Airlines with frequent flier programs are focused on customers and profits. Profitability can come from a variety of revenue streams: better margins, higher attachment rates or more redemption options that incentivize members to earn and burn points.
You know your customers. You’ve established your goals, and you’ve answered these five questions. Now it’s time to start vetting potential travel rewards providers. These questions will help you find an ancillary travel (think hotel and car rental) provider that can work with you to figure out the best mix of strategies to push you toward achieving your program’s loyalty and revenue goals.
5 questions airlines should ask potential ancillary travel rewards providers:
- What do you recommend for pricing my program? Your loyalty partner should be able to give you some insight into how you should price travel add-ons. Ask about their experience in scoring and creating algorithms that help make the program add value to consumers. The pricing of activities should be based on purchase models and specific algorithms to help you develop a points scoring system. For example, what will be the cost or value of each point; is one point equal to one dollar? There are different ways to score redemptions to help incentivize increased point spend or reward members that are highly active within your program. Your partner must be experienced enough to know what will work best for you from a pricing perspective.
- Can you offer travel ancillaries as both purchase and redemption options? If this is something that’s important to your brand, ask potential partners if they can provide travel ancillaries (like hotel and car rentals) for purchase and as rewards for your loyalty program. A single partner for purchase and redemption is strategically advantageous and cost-effective. A single provider that can fulfill both your purchase and redemption needs requires far fewer IT, integration, accounting and contract-management resources. Managing multiple partners can also be tedious and time-consuming when it comes time for a site redesign or API upgrade.
- Will you be competing for my customers? In other words, does your supplier also sell travel content directly to consumers? If so, ask how they can ensure your customers are still getting the best prices and content offerings. Ask questions about how they plan to help you encourage hotel and car rental bookings on your site (versus theirs). And be sure potential partners are asking about your customers and considering their buying habits when recommending travel ancillary offerings. Luxury airlines should be promoting more high-end, custom redemption options. If your airline’s brand touts the lowest prices for basic travel needs, lower priced redemption options that add value should be in your product mix.
- Can you help with earn and burn? The greater the breadth of options an airline offers, the more likely customers are to be brand loyal and shop for all their travel needs on that site. Most travelers are going to book a hotel, car or activity anyway, so give them the option to earn points on those purchases by booking with your airline. What about burn rates? Airlines don’t generate revenue when points sit in a balance. Ask your potential travel provider how they’ll help you encourage members to not only earn, but also spend points.
- Can you provide access to multiple suppliers and what will that cost? If your airline is looking for a greater breadth of inventory from a provider, ask if they can give you access to multiple ancillary inventory suppliers. Providers with the ability to aggregate content can give you not only more inventory options, but also typically at a better price or margin. What about API connections? If they have the capability, ask if you’ll be paying for multiple connections. The overall cost of the program should include integration, maintenance and connections.
Whether you’re looking for higher commissions and margins or a wider breadth of travel ancillary inventory options, the ultimate goal is increased loyalty and profits. So as you’re vetting potential travel rewards providers, be sure their answers to these questions align with your needs and goals.