The impact of personalized travel rewards on customer loyalty, emphasizing AI’s role in creating tailored experiences and enhancing lifetime value.
It’s no secret that long-term engagement is the key to improving customer lifetime value. However, to achieve this, brands must connect with customers by catering to their unique wants and consistently delivering relevant offers and recommendations.
This level of personalization is nearly impossible without the right data and the tools to turn it into actionable insights. Leveraging loyalty technology solutions with built-in AI and automation capabilities allows brands to align their content with a customer’s preferences and purchasing behavior at every encounter. Even more importantly, it allows them to anticipate and address customer needs before they’ve even fully formed, providing them the opportunity to deliver unique value that encourages consistent customer interactions.
So, if personalized marketing is so effective, why do some companies still lean on broad strategies? Marketers used third-party cookies to personalize content in the past, but evolving privacy laws, such as those in Canada and Europe, are making this more challenging. Though no such law exists on the federal level in the United States, state laws such as the California Consumer Privacy Act and Google’s decision to elevate user choice around privacy when it comes to third-party cookies in its Chrome browser mean that marketers will need to push for first-party data wherever possible.
This shift has fueled the rise of loyalty programs. According to consulting firm Gartner, one in three businesses without current loyalty programs will establish one by 2027 precisely because they can gather first-party data. We’re also seeing a rise in strategic loyalty partnerships, which enables brands to share user data as well as expand their earning and redemption opportunities. For instance, Lyft and Delta Sky Miles members can link their accounts to earn additional frequent flyer points with every ride. As loyalty programs expand these opportunities, marketers will be privy to streams of customer-supplied data to further refine and personalize their loyalty offerings to encourage maximum engagement.
Also Read: From Legacy to LaaS: The Evolution of Loyalty Programs
Within the pantheon of loyalty rewards, travel perks are the most coveted by consumers and brands alike. According to arrivia’s 2024 Travel Loyalty Outlook Report, 95% of companies surveyed now offer travel rewards as part of their loyalty programs, compared to just 65% in 2022. Through strategic partnerships and with the help of travel loyalty technology providers, offering these types of rewards is no longer the domain of just travel companies.
The benefits of travel perks
Imagine this scenario: a customer walks into a Starbucks, orders a mezzo latte via the Starbucks app, schedules an Uber to bring them to the airport later in the day, and finally books a hotel via T-Mobile’s travel site — all the while earning points that can be later exchanged for travel perks.
The demonstrable value to the consumer illustrated in that scenario partially explains why travel rewards are booming. However, they also confer advantages to the brands that offer them. Say you’re Starbucks, and your loyalty rewards are limited to free coffee or branded merchandise. Are these valuable enough to incentivize customer spending and encourage frequent store visits? Consider how the coffee retailer has recently expanded its loyalty program via partnerships. In a 2024 earnings call, Starbucks CEO Laxman Narasimhan credited the company’s partnership with Delta’s Sky Miles program with driving deeper “connection and engagement” from loyalty members. By offering its members the opportunity to earn travel rewards with specific purchases, Starbucks now delivers value that consumers, especially millennials and Gen Z, increasingly prioritize— experiences. And experiences can be highly personalized.
While a Starbucks Rewards and Delta Sky Miles member in a lower income bracket might value travel discounts more than any other travel perk, a business traveler might be more interested in rewards that streamline the travel process, such as free lounge access or expedited security clearance.
Using AI to Augment Travel Rewards
These brands can identify travel patterns, favorite destinations, and user behavior by leveraging the customer data from these programs through data-sharing agreements, AI-powered tools, and marketing automation capabilities. This allows them to dynamically generate personalized rewards at the exact moment when the member is most likely to engage with them.
In other words, marketing technology enables brands to offer their loyalty members curated experiences. For example, Marriott Bonvoy, the hotel chain’s popular loyalty program, integrates AI-driven personalization tools to generate offers based on a traveler’s unique profile, whether free nights in their preferred hotel locations or exclusive packages tailored to their past travel behavior. This kind of data-driven precision and personalization separates leading brands from those still using traditional, broad marketing strategies.
Also Read: Beyond Rewards: Redesigning Loyalty Programs for the Modern Customer
As marketers, we know that sending the right message to the right person at the right time and in their preferred channel is the key to higher conversion and engagement rates. That’s why organizations must consider how a loyalty program and modern marketing technology solutions can help them achieve these goals. With high-quality, first-party data from their loyalty programs, brands can train their predictive AI models to anticipate what types of messaging, offers, and experiences a customer will most likely respond to. By leaning into personalized marketing strategies that utilize highly valued rewards such as travel, marketers can achieve the only real prerequisite to increased customer lifetime value: long-term loyalty.
