Loyalty points are here to stay. So are heightened member expectations

Apr 11, 2019
3 MIN. READ
Point-based loyalty programs aren’t going anywhere, but we are seeing a significant shift in what members expect in terms of benefits from the loyalty program(s) they participate in.

Doesn’t it seem that every year we come across another rash of headlines proclaiming that “Points-based loyalty programs are dead”? B2B restaurant magazine QSR wrote in a 2018 article, “The loyalty club is dead. Long live the logged-in customer.” The article goes on to say brands are still offering premium services, but to all customers, rather than a specific group. For some brands this may be true, but overall, this is a remarkable assertion considering what is truly at stake.

Some of most popular points-based loyalty programs have amazing staying power. Delta SkyMiles was established in 1981 and lives on today! Two of our clients, Hyatt Gold Passport, (now World of Hyatt) and Hilton Honors, launched in 1987. The point is, there are billions of member accounts across a vast number of global loyalty programs that have an unredeemed point balance on the books of brands like Delta, Hyatt and Hilton. Sure, many of them put an expiration date on members’ points, but, at any given time, unredeemed points can represent a significant financial liability.

When I see the gloomy headline that points-based programs are dead, I imagine the enormous difficulty a CFO must be facing when having to explain the not-so-insignificant write off they’re about to take.

Experience takes a leading role in delighting members.

Major changes are underway to meet the expectations of today’s loyalty program member. Take a look at how the World of Hyatt program has evolved using the FIND Experiences program, or the recently announced partnership with American Airlines.

FIND experiences extend the reach and usefulness of World of Hyatt points well beyond the Hyatt brand itself. If you have points to burn on a bicycle tour and lunch with winery owners in Napa Valley, you can do that. Prefer a Brazilian Jiu Jitsu class in New York City instead? No problem at all—your points will be good for that as well.

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Let’s pause for a moment and consider the Hyatt brand in all of this. If members choose to redeem their points for a FIND Experience, they really don’t interact with the brand at all in terms of how they choose to reward themselves with hard-earned points. Yes, Hyatt helps members participate in their experiences, but whether they are sipping wine in Napa or trying to not break their noses practicing Jiu Jitsu, Hyatt is “just” the facilitator of the experience.

Partnership-based loyalty programs prevail.

The new partnership between AA and Hyatt lets members of both programs double dip. Stay at a Hyatt property and earn AA miles. Fly with AA and earn World of Hyatt points. It’s a big deal because you can earn across two different programs simultaneously with a stay or a flight. It’s something we rarely see. It is usually an “or” not an “and” proposition to members.

With this AA partnership, Hyatt has tied a segment of members into a major global airline’s loyalty program, if members happen to book travel across both. They’re not just dating here, folks. These are two major brands locking arms despite the success of their respective loyalty programs on their own merits.

Prioritizing both on-and off-brand experiences.

Beyond partnering with AA and providing exclusive member experiences, Hyatt has also increased its focus on wellness. Customers are able to use their points for a fitness class or a treat at the spa across any of their (participating) Exhale-branded properties. It’s clear that Hyatt is rapidly moving toward the idea that both on- and off-brand experiences (which extend the value of your points in new and differentiated ways) is not only the direction they are taking, but also what their members expect from them.

To succeed in loyalty, brands must center their efforts around the human, personal element of their offerings. Hyatt’s recent initiatives allow members to look beyond the traditional, transactional value of their points and instead look at their loyalty membership as a mutually beneficial relationship with the brand.

How have you seen points-based loyalty programs evolve? Join the conversation with us on social media by tagging @ICFNext and sharing your thoughts.

By Joerg Granacher
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