Monetizing Loyalty Programs – From Cost Center to Revenue Center

The full potential of loyalty programs wasn’t realized until 1980s. Today, they are everywhere in the customer-centric industry. But are loyalty efforts profitable? The answer is yes.

Research suggests that some highly lucrative loyalty programs by elite airlines generated over 10B$ in earnings alone in 2015.

That brings us to the question – how to turn your business’ cost center into profit center? Let’s start with the cost factor. Labor and technology represent most of the cost of a loyalty program. While technology will add value to your business, the workforce is ultimately responsible for enhancing customer’s experience. Loyalty programs are designed in a way to provide scalability, stability, predictability and agility to the business. The ultimate purpose of loyalty programs can be summed up in one sentence – “figure out your customer behavior, offer the best incentives to make them spend more with you.”

The secret to achieving this goal is marketing. To make it clear, let us stick with the fastest-growing segment of travel consumers, Millennials, for the time being. A study on Millennials suggests that 85% of them look for the best possible deals online, including freebies, discounts, rewards and other amenities.

Here are different ways to offer your members the best perks:

Discounts and rewards

Customers search for member-only rates while booking a flight or accommodation. Travel clubs offer exactly this and choosing a travel club with such inclusions in the loyalty program will drive revenue earlier than expected.


Who doesn’t love a freebie in the form of a free night or discount coupon? Now if the customers are able to redeem miles or points for a freebie, they will feel special. Not only will they covet miles but also the elite status. They can check their balance any time, consume them at their will and that will generate definite revenue in the long run.

Other discounts

Imagine if they get discounts beyond travel. Travel clubs that combine travel and lifestyle benefits have an edge over other businesses. Getting lifestyle benefits will be like an added bonus for your members. When they are not traveling, they will be able to use the exclusive discounts for retail, shopping, dining and entertainment. Not only this will enrich their experience as loyalty program members, but also give them a reason to come back to you and spend more.

Personalized rewards

According to a study, over 75% travelers have no problem in paying extra for added perks. The travel clubs can utilize this fact to encourage their members to spend more. How? Simply by offering them ways to earn extra miles or points by purchasing add-ons such as seat with extra legroom etc. Plus, loyalty programs can give your customers more options to choose from such as several fare options, personalized itinerary, visa assistance to name a few. More targeted offers = wider range of customers.

So it will work like a tiered loyalty program more or less. By rewarding the high-spenders, you encourage them to come back and spend even more.

Virtual profit by the virtue of referral

A study suggests that 76% of travelers count on their friends’ recommendation of a travel service or product. (Source) That’s why loyalty programs encourage referral schemes which benefit both the existing customer and your travel business.

Marketing your business using loyalty programs is a wise investment with compounding returns. From cost center to revenue center, monetization of loyalty programs certainly contributes to your company’s profits. Especially when it is a one-of-a-kind loyalty program offered by Custom Travel Solutions. The analytics surrounding Custom Travel Solutions’ loyalty program combined with technological innovation plays a vital role in understanding the customer thereby driving more revenue into your business.

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