From a customer perspective, company loyalty programs provide "hard" and/or "soft" benefits that provide enhanced value. Hard benefits include financial rewards like free air travel or free nights at a hotel while soft benefits include perks like expedited check-in. Benefits offered through travel loyalty programs aim to meet customer's financial and emotional needs which include offering appealing price incentives while making participants feel special, appreciated and valued. Historically, travel loyalty programs have been more about price discounts and less about relationship building but the fiscally challenged travel industry, spearheaded by the bankruptcy-ridden airline industry, can no longer afford to be driven solely by offering the cheapest deal.

The travel loyalty program market in the U.S. includes programs offered by a wide variety of companies from the airline, hotel and rental car industries. Many of the loyalty and affinity programs work together in business partnerships to offer customers greater flexibility and a broader selection of rewards.

A new approach to customer loyalty programs is necessary, one that continues to focus on the hard benefits through discount points and competitive pricing while providing an increased focus on soft benefits that cradle the emotional connection between customer and company, in order to provide customers with a special sense of belonging to something that they care about.

When driven by price alone, customer loyalty programs attract customers who are loyal for as long as the price is the lowest and when a lower priced offer is introduced into the market, this so-called loyalty readily vanishes. Successful customer loyalty programs require a corporate-wide commitment and strategy that transcends individual departments since it involves creating and nurturing a personalized relationship that includes each employee/customer interaction.

Loyalty programs that work on an accrual system use either "points" or "miles." Points are commonly used by hotels and car rental companies, which offer points based on dollars spent or, in the case of hotel, the number of nights paid for during the stay. Airlines traditionally use miles, which correspond to the number of miles flown per flight, plus bonus miles for their elite members, as well as miles for dollars spent on branded credit cards and other partnership programs. Loyalty program members who have more than one type of membership can often receive both points for a hotel stay along with miles on their frequent flier program from that same hotel, and they may receive miles from their credit card as well, if they use the airline card to pay for the hotel stay.

A new report by Ireland-based Research and Markets Inc. covers loyalty programs offered by major airlines, hotel chains and car rental companies, as well as those offered by online travel sites. In some cases, loyalty programs are multi-layered; several companies follow a points/miles accrual program, while other programs work with real-time discounts and customer service concepts rather than points accrual.

Related Link: Research and Markets' Travel Loyalty Programs in the United States Report