Across industries, technology often determines the success of a company’s loyalty strategy. In travel and financial services, where customers are accustomed to full-featured loyalty platforms with travel booking capabilities and sophisticated earning and redemption frameworks, technology’s role is magnified, and having the right solution in place is essential.
But what does that solution look like? What are the fundamentals underpinning successful loyalty technology platforms? And what does the future hold for loyalty technology?
The expert who can answer these questions (and a few others) is Mike Engelhart, iSeatz’s Chief Technology Officer. Mike is the leading technology authority at iSeatz, having spent the better part of 16 years architecting, developing, and directing the solutions the company offers to clients. His titles have included VP of Application Architecture, Senior Solutions Architect, Chief Solutions Architect, and now CTO. As you'll glean from his answers, Mike’s approach to loyalty technology is customer-centric, functional, and inclusive.
The following Q&A offers the CTO’s perspective on the challenges and potential solutions for companies seeking to improve the performance of their loyalty programs.
We expect significant advancements in the loyalty technology landscape in the near term, particularly concerning data utilization and personalization. One notable development is the enhanced use of artificial intelligence (AI) and machine learning algorithms to analyze vast amounts of customer data, allowing for more accurate predictions of consumer behavior and preferences. This generation of AI is proving adept at aggregating data from disparate and seemingly unrelated sources to get a true sense of the customer’s “intent,” not just their historical activity with the brand.
Applying these solutions will enable travel loyalty programs to make the booking and browsing experience more compelling, surfacing only the most relevant or enticing content, offering rewards and experiences tailored to individual members, and even improving the post-booking experience. All these capabilities will increase engagement and retention rates.
Improvements in omnichannel integration will also likely occur, enabling seamless experiences across various touchpoints such as mobile apps, websites, and physical stores. One insight we've learned from our own travel booking platform is that while consumers love to browse for vacation packages or flights on their phones when they are ready to book, many times they use a laptop or desktop.
Whether that’s because they feel like it's safer to transact that way or that a larger-format device is more conducive to filling out long forms (as many travel transactions require), the focus for the brand or loyalty program should be on making it easy and frictionless for them to cross those boundaries. Improvements in technology are making that possible and will address the current lack of consistency and convenience in loyalty program interactions, ultimately enhancing the overall customer experience.
Over the last five years, the most critical evolutions in loyalty technology have revolved around data analytics, personalization, and mobile integration. Data analytics tools have become more sophisticated, allowing businesses to gain deeper insights into customer behavior and preferences. This has enabled more targeted marketing campaigns and personalized rewards, leading to higher engagement and loyalty program performance.
Integrating loyalty programs with mobile platforms has also been crucial, making participation more accessible and convenient for users. Mobile apps offer real-time updates on rewards, exclusive offers, and redemption options, enhancing the overall customer experience and driving increased program adoption.
But really, the convergence of these three evolutions has had the most significant impact on the loyalty technology landscape. The fact that vast amounts of data can now be analyzed and put into personalization engines, fueling marketing initiatives that not only consider a customer’s history or status level but also what they like to do and deliver them to customers where and when they’re most likely to convert... this holistic process has only become a reality in the last few years. It’s leading to a greater quantity of successful transactions and better experiences.
Generally, brands in these industries typically seek loyalty technology solutions with three broad capabilities. First, they want technology that provides flexibility, scalability, and ease of integration with existing systems. Every brand wants its loyalty program to grow, so it is important to have technology that can scale with that growth. However, many financial services and travel brands have existing technology platforms like a loyalty point bank, a customer profile, or a CRM system, so ease of integration and the flexibility to work with these extant systems become vital considerations.
This is why it’s so important for travel loyalty platforms to offer a normalized set of APIs that facilitate a broad range of integration options, work with a variety of different travel providers, and span multiple lines of business.
Second, they seek platforms that can adapt to their unique business needs and provide comprehensive data analytics capabilities for actionable insights. Data, as I mentioned, fuels all sorts of valuable initiatives, from marketing to dynamic content presentation to program optimization, and it's the engine for a host of AI-based enhancements. So, this is typically a high priority as well.
Finally, brands want solutions that improve the customer experience, such as seamless omnichannel interactions and personalized rewards. Rewards tailored to the individual are much more likely to be perceived as valuable by members and, therefore, more likely to be redeemed. More seamless omnichannel interactions open up an array of opportunities to engage with members while traveling, such as pushing notifications to their mobile devices or enabling additional purchases or redemptions through the loyalty program while at their destination.
One of the primary challenges with supplier integration is ensuring compatibility between different systems and platforms. Technological interoperability issues can arise when integrating loyalty technology with third-party vendors or service providers. This can be particularly fraught in the travel industry, where there is an incredible amount of variance in how things are built and designed, and many legacy systems are drastically outdated. This obviously can – and often does – lead to data silos, inefficient processes, and inconsistencies in customer experiences.
Loyalty platforms should prioritize open APIs and standardized data formats to mitigate these effects and facilitate seamless system integration. Not to be too self-congratulatory, but that’s precisely what the iSeatz platform is designed for. If a travel supplier has an old SOAP-based API, we can integrate with that. Conversely, if a vendor has a modern RESTful API or a GraphQL API, we can integrate with that, too. And because we’re a travel-first company, we know how to design our systems to support those variants and idiosyncrasies that are unique to the travel sector, like the XML-based systems used by most car rental suppliers and the NDC connections that are gradually supplanting the old GDS model in airline booking.
For brands and loyalty programs, collaboration between IT teams and vendor partners is essential to proactively identify and resolve compatibility issues. Investing in robust data management and governance practices can help ensure data accuracy and consistency across integrated systems.
The primary technical challenge in implementing personalization within loyalty programs lies in managing and analyzing vast customer data in real-time. This requires advanced data analytics capabilities, including AI and machine learning algorithms, to identify patterns and predict individual preferences accurately. My colleague Zach Wallace discussed the importance of advanced data analytics to loyalty programs in his recent blog post on this topic, which I encourage you to read.
Companies should invest in advanced customer relationship management (CRM) systems and data analytics platforms capable of processing and analyzing data at scale to be more effective. The “at scale” part is essential, particularly for financial services companies with potentially hundreds of thousands of customers transacting simultaneously, and each transaction is a data point that needs to be aggregated and analyzed. Additionally, integrating personalization features directly into loyalty program platforms can streamline the delivery of tailored rewards and experiences to individual members.
The "as-a-service" business model, such as SaaS (Software as a Service) and Loyalty-as-a-Service (LaaS), offers several advantages for brands looking to improve their loyalty program offerings. These models provide flexible and scalable solutions that can be customized to meet each brand's needs. Another of my colleagues, Elizabeth Giuffrida, also wrote a compelling article exploring the advantages of LaaS in more depth, which I urge you to read.
By leveraging cloud-based technology, brands can access cutting-edge loyalty features and functionalities without significant upfront investment in infrastructure or IT resources. The financial benefit of this approach is even more pronounced when considering the cost of managing and analyzing data to achieve the personalization advantages we discussed earlier. An organization with an in-house loyalty solution that wants to implement advanced AI and data mining techniques will quickly face skyrocketing cloud and storage costs. A LaaS partner, however, can help that brand understand what data they’re trying to extract and how it will impact their personalization efforts, transaction volume, and revenue stream.
Additionally, the subscription-based nature of these models allows brands to stay agile and adapt quickly to changing market dynamics and customer preferences. They can easily upgrade or downgrade their service tier to meet evolving business requirements. A LaaS platform that leans on microservices and on demand serverless technologies further increases flexibility and keeps cloud costs manageable.
SaaS and LaaS providers often offer ongoing support and updates, ensuring that brands can access the latest innovations and best practices in loyalty technology.
Can you discuss the importance of integrating loyalty technology with other operational systems and what challenges companies might encounter in this process?
Integrating loyalty technology with a company's broader operations presents several challenges, primarily related to data synchronization, process alignment, and organizational collaboration. One common challenge is ensuring seamless data flow between the loyalty platform and other systems, such as CRM, POS, and inventory management. Misaligned data formats and integration protocols can lead to data inconsistencies and operational inefficiencies.
As with supplier relationships and integrations, interoperability and data standardization across all systems go a long way toward addressing these challenges, as does a strategic and collaborative approach. Investing in middleware solutions and API gateways can facilitate smooth data exchange and communication between different platforms. Regular performance monitoring and optimization are crucial to proactively identifying and addressing any issues or bottlenecks in the integration process. Moreover, fostering cross-functional collaboration between IT, marketing, and operations teams is essential to ensure the alignment of processes and objectives, including data security and compliance measures.
The latter is a newer challenge as governments and businesses prioritize privacy in data collection. Regulations like GDPR or CCPA provide strict limits on what companies can use customer data for, and there can be severe fines for breaking these laws. Technical privacy rules such as Apple’s App Tracking Transparency (ATT), which requires apps to get the user’s permission before tracking their activity across other companies' apps and websites, have made targeted advertising, personalization, and omnichannel approaches much more challenging to implement.
Companies that can effectively balance respect for privacy with personalization and customer engagement through transparency and innovative technologies will have the best chance of succeeding. That will require adapting to new regulations and consumer expectations while finding innovative ways to deliver customized experiences.
Achieving the next evolution of travel loyalty will require companies to embrace advanced technologies, understand the increasingly central role of data, and identify the right partner to help them navigate the changing loyalty technology landscape.
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