The true cost of loyalty

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The true cost of loyalty

Travel Policy

Personal loyalty can often be odds with a well-managed travel programme; such loyalty schemes drive non-compliance with corporate policies. We consider whether this makes loyalty ripe for disruption.

 

We all like to feel that we are being rewarded for our loyalty; and when businesses get them right, loyalty schemes can be an extremely effective sales and marketing tool.

So effective, in fact, that they can drive non-compliance with other competing demands.  Studies suggest that personal loyalty is at odds with a managed travel programme.  The Institute of Travel Management has said that loyalty programmes with airlines and hotels are one of the underlying reasons for noncompliant spending.  And it’s a rare travel manager who doesn’t have at least anecdotal evidence that this phenomenon is occurring in their own organisation.

At the extreme end of the scale, a recent article in Buying Business Travel highlighted the problem of staff who leave it late to book travel so that it costs more and they can accrue more points.  So how can travel managers respond to these warring loyalties?

 

Warring Loyalties

Internal education campaigns highlighting the benefits of travel compliance must be the first step, although such communications tend to stress the benefits of compliance to the company not the individual.  To maximise effectiveness, it’s important to consider the benefits to the individual as well as corporate benefits.

Some airlines have introduced schemes that enable individuals to collect points at the same time as the organisation collects corporate rewards.  This is welcome.  But while this addresses the thorny problem of in whose benefit the scheme operates, it still does not solve the problem of travellers going outside the approved supplier list altogether.

 

Flexibility drives compliance

Many businesses are allowing more flexibility for their travellers; enabling them to retain and use their existing memberships as long as they achieve the best rates within a mandated booking policy.

As well as benefitting the traveller, there are benefits to the business.  Perks like free lounge access, complimentary snacks and water and upgrades are likely to reduce the cost of travel for the organisation.  And through these perks, schemes can improve traveller productivity and comfort.

However, since increased flexibility allows spending to be spread across multiple suppliers, it is possible that these traveller-centric organisations are missing out on the best possible corporate rates.

This concern is widely held: the Institute of Travel Management found that more than 76% of corporate travel buyers felt loyalty schemes mainly benefit the traveller rather the company.

 

Is it time for disruption?

It is said that an industry is ripe for disruption when there are common processes that no one has got right.  The contradictory pull of personal and corporate loyalty schemes certainly suggests room for improvement.

A recent article in Forbes suggested that Blockchain could be the mechanism for disruption in loyalty, arguing it would make it possible to combine points from multiple loyalty programmes in a single ledger.  It does raise other questions, however.  Notably, where ownership of the data would lie – something that will be especially prescient when GDPR comes into effect in May this year.

While the travel industry gets to grips with the potential of this new technology, travel managers are left wondering how to square the competing demands of personal loyalty schemes and corporate travel policy.  Buying Business Travel cites a hard-line response to the problem; highlighting the organisation that enforced a policy of compliance through an absolute refusal to reimburse corporate travel when not booked through the approved mechanisms – no exceptions.

 

Whether you want to ensure compliance with your corporate travel policy with carrot or stick, your Travel Counsellor can help you to identify opportunities to improve travel compliance.

 

 

 

 

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