Could more open loyalty save you from the repercussions of Covid-19?

Brands are reacting very differently to the Covid-19 crisis.

What’s particularly interesting to my business, as an intermediary between many big loyalty programs, is how it’s affecting customer engagement.

From the data I’m seeing, things for brands with the right mix of partners aren’t as dire as they may appear.

From the news, everyone can see that some travel brands’ core business has been particularly affected.

In some regions, load factors on airline routes have fallen dramatically. Some hotel groups are seeing occupancy plummet to 10%. The virus may have driven the final nail into the coffin of Flybe, a small UK carrier.

Businesses in other sectors, that depend on travel, are struggling to survive. They’re finding it harder to keep employees engaged, some of whom have stopped showing up for work out of concerns for their personal safety.

And of course, we are also seeing less earning and redemption transactions between brands on our platform as a result.

But I can also see that many customers are still earning points and engaging with loyalty programs even if they are not traveling.

Such earning continues in credit card programs, at the grocery store, or with local transit providers who are issuing a travel brand’s currency, when members carry on their mostly-normal lives close to home.

I think this is a powerful lesson – and perhaps one that not many people have considered.

Collaboration among complementary brands in an open loyalty coalition can keep your brand top of mind, even when customers aren’t using your services directly – or when they cannot.

If a brand with a loyalty program has a diversified mix of partners collaborating around a common loyalty currency, or enabling exchange between programs, every brand in that network continues to benefit from member participation, even if their core business is affected.

This shouldn’t be a surprise, because loyalty programs have always benefitted businesses in this way.

Loyalty points can have a significant impact on people′s behavior. They confer aspirational value: of future magic moments, of creating new memories with friends or family, of enriching experiences, or of obtaining a product or service that otherwise would not be prioritized, or be affordable.

These aspirations don’t drift away during a crisis; if anything, they may become more aspirational because present circumstances put then further out of reach.

The collaborative loyalty network keeps customers thinking about the brands that can make these aspirations a reality, when better times roll around.

The loyalty program confers other benefits too.

I have no data on this, but I also suspect that loyalty program members are monitoring how brands are responding to the current situation, and appreciating those that do it well.

Your loyalty program is probably your most direct, open and trusted communications channel: where members expect you to communicate, rather than finding your email updates an annoyance. You can be proactively communicating the action you’re taking to protect your customer’s interests during the crisis, and deliver more value.

It’s also the best place to collect data on how customers are responding to your efforts. Maintaining an open dialog with customers, around a topic of mutual concern, also enables brands and their loyalty members to co-create solutions to problems or create value that benefits all stakeholders.

Most people optimistically believe the Covid-19 epidemic will pass, and I certainly hope that is soon. Therefore, they continue to think of the future and dream about experiences they will pursue when things return to normal.

But it bears considering that the benefits we’ve discussed here are not confined to the current Covid-19 crisis.

Crises are nothing new, and if you think such disruptions won’t directly affect your business in the future, you are a fool.

Several clients I′ve spoken to have imposed ′no travel′ policies to reduce their team′s exposure to the virus and/or ensure all hands on deck if things get worse. This tells me that companies have learned from past disruptions such as Chernobyl, 9/11, SARS, the Indian Ocean Tsunami, the Eyjafjallaj?kull ash cloud, and have measures in place to mitigate impact.  

The travel industry was badly hit by the 2008-9 financial crisis; 144,000 hospitality workers lost their jobs as people booked fewer trips. There is talk that Covid-19 may trigger a long-expected, long-term economic slowdown worldwide.

During such times, the same theory applies. Travel may move further out of reach, but spending in other categories continues. Customers’ aspirations for memorable experiences remain keen as ever.

If a customer is not active in the loyalty program (which represents 60% to 70% for non-travel brands, or 40% to 60% for large travel brands), then this opportunity is missed.

Adding partners into a type of peer-to-peer coalition can double member participation and enable you to communicate to a much larger audience.

Perhaps this outbreak of coronavirus will signal that multi-brand collaboration, across spending categories, is one of those measures for loyalty and maintaining engagement.

When times are good, these partnerships accelerate earning, offer higher value redemption options, and enable the sharing of powerful customer insights.

But when times are bad due to factors beyond your control, they can also soften the blow.