The Art of Flow

What can the travel and retail industries can learn from each other? A lot.

?By Rick Ferguson

?Artists, athletes, and software engineers all describe the state of “flow” they enter while performing: That nearly meditative state in which all extraneous distraction is shut out. For the solitary performer, flow is essential to producing a work of beauty, winning the gold medal, or creating a flawlessly functioning app.

?The only problem with flow: It can prevent you from learning new tricks. Unlike artists, athletes, and coders, the profession of loyalty marketer is decidedly un-solitary. Success requires listening to customers, collaborating with colleagues, and uniting cross-functional teams. But even the most collaborative marketer can miss opportunities to learn from other industries.

?Events like our Loyalty Summits provide opportunities for marketers to do just that. Such was the case in our Washington, DC session last summer on what travel and loyalty marketers can learn from each other, moderated by Loyalty Summit co-chair David Slavick. The discussion featured an august panel comprised of retail and travel loyalty experts: Casual dining chain TGI Friday’s Lindsay Eichten, beauty retailer Function of Beauty’s Sooklee Shirlee Fridley, and the Washington Post’s Anna Lorch.

The panel’s consensus: Both travel and retail marketers would do well to spend more time learning from each other. Drawn from their discussion, here are five ways that marketers from both industries can learn from their cross-industry peers.

From retailers: Make personalization part of your DNA

For beauty retailers, personalization is more than just a marketing buzzword; it’s an existential requirement. Online beauty retailer Function of Beauty creates solutions tailor-made to each customer’s specific requirements, beauty goals and preferences, down to the fragrance and the color of each product. The company combines transactional data with zero-party profile data to create unique products that build long-term loyalty.

“The company was born with personalization at its heart,” says Sooklee Shirlee Fridley. “My team owns the CRM and loyalty efforts across channels, and so it is very critical for us to really think through that personalized experience for our customers.”

For travel marketers, adopting this mindset means more than just knowing whether your customer prefers an aisle seat or an upper-floor room. It means developing new sources of zero-party data to tailor a unique travel experience for each customer. An aspirational goal to be sure—but the travel brand that learns to personalize like a beauty retailer will gain considerable advantage.

From travel marketers: Think like a casino

All the panelists agreed: When it comes to effectively actioning behavioral data, no industry does it better than the casino resort industry.

“We all think we’re good at using data, but compared to the casinos, we’re amateurs,” says David Slavick.

From the moment you insert your loyalty card into a slot machine or hand it to a table game dealer, the casino’s marketing teams collect and action that data. Which machines and games you prefer, your rate of play, your sampling of restaurants, your on-site activity—casino marketers leverage that data to deliver rewards and perks that build engagement, increase retention, and foster incremental spend.

“We all think we’re good at using data, but compared to the casinos, we’re amateurs." -- David Slavick

For retailers, emulating the casino industry means breaking down data silos, synchronizing data collection, and actioning that data most predictive of customer spend. We can’t match the casino industry overnight—but we can begin the first steps on the journey.

From retailers: Exploit the point of commitment

When retailers think about customer acquisition, they often talk about the point of commitment—the point at which the customer experience turns a curious customer into a new loyal one. Wowing a new customer with your products and services and then enticing them into your loyalty program is a time-tested way to acquire new customers from the competition.

For traveler marketers, that point of commitment is a much harder nut to crack. High-status travelers who choose to sample a competitor lose that status, are treated like nobodies, and then retreat to the safety of their home airline or hotel brand. That’s why status-matching has become such an imperative for travel marketers—give your competitor’s customer a taste of the good life, and she just might stick around.

“If I'm walking away from my status to give you a shot, and I have to wait in line and you lose my luggage, then you lose that chance to make me loyal,” says Lindsay Eichten. “But if I exploit that moment [as a marketer], then I give myself a chance to lower my trading cost.”

The challenge for travel marketers is to gain the support of the C-suite to break down the operational barriers that inhibit your ability to exploit the point of commitment. Think like a retailer and leverage that moment to acquire new loyal customers.

From travel marketers: Practice the science of test-and-learn

Overall, the travel industry has a much longer track record of practicing test-and-learn methodology that turns customer data into profitable behavior change. When Fridley worked with Caesar’s Entertainment as an analyst, the data science team crunched the data from 50 million members to model the behavior of both high-value and high-potential customers. She has since brought that test-and-learn approach to her role at Function of Beauty.

With a background in travel marketing herself, Anna Lorch has approached her current role at the Washington Post with a similar degree of scientific rigor. Her team leverages reader data to devise test-and-learn strategies that attract and retain subscribers.

“We look at the best practices from the loyalty world to test variations of the subscription models that [turn] casual readers to loyal ones,” says Lorch.

For Eichten and TGI Friday’s, practicing the scientific method means remembering that failure is a part of the learning process. To minimize failure with new loyalty initiatives, her team practices a methodical approach to testing new initiatives.

“Sometimes we forget that the test doesn’t work,” says Eichten. “We try to put real structure around our hypothesis, the duration of the test, and the rollout plan to test more efficiently.”

“Sometimes we forget that the test doesn’t work. We try to put real structure around our hypothesis, the duration of the test, and the rollout plan to test more efficiently.” --Lindsay Eichten, TGI Friday's

From both: Build purposeful partnerships

Travel marketers pioneered the concept of loyalty program partnerships between like-minded brands; airline credit card partnerships are the most lucrative example. Meanwhile, airlines have partnered with hotel and car-rental brands, while hotels have partnered with airline and casino brands. Retailers followed suit, building mammoth coalition partnerships in which members could earn reward points across a suite of retail brands.

Those big coalition programs may be mostly gone, but the past few years have seen a rebirth of loyalty partnerships that are both nimbler and more strategic. Both travel and retail marketers would do well to learn from success stories on both sides. For travel marketers, it means learning from successful retail partnerships such as Target and Ulta Beauty in the US. For retailers, it means learning from exciting new partnerships such as the Norwegian Air and Strawberry hotel alliance in Europe. The key, says Slavick, is for both partners to know what they want out of the partnership.

“There are both strategic and tactical partnerships,” says Slavick. “The key is to work through a thorough planning methodology to find where the complementary aspects are, and which potential partners can help you fill the gaps.”

The future: Collaborative flow

The Loyalty Summit panel agreed that both retail and travel marketers have much to learn from each other. The future of loyalty marketing is a sort of collaborative flow—not marketing in isolation, lost in the weeds of your own industry, but rather a continual sharing of best practices across industries. The rising tide of loyalty marketing will lift every boat.

“It’s exciting for me to talk about how retail and travel loyalty intersect,” says Eichten. “There’s a lot we can learn from each other.”

Rick Ferguson is VP Marketing for Loyalty Summit. For information on sponsoring or attending Loyalty Summit Europe on 5-6 June 2024, please DM!