While airline loyalty programs are fading, airlines should not stop investing in customers to build brand loyalty.

The decline of airline loyalty programs is no secret among those following the travel industry. Major airlines have overhauled their programs to be based on ticket prices and not miles, and the barrier to reaching rewards has increased. With airline mergers, the number of people vying for upgrades has also made the ability to cash in airline miles frustrating for many flyers.

Companies in the travel sphere are actively altering their loyalty programs in the hopes of attracting regular customers, but are better programs really the answer? The loyalty issue is much deeper, going beyond finding the right perks to drive traveler interest.

 

What’s driving brand loyalty?

Loyalty and rewards programs are no longer the sole driver of true brand devotion. The customer mindset has changed, and airline miles are often a secondary or tertiary factor in booking a flight. ”Rewards-program roulette”, with shifting miles goals, slowly diminishing rewards and the ever-present fine print, seems to mostly frustrate customers in the long run.

While the prominence of these programs is fading, it does not mean that brand loyalty is dead. Traveler preferences have shifted and they are choosing airlines based on new metrics, including price, convenience and, most importantly, customer experience.

Research from a survey we conducted earlier this year indicates that improved customer experience was a significant factor in how airlines can stand out from the competition. In fact, 85 percent of travelers said they would value travel websites that remember personal preferences and automatically present the best and most relevant options based on individual needs and travel history.

This represents a significant opportunity for airlines to spend their resources on building brand loyalty through customer experience options and not traditional loyalty programs. Airlines have the opportunity rethink the travel experience and revamp how they engage with their customers.

 

The need for a customer experience focus

Unfortunately, the industry seems to be trending in the wrong direction in the eyes of consumers. The average customer experience rating of the industry decreased by seven percentage points between 2015 and 2016, dropping from 63 percent to 56 percent according to the Temkin Experience Ratings.

But as customer experience wanes in the eyes of consumers, airlines have the opportunity to gain a competitive advantage. Brands looking for ways to drive loyal customers should invest in an exceptional customer experience, leveraging what they already know about a customer to create small, meaningful interactions. These types of personal, relevant connections between customer and airline can be incredibly important in building meaningful relationships and repeat customers.

See how the world’s best travel providers are already creating these types of micro-moments with customers and building brandy loyalty.