Are Loyalty Programs Losing Their Luster for Business Travelers?

What happened to loyalty love? A few months ago, we wrote about a new trend in business travel: road warriors who leave their loyalty programs in search of better bargains. Thanks to a new report by consulting firm Deloitte and Touche, that trend is becoming a reality for a bevy of business travelers.

So what happened? We did a bit of digging to sort through what’s going on with increasingly unpopular rewards programs:

Loyalty “monogamy” is out of style

The Deloitte and Touche study surveyed frequent travelers to gather their thoughts on their airline loyalty programs. It concluded that the programs aren’t working as intended – to nail frequent fliers to one airline and one loyalty program.

Here’s how some of the findings broke down:

  • 44% of business travelers and 72% of high-frequency business travelers participate in more than one airline loyalty program.
  • Only 44% of all travelers (and 40% of business travelers) fly at least three quarters of their air miles on their preferred airline.
  • Road warriors rank an airline loyalty program as the 18th most important airline attribute out of 26 factors; but it’s the second most important attribute for high-frequency business travelers.

The bottom line: shopping around for the best deal trumps carrier loyalty these days. But why is that?

One size doesn’t fit all

A few people are indeed benefiting from loyalty programs: top-tier frequent fliers typically traveling on the company dime and hobbyists who gleefully game the system. The real winners are the travel companies themselves, who can change loyalty program rules at any time to benefit their bottom line.

Not every traveler sees benefits though, and here’s where frustration sets in: loyalty programs don’t always guarantee preferential treatment. Airline carriers might want to reassess their “one size fits all” loyalty program approach and create more customized programs for individual travelers at every tier.

What’s next for loyalty programs?

The airlines are indeed reacting to this trend. Several are starting to base programs on the amount of business travel dollars spent. But according to the Deloitte and Touche study, the shift to dollar-based loyalty programs makes it difficult to use “dollars spent” as the sole or primary criteria for rewarding customers. Frequent changes in prices and lower ticket prices with advance bookings put a wrench in the “dollars spent” plan. Instead, the study’s authors recommend a hybrid model that incorporates the miles flown and dollars spent. Could that bring back the loyalty love? Time will tell.

What do you think? Tweet us @Concur or comment below and let us know what you think the future holds for loyalty programs.

Photo credit: AttributionNo Derivative Works Some rights reserved by Nick Harris1  

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