In recent years, travel companies have transformed their loyalty programs from mere reward tools into essential pillars for financial stability and long-term growth. With low margins, fierce competition, and economic uncertainties, the ancillary revenue market has surged, driven by innovative, data-driven solutions.
In 2013, ancillary revenue in the airline industry was estimated at $42.6 billion, accounting for 6% of global airline revenue. By 2023, this figure had soared to $117.9 billion, accounting for an incredible 15% of total airline revenue. This dramatic growth highlights the symbiotic relationship between loyalty programs and ancillary products, creating a cycle of increased traveler engagement, enjoyment, and economic growth.
While loyalty programs continue their ascension, the ways in which loyalty programs drive revenue are also on the rise. With support from partners like Plusgrade, travel companies are not only offering a growing array of ancillary products designed to delight travelers but are also leveraging sophisticated, real-time analytics to deliver personalized offers.
In a new report from Plusgrade — based on a global survey of thousands of travelers, as well as their deep experience developing ancillary revenue solutions for the global travel industry – you will discover:
- Early engagement drives more revenue: Engaging loyalty program members early in their journey significantly enhances customer lifetime value, with members who purchased points showing a 31% increase in airline transactions and a 26% increase in flights booked.
- Ancillaries offer new revenue opportunities: The shift towards unbundling has seen strong customer approval, with 83% of loyalty program members purchasing at least one add-on in the past and 92% willing to do so again in the future.
- Loyalty members prefer premium options: Loyalty program members are more likely to invest in premium ancillaries, with a strong preference for upgrades like premium economy and business class, showcasing their willingness to pay more for enhanced comfort.
- Flexibility enhances engagement: Giving loyalty program members more ways to earn and use points, from additional ancillary products to the ability to mix points and cash for purchases, significantly improves satisfaction and leads to more engagement.
- Personalized experiences boost conversions: Leveraging real-time data to send timely and relevant offers tailored to the unique needs and preferences of loyalty program members can significantly increase conversions, transaction sizes, and overall revenue.
- And much more!
We hope these insights inspire you to unlock the full potential of your loyalty programs and ancillary offerings. Download the full report now to delve deeper into these findings and learn how to maximize the impact of your loyalty program. Look forward to seeing everyone at WAF 2024.
Download full report here
Article by Plusgrade
