An interview with Ed Silver, CIO, iSeatz
Recent research suggests that more and more Americans are using travel rewards cards to offset the high cost of their vacation. But are their travel rewards meeting their expectations?
We spoke with Ed Silver, Chief Information Officer at loyalty technology company iSeatz, who shares insights from the company’s recent report, The Tipping Point for Travel Loyalty in 2023, to find out how loyalty providers can drive revenue and member engagement through travel rewards, and what they must do to address the gaps between what American consumers want and what providers are investing in.
1. You just passed your two-year anniversary with iSeatz. What do you see as the most significant changes to the travel loyalty technology landscape during this time? What stands out as the biggest wins (for both travel brands and consumers)? What about losses, or areas for improvement?
Despite the global pandemic, and record-breaking inflation, travel is thriving! According to our report findings, which are based on concurrent surveys of American consumers and loyalty program professionals, the appetite for travel is predicted to stick around with 55% of consumers planning to travel more in 2023 than they did in 2022. I think that’s a big win for the travel industry as a whole.
Travel rewards can help brands build life-long relationships with customers by helping them to save money on travel — something 43% of respondents in our survey say they value most about their programs. In turn, loyalty providers can capitalize on current and future travel demand to meet their revenue and growth goals and better engage their members. That’s why I was surprised to find out that only 32% of the loyalty providers we surveyed offer travel rewards as part of their earning and redemption options. This means there’s a lot of unrealized potential in this space.
However, our report also reveals that there’s a disconnect between what consumers want and what they’re getting. For instance, 63% of loyalty brands with travel rewards say their programs are members’ first choice when booking travel, but only 51% of consumers report the same. In many instances, lagging technology platforms are at the root of this gap. Loyalty technology platforms in the past two years have evolved to be more flexible and user-friendly (both for members and loyalty administrators) but not all brands are adopting this technology, which leaves them at a disadvantage.
2. You touched upon findings from The Tipping Point for Travel Loyalty report. What are other key take-a-ways that brands should keep in mind while evaluating current loyalty programs and opportunities for improvement?
Travel loyalty programs that offer clunky booking experiences, fragmented redemption options and limited personalization, ultimately end up disappointing customers. Take booking technology for instance. While almost 30% of loyalty professionals describe their platforms as ‘state of the art’, consumer frustrations include: not being able to book all the travel options they want in one place, difficulty in understanding earning and redemption rules, and being directed to another site for payment. These are all fixable with the right tech powering their platforms.
Personalization is another area that’s lacking. Our survey found that less than 40% of consumers get personalized recommendations from either their travel loyalty program’s booking site or via email. Why is this important? Because there is a direct correlation between a program’s perceived value and personalization. Just over 70% of consumers who receive personalized recommendations through their rewards booking site say their current loyalty programs provide them with the value they are looking for. For those that primarily receive personalized recommendations through marketing emails, that number drops to 48%. Only 44% of respondents who receive no personalized content say their current loyalty programs provide them with the value they seek.
Other important takeaways from the report highlight the importance of planet-friendly travel rewards and newer payment methods like buy-now-pay-later, especially to younger generations. Currently, 32% of travel rewards providers offer sustainability-related redemption options, 45% offer bonuses or incentives for booking sustainable options, and 37% contribute a portion of revenue to sustainability causes or organizations. That’s a great start but it’s not enough when you consider that roughly 91% of Millennials and Gen Zers say that a reward program’s commitment to sustainability has an impact on their decision to book a trip or not. With only 7% of travel rewards brands planning to introduce carbon offset/other sustainability features to their rewards portfolio in the next 6-12 months, loyalty programs aren’t placing enough importance on this aspect of their programs.
Younger loyalty program members also value payment flexibility. Just over 30% of consumers want their travel rewards provider to add buy-now-pay-later (BNPL) options for purchases made via their loyalty programs, but this number jumps to 53% for Millennials and Gen Z members. Our data shows that consumers are more than two times as likely to book travel through their loyalty program based on access to payment options like buy-now-pay-later, but only 31% of brands plan to invest in BNPL over the next 6-12 months. With younger generations more skeptical of traditional credit and financial institutions, brands that want to grow this market segment can’t ignore alternative payment methods.
3. Why do you think there is this ongoing gap between what consumers want and what brands are investing in?
As a technologist, I might be a little biased, but I think the source of the expectations gap is primarily technological. Many loyalty programs don’t have the right technology to keep up with shifting consumer demands, and many don’t have the in-house resources to provide it. If they do have existing travel booking capabilities, their platforms might be stuck in the past. Maybe they aren’t mobile friendly or offer personalized recommendations, maybe they don’t do a good job of linking up with the social experience or incorporating the travel options consumers most want, which means they aren’t being as effective as they could be.
It’s not a matter of ignorance or apathy; loyalty professionals are cognizant of areas that their programs can improved. Roughly 40% of loyalty program professionals say the ability to incorporate multiple content and inventory sources is what needs the most work, while 20% say user experience is their biggest challenge.
But of course, change is hard, so there also needs to be a champion within a company to drive that change — one who is willing to ask the hard questions and take the steps to improve the situation.
4. How can brands close this gap between member expectations and program offerings to ensure better travel loyalty approaches now and in the future?
Understanding what consumers want is the first step. Of course, people’s desires aren’t constant, and as we’ve seen in recent years, any world event or new trend can influence what they’re looking for from their travel loyalty provider. But as our report and countless others have shown, they’ve consistently stated their preference for value, options, flexibility, and rewards that align with their values.
Partnering with a provider that can deliver a flexible, user-centric booking platform that combines travel inventory from multiple sources helps ensure that a travel loyalty program can meet those wants with the agility to adapt to shifting priorities. A travel rewards program needs to be flexible and that’s simply impossible if the technology powering that experience exists in a silo.
5. That's a good lead-in for my last questions. What are you most excited about in terms of technology innovation you are seeing within the industry today? And what are you looking forward to seeing another two years from now?
I’m excited for a greater AI/ML-driven push into personalization and how that will impact the buying cycle. Loyalty companies have the leg up when it comes to knowing their client versus other brands.
There’s really no reason that a member should receive irrelevant offers from their travel loyalty provider at any touchpoint. As AI and machine learning capabilities become more accessible and widespread, I expect recommendation engines to take a leap forward and truly bespoke content to become the norm.