By Phil Seward
Banks and credit card companies have long loved travelers as customers. Today’s travelers are made up of diverse demographics, giving banks the opportunity to provide a broad range of benefits and offers. These offers range from miles or points for card spend or complimentary access to airport lounges to relax and refuel prior to boarding. Challenger banks—such as N26 in the United Kingdom—and well-established players, such as Chase, understand the appeal these value-added services and benefits have. And they make a point of offering free or low-fee foreign transactions to lure consumers with a wanderlust lifestyle.
Some critics may argue that focusing on a leisure-oriented audience could cause banks to miss out on the opportunity to secure strategic revenue gains. However, the travel industry is witnessing consumers engage in more frequent and pleasurable travel. Millennials, especially, are taking part in more “micro-cations,” with 72 percent of millennials having taken at least one vacation no longer than four nights in 2018, compared to 69 percent of Gen X-ers and 60 percent of baby boomers.
Travel continues to be a top interest for many consumers—with 1.4 billion international tourist arrivals in 2018 (a six percent increase over 2017). More than ever, travelers represent a vital and highly profitable investment for banks.
With travel becoming more ubiquitous, banks are better able to accurately identify mid- to high-net-worth consumers who will be potentially valuable long-term. The more enjoyable an airport experience is for a customer, the more likely they are to spend at airport concessions and restaurants. In fact, a report released in 2017 by GlobalData estimated that spending in airports could reach a global total of $49 billion by 2021, a 27 percent increase since 2016. Therefore, unlocking cross-border spend once travelers are at their destination is also a key value driver for banks.
At the end of the day, it is worth it to banks to devote time and effort to retain the loyalty of these lucrative customers. While this investment can manifest itself in a variety of ways, the key is to make sure that the benefits and travel-related products that banks offer to travelers impact their everyday lives. There are many stages throughout the travel experience where small additions can make a big difference to the customer—from lounge access while waiting for a delayed flight to trip delay and lost baggage insurance. This can generate goodwill and enhance bank loyalty. Additionally, banks have plenty of customer data available at their fingertips. If used correctly, banks can deliver more personalized and timely travel incentives.
Banks do not need to invest in expensive experience-impacting benefits and rewards to leave a positive and memorable impact on customers. By capitalizing on airport experiences and offering personalized incentives to travelers, banks can begin to see a boost in their brand recognition—and even more tangible, their business metrics. There’s also the potential to drive higher card spend—including cross-border spend—and help banks differentiate themselves against competitors.
A bank’s success in today’s digital economy is ultimately decided not only by its access to data, but its ability to accurately interpret it and offer a selection of personalized benefits and rewards.
Airports themselves present a valuable opportunity to access customer data. Almost every shop in an airport collects origin and destination data, which shows where a traveler has departed from and where he or she is traveling to next. Banks can easily identify which of their customers are frequent travelers by tracking how often they use their card at the airport or in overseas locations.
With the right systems in place and a deep understanding of what makes customers tick, travel presents banks with a range of opportunities to boost engagement and even grow relationships. Card-linked offers (CLOs) are especially helpful in this space. CLOs enable spend-related offers or rewards—whether cashback or loyalty currency—and provide a simple way for customers to view offers, link them to their payment card and redeem them when paying online or in-store. This process significantly reduces friction and benefits both the bank and the traveler. CLOs also provide an abundance of valuable data that, when leveraged effectively, can be used by banks to deliver more personalized offers and experiences to their customers—driving further engagement and loyalty opportunities. Capitalizing on data from a variety of sources in a smart way helps banks to remain top of mind for their customers, creating emotional loyalty.
Securing long-term relationships
Customers don’t want to be an afterthought. They want a brand that understands them, their lifestyle and their interests. Therefore, to retain customers and boost brand loyalty, banks must be willing to reinvent their strategic approach, placing customer experience at the forefront. By embracing new partners and technology, and using available data, banks have an opportunity to be present in customers’ everyday lives. They can present relevant benefits and offers that are both compelling and personalized to the individual. Travel is an increasingly important gauge of this, and paying attention this sector will help to drive long-term relationships between banks and their customers on the move.
Phil Seward is senior vice president of loyalty strategy – Americas, at Collinson, a global leader in customer benefits and loyalty solutions.