend, engagement, and retention.

Loyalty360 caught up with Kyle Armstrong, CEO of Kaligo Travel Solutions, to find out his views about today’s customer loyalty arena, how loyalty programs can be successful in this environment, and the challenges connected to data and creating actionable insight.

What pain points/challenges are you seeing in the customer loyalty arena?
Armstrong: It’s becoming much tougher to achieve true customer loyalty. Given the breadth of choice, ever-increasing channel options, and globalized competition, customers can pick and choose from transaction to transaction whichever company provides them the best value. As a result, more and more often, the lowest price will win, and companies are struggling to avoid a race to the bottom.

It’s particularly easy to see this in the travel arena. In the past, households had a preferred travel agent, a brick-and-mortar agency where they received personalized advice and attention. If the service was consistently good, a family would easily remain loyalty to one single agency for life. Today, customers check on Kayak which site offers the best rate and can be almost completely indifferent to which site they end up booking with as long as they get the best deal.

Customers, especially millennials, are increasingly savvy e-commerce buyers and now have more options at their fingertips than ever before. Brands need to constantly evolve and consistently offer differentiated value, more choice and a superior experience to generate repeat purchases. In addition, as we’ve seen recently with Uber and United, negative publicity can spread like wildfire via social media and instantly hurt your brand on a large global scale, destroying overnight much of the loyalty you’ve built painstakingly over many years.

Finally, the same proliferation of choice and channels is making it harder for loyalty programs to differentiate their rewards currencies. Most large programs, whether in retail, financial services, or travel, offer the same broad line-up of redemption options, and it’s increasingly easier to transfer points between programs as well. 

How do loyalty programs become successful in this environment?
Armstrong: In the past, running a successful loyalty program has often just been about creating a good line-up of accrual and redemption options, and perhaps running some engaging tactical offers. Going forward, programs will need to evolve rapidly and focus more on delivering great experiences and convenience. Saving customers time, improving comfort and reducing any anxiety associated with purchases or rewards earn & burn is as important as the brand’s product and price.

Programs need to build a members-only ecosystem that makes it highly attractive for customers to stay with the brand and remain within the ecosystem. This requires a combination of superior value, better experience, and unique options. All too often, the products and experiences offered within loyalty programs are of similar or even inferior value and far more clunky to purchase than what non-members can access publicly.

For customers to become loyal, they not only have to experience this ecosystem effect in the present moment but should trust and perceive that this will remain in place (e.g. that their miles or points will still be equally valuable and easy to use) in the future. There needs to be an element of continuous improvement where your experiences will be able to compete with and beat other offerings available in the market.

Often overlooked, but extremely powerful: Communicating and operating in an open and transparent manner and be known for advocating on behalf of your customer if any errors and exceptions occur. In the days of social media and global visibility, a negative incident could turn into a company disaster or a powerful positive PR tool depending on how it is handled.

What challenges do you see in the travel industry–from both a consumer and brand (Airline / Hotel perspective)?
Armstrong: From a consumer perspective, the proliferation of product choice and channels, which is for the most part highly beneficial, does mean that it’s becoming more difficult and time-consuming to search for the right product and discover interesting unique options.

Twenty years ago, if you were traveling from London to Sydney, you had two options: British Airways or Qantas. Today, you’ve got Emirates, Etihad, Qatar, and Turkish Airlines and others all wooing customers with five-star product offerings, world-class service, stellar cuisine and attractive prices. And the resources available to consumers to discover, compare and ultimately choose the right option are still catching up gradually. The same challenge applies to choosing your holiday destination.

In the past, when there were three sunny places to visit for a reasonable price from your hometown, it wasn’t too hard to choose. Today, the options have grown exponentially, and we see start-ups across the globe popping up to try and solve the challenge of travel discovery, be it for destinations, unique hotels, special airline lounges, and the list goes on. But this journey is just at its beginning, and customers will continue to have to dig a fair bit if they want to truly examine the full lineup of travel options available to them.

For brands, this challenge represents an interesting opportunity. Those who can successfully incorporate elements of travel discovery into their core products gain a solid competitive advantage. Travelocity was one of the pioneers in this space with its Dream Maps that did away with the linear travel booking experience (enter dates, destination and browse results) to allow customers to visually explore travel options based on budget and real-time availability. Today, this type of offering is increasingly common for online flight purchases, and we expect will continue to proliferate in more and more travel booking channels.

What is the biggest challenge you see in the market regarding data and creating actionable insight from that data?
Armstrong: We see two very common issues:

One, is companies have access to more and more data, which tempts employees to spend time doing bottom-up exploratory analysis. They dig around, create reports and try to impress management with insights and metrics that seem “interesting” (e.g. insights that were not previously known, such as “During night times, sales of X product are 20% higher”), but that have no obvious actionable use. Finding and tracking such vanity metrics can consume vast amounts of organizational resources without delivering tangible benefits. The inverse approach is required to really make data actionable: senior leaders need to first determine what high-level goal they must achieve, and then generate concrete hypotheses that need to be proven or disproven.

This enables their teams to identify and track the right metrics in the ocean of available data and leads to real ultimate action.

The second issue we see is despite all the technological progress today, data sources frequently remain in disparate systems, making it very difficult to connect the dots between the core data warehouses, the web analysis platform, the offline and online advertising channels, to ultimately generate holistic insights and deploying targeted actions at all customer touch points. The entire process tends to be manual, fragmented, and extremely time-consuming. Very few organizations have invested sufficiently to in evolving their technology and internal processes far enough to truly minimize the cycle time from data analysis to targeted actions.

Is there one question (themed/topical) that your customers/clients seem to be asking of you today?
Armstrong: Strategies to engage high-value customers is a very big topic we get consistently asked about. More and more brands are recognizing that a large portion of their sales are generated by a relatively small group of loyal, high-value customers. And the well-known saying of “retaining a good customer is much cheaper than acquiring a new one” is getting gradually more internalized, even by organizations who’ve been traditionally focused largely only on acquisition.

Loyalty program status benefits are a big topic in this regard. Traditionally limited to the realm of airline and hotel programs, status tiers and benefits are now being considered and implement by many other brands across sectors like retail and financial services. Engaging your best customers with differentiated experiences, special benefits, and exclusive offers is a reliable strategy to prevent competitors from stealing your market share.

The main challenge brands encounter when creating status benefits is the cost. There’s typically no shortage of creative and compelling ideas to pamper the best customers, be it annual “thank you” gifts, discounts, freebies and so on. However, these benefits can come at a significant cost and need to be built into an organization’s budgeting process. When the rubber hits the road, ambitious benefit strategies are then often cut back significantly and end up becoming “boring” status tiers that give bloggers and forums ample material for ranting.

We recommend to our clients that they spend time identifying compelling benefits with high perceived value, but zero or manageable variable cost to the brand. For example, giving a premium customer top priority in the call center queue can be an extremely valuable benefit (especially when the average wait time for regular customers is thirty-plus minutes for some brands) that has zero marginal cost to the company. Another example would be priority access to special sales. In Hong Kong, Cathay Pacific runs a famous annual seat sale with a few limited highly discounted seats available on every route. The entire country is poised at their mobile phones and computers when the sale opens and servers typically shut down within minutes due to overload–now just imagine how powerful it is when premium members get to book a day in advance before the public frenzy starts.

What does your technology aim to fix in the industry?
Armstrong: We are really addressing the basics of customer experience. In this day of technology where you can hail a ride from your mobile, browse online dining offers just minutes before stepping into the restaurant, and book your hotel whilst in the air on route to your destination, it’s rather surprising how far behind many loyalty programs are in offering a user-friendly, hassle-free web and mobile customer experience when earning and redeeming rewards.

For example, two in three airlines outside the United States are still offering flights as the only redemption option and, for many, you need to use the call center to book an award. Online redemptions, if available, are often clunky and error-prone, driving customers to quickly abandon the process. And despite knowing this all too well, the loyalty teams are paralyzed−unable to fix the issues given limited budgets and airline IT teams that are backlogged for years.

This is precisely the gap we are closing in the market. Kaligo Solutions delivers end-to-end, plug & play solutions that allow loyalty programs to elevate their accrual and redemption offering in less than eight weeks and with minimal financial and resource investment. Our accrual and redemption products are designed from the ground up to be extremely easy to implement for any loyalty program, despite being fully customized. They are cloud-hosted and built to meet the strictest security and data privacy standards, to make brand internal approval processes a breeze. 

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