Why Now is the Time for the Travel Industry to Embrace Blockchain Loyalty Schemes
Loyalty programs have long been used by the travel industry as a way to win new customers and and encourage existing ones to come back and spend more. And for good reason.
Customers that are in loyalty programs spend more money — an average of 12–18% more per year — while 56% of consumers that aren’t already part of a scheme actively seek them out when deciding where to spend their money. Loyalty programs are a tried-and-tested customer engagement method, which is why travel sector brands continue to invest heavily in them.
So why is it that $100 billion of loyalty points and as many as many as 9.7 trillion frequent flyer points are left sitting idle every year? According to a study by Accenture, more people than ever are signed up to hotel loyalty schemes and airline programs, so what is it that’s stopping them claiming points that they’ve earned?
The problem with travel rewards
Whether it’s traveling with work or enjoying a short getaway, millions of travelers are dependent on hotel rewards for hotel stays and flyer miles for flights. However, as the stats show, traditional loyalty schemes often fail to deliver. The reason for this lies in how difficult programs make it for travelers to earn enough points and cash in on the ones they have earned.
A survey carried out by incremental revenue experts Collinson Latitude sought to find out travelers’ biggest loyalty program complaints. The results were telling:
- 60% of people think that it takes too long to collect enough points to get anything of value
- 51% of people think that having to pay taxes in cash makes rewards less valuable
- 30% of people don’t find rewards to be of any value
- 38% of people tried to redeem points but failed due to a lack of points
- 37% of people tried to redeem points but failed due to a lack of availability
- 46% of people never tried to redeem points
While the survey was focussed specifically on flyers, the results can be applied to the travel industry as a whole.
Loyalty programs in their current guise suffer from a lack of transparency — travelers are unsure how exactly points are accrued and left confused as to why some points purchases earn more points than others — and are hampered by too many restrictions. Not only do rewards points take a long time to accumulate, they can often expire before a traveler has had the chance to redeem them.
And when points do amount to enough to redeem on travel, customers are met with obstacles around which locations, hotels, and modes of transport can be used, as well as restrictions on dates of travel.
It’s clear from customer feedback that traditional loyalty schemes aren’t working and something needs to be done about it.
Disrupting an outdated model
While all loyalty programs are at risk of disruption, the travel industry is particularly vulnerable. Travel loyalty programs differ to traditional discount models used by retailers and banks. Rewards are more fragmented with points dependent on mode of transport and activity.
Blockchain loyalty programs like BitRewards have the potential to revolutionize current travel programs in the same way that online travel agents and brokers transformed the travel industry. It’s a concept already being used Singapore Airlines, while TUI Group is transforming the way it rewards customers through motivational marketing thanks to BitRewards and our parent company, GIFTD.
Fixing the broken system
BitRewards can succeed where current loyalty programs fall short quite simply because it addresses the issues consumers are facing. It also presents a more cost-effective and intuitive way for businesses within the travel industry to roll out rewards.
The problems customers face with collecting and gaining access to points are immediately addressed with a tokenization system. Rather than points being delivered in a statement weeks, or even months, after a purchase, digital tokens in the form of BIT Tokens are sent to the customer in real-time. When a purchase is completed, BIT cashback is sent immediately to the customer’s account.
In practice, this can mean booking a flight and having rewards to spend before you’ve even taken your seat. These rewards can then be used hire a car or make a dinner reservation from the plane.
Additionally, the same restrictions that dent consumer enthusiasm do not apply here. Customers are easily able to check how many points they hold across multiple different programs from “one wallet” and redeem them at their discretion, across a wide range of options. BitRewards is not restricted by merchant. BIT tokens can be used at any merchant within the ecosystem, retained to grow in value, or exchanged for fiat currency.
In a market where so many points go unused, BitRewards encourages spending through personalization, thanks to decentralized, crowdsourced recommendations on products and rewards. Customer data is used to tailor the shopping experience for the individual, showing hotels, flights, destinations, and more based on their buying behavior. With 75% of consumers more likely to buy from a company that recommends options based on past purchases, this level of personalization can greatly increase conversion rates.
Customer experience is at the forefront of the BitRewards model. It works where traditional loyalty programs fall short, fixing the disconnect between brands and customers, and allowing merchants to create a truly personalized experience that improves customer satisfaction, boosts retention rates and increases revenues.