By Mark Ross-Smith of Travel Data Daily
Each year I review past loyalty predictions and make new predictions for the upcoming 12 months.
The report card for my 2021 predictions is 4 out of 5 transpired throughout the 2021 year.
The big one which didn’t happen – yet – “a loyalty program will buy/acquire an airline” – is coming. Perhaps the call was a bit early – but I’m not wrong. 100% a loyalty/marketing/fintech company will start, or acquire an airline.
After all – it’s cheaper for a fintech company to start an airline, and deal with all of the associated expenses and operational overheads that come with running an airline — than it is for that fintech company to pay to acquire customers via traditional channels.
Now on to where the world of airline loyalty is heading in 2022…
1. A Major Loyalty Program Brand Makes a Critical Mistake
Some major travel loyalty brands have over the years become complacent; in that they’ve been extracting maximum value out of the existing business structure.
Don’t get me wrong, I’m probably the most pro-money-making person there is around. But something isn’t right at the top end of town. The balance of pro-member stuff and revenue-generating activity is out of whack.
It feels like the CFO has had too much time in the business without giving reins to a more creative person who would otherwise look at a balanced scorecard and not just P&L.
I feel the lemon is about to be squeezed too hard on some of the major programs, and that juice is going to catch the eye of the executive team in a bad way.
I believe this will transpire as a reflection of not focusing enough on the customer, and instead, the business has been trying to pump up existing loyalty metrics, which don’t serve the loyalty business in the same way, today as those metrics did in past years.
The major program won’t go bankrupt, nor will it close down — but it will suffer majorly through lost opportunities or massive member churn.
The blowback would hurt significant vested parties in this program. The airline, or hotel chain itself. Investors. Senior management. Banks. Card networks, and ultimately the customers.
Now my prediction here could go either way and I’m not saying all is doom and gloom.
If we see a major loyalty program roll out massively pro-customer features, this prophecy would then be wrong. I would view that as a win for customers and the loyalty industry as in my mind – as it means we avoided catastrophe as a major brand realised the course of destruction they were on.
2. Customer Acquisition Becomes the #1 Loyalty Metric
I have long discussed how customer share of wallet is the single most important for travel loyalty programs. I’ve even detailed how to track customer share of wallet, which major airlines have adopted and use today to measure this key metric.
However for 2022 – new customer acquisition is going to temporarily (it’s the #2 important metrics during normal times) rise to the top for a simple reason.
In the travel industry today – it’s now cheaper and easier to acquire a new customer than is to try and reactivate or retain an inactive loyalty member.
With millions of airline & hotel elite members effectively dormant, or unable to retain elite status under their own steam — loyalty programs, banks, airlines, hotels… Basically everyone in the industry is looking at how to replenish that elite member base with a new, actively engaged, and ready to spend customer.
As the need for high-value customer replacement grows, so too will the marketing dollars and urgency from management teams to fast-track new customer acquisition efforts.
3. Major Talent Shortage
Most of the travel industry downsized staff levels to some degree over the past two years.
In addition to forced downsizing, smart people left the travel industry to find new careers — which includes starting their own business.
Getting these people back into the travel industry will be expensive. The amount of expert knowledge which walked out of the door when the industry downsized — isn’t coming back at the same price.
That’s if they’re interested in coming back. If they don’t – that knowledge may be lost forever — and thus, costing the industry even more in lost revenue.
I think we’ll see talent acquisition in the industry heat up. Acqui-hires, ‘Celebrity’ hires, and the market will be HOT AF for people with specialist expertise.
4. Loyalty Focused Corporations Will Increase M&A Activity
The suppliers who feed the loyalty industry are likely to be acquired by the mouth they feed. The upside in the loyalty/marketing/fintech space is virtually unlimited, and it’s through these third party companies that the industry will grow.
Additionally – See prediction #3 – Smart people have left the industry. Many started their own companies to solve problems they saw in their jobs at airlines/hotels. Growth via M&A will step up a notch in 2022.
5. A major industry partnership connecting the airline world with the technology world or another industry
Starbucks and Skyteam?
Apple and Star Alliance?
Samsung and Hilton?
Does Accor join oneworld?
Something super big will happen that will unlock new opportunities for both brands in ways never before possible.
While I don’t know what this will look like or what brands are involved – I bet this is being discussed at boardrooms across the globe right now.