The Customer Loyalty Battle: Online Travel Agencies vs. Hospitality and Airline Direct

Author: Evelyn Bozak
6 / 18 / 2015
customer-loyalty-airline-hospitality-ota

With the news earlier this year that Expedia purchased Orbitz coupled with Priceline’s plans to acquire Rocketmiles, online travel agencies (OTAs) are shrinking and changing overnight. Because we work with many clients in hospitality and travel industries, we have to keep a close eye.

These abrupt market changes and acquisitions cause confusion, not only for customers, but also for the marketers that are tasked with brand re-positioning, new customer acquisition programs or expanding customer loyalty programs.

And then let’s layer on more market complexity—merging hospitality and airline programs ala online travel agencies. Customers have to figure out which loyalty program trumps what before they book their travel.

Here’s just a few tradeoffs customer have to weigh:

  • OTAs  now offer package discounts or flexible point trading programs for hotels or airlines (for example PointsHound and Rocketmiles) if consumers book through their website versus;
  • Hotels offering upgrades and additional points if booked direct versus;
  • Airlines offering more miles, in-flight perks or ticket upgrades if booked direct.

But you cannot have it all. You have to pick and choose which perk and which experience is best. So the key question for marketers: How do you win over the competition?

To all our fellow Marketers that may be pushing money toward the next big ad campaign in a last-ditch effort to increase market share, let’s pause and consider a more impactful strategic play:

Customer segmentation: When was the last time your company conducted some level of customer research or customer segmentation? Do you truly know who your target customers are and what matters to them?  Millennial Mary, for example, has much different needs than Business Barry when traveling. Lenati’s recommendations for companies in industries that change rapidly—like travel and hospitality—is to conduct some level of primary or secondary customer research every year to ensure marketing and sales strategies are aligned to your target segments. In today’s customer-driven economy, marketing requires a very nuanced and real-life understanding of customer attitudes, behaviors, desires and expectations.

The buying journey: Do you have a 360-degree view of your customer and their buying journey? The buyer’s journey is not just the check-in process online, at the front desk or boarding the plane. This process begins long before your customer is even considering their next travel, and continues long after they’ve returned home after their trip.  This is where you can easily expose the decisions points that come into play for customers considering OTA versus hotel versus airline programs and which levers to pull to win them over.  Mapping customer patterns quickly reveals opportunities to make a stronger customer connection and build customer loyalty with your brand.

The customer experience: If you were to map out every touch-point a customer has with your brand—physical, digital and face-to-face—would it be one cohesive experience? Probably not. A holistic customer experience mapped to customer expectations, desires and needs can be the most impactful business strategy today. A holistic customer experience is 30-40% more strongly correlated with customer satisfaction—and 20-30% more strongly correlated with business outcomes such as revenue, repeat purchase, reduced customer churn and positive word of mouth.1

Important consideration for airline and hospitality marketers: This is where we see great opportunity to win over competition. Airlines and Hospitality are the ones delivering the actual experience being purchased. The question then becomes, how do you deliver more value to those loyal customers that by direct?

The loyalty program: Does your loyalty program address both behavioral and emotional loyalty?  Our prediction is that the next big player in the hospitality and travel industry will go far beyond “loyalty points” and will start motivating and engaging customers at the experiential level. A term we’ve dubbed “integrated customer loyalty” looks across the customer experience end-to-end in order to estimate the success of potential loyalty marketing tactics, focusing deeply on the core product or service experience itself.

These questions and recommendations may seem like daunting overhauls, but not all of these have to be drawn-out, company-wide strategic shifts. Certainly there’s times where it can and should be, but there’s also immediate opportunity for tackling the low-hanging fruit, like identifying specific pain points in the customer journey to improve the customer experience.

In the meantime, we have our pulse on the big players in this market and will continue to monitor until the next big acquisition or loyalty program is announced. Who wants to call it?

Interested in learning more about the Customer Experience – Loyalty Connection? Check out our latest article on CX & Loyalty: Human-Centered Marketing.

1Harvard Business Review 2013.

About the Author

Evelyn Bozak is the Marketing Manager for Lenati overseeing content marketing, marketing technologies and marketing automation programs. Evelyn has comprehensive consulting experience in the public and private sectors across a variety of industries, including high-tech, government, non-profits and healthcare, with experience in brand strategy, marketing strategy, customer research and segmentation, digital strategy and online engagement.

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