Customerland

Reconciling Consumer Expectations and Brand Realities for Better Travel Loyalty

• Jeff Zotara • Season 2 • Episode 26

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Today on our podcast, we explore the specifics of consumer expectations from loyalty programs with Jeff Zotara, Chief Marketing Officer at Arrivia. Jeff discusses key findings from Arrivia's 2024 Travel Loyalty Outlook, highlighting the stark misalignments between what businesses believe consumers want and the actual consumer priorities. We uncover the essential features consumers are looking for, such as tangible discounts on everyday purchases, and explore how companies can enhance their offerings through more effective user experiences and integrated omni-channel strategies.

We also examine how our company has leveraged technology and strategic partnerships to transform the travel industry. We discuss the role of our advanced customer data platform (CDP) and our implementation of AI and machine learning technologies, which have automated 60% of our bookings. This shift has allowed our team to concentrate on improving both product quality and user experience. We'll explore the critical role of precise, timely data in crafting personalized offers that elevate customer engagement and increase the lifetime value.

Finally, we address a major issue in loyalty programs: the disconnect between brand perceptions and consumer frustrations. Contrary to many brand assumptions that poor website user experience is the foremost concern, we find that consumers are more frustrated by the complexities involved in earning and redeeming rewards. We discuss the necessity of straightforward communication, such as utilizing short-form videos for effective engagement. Drawing inspiration from Steve Jobs' emphasis on focus, we advocate for a disciplined approach to business that minimizes distractions and maximizes success.

Jeff Zotara:

Consumers have shifted their attitudes. They are now more discerning in which loyalty programs they're using, and the status that we speak of in this scenario is simply a moniker for a brand that puts something on it like you gold or platinum or you silver? Well, does it matter if you don't have the user experience? Does it matter if you don't have convenient omni-channel solutions?

Mike Giambattista:

Jeff Zotara is CMO of Arrivia, the largest travel loyalty and rewards platform in the world. Really honored to be talking to you, Jeff. We've got a lot to talk about today, but before we get into the meat of this conversation, which is Arrivia 2024 Travel Loyalty Outlook, first thank you for joining me, but maybe you could just tell us a little about what Arrivia is all about and your role there, and then we can start pulling the report apart.

Jeff Zotara:

Yeah, thanks, Mike, and it's a pleasure to be here with you today. I think Arrivia is probably best described as the technology as far as the technology and power of many of the travel loyalty programs you see today. I've heard on previous podcasts with you that you're a member of USAA and USAA Insurance. We are their travel provider we are their travel provider.

Jeff Zotara:

Aribia provides those white label travel solutions to companies that want to provide a travel platform to their members or to their closed user groups, but they don't want to take on the responsibility of building an entire ecosystem, of negotiating with travel suppliers, providing the front end technology to help make it happen. So, in simplistic language, we provide hotel, air car, cruise and all the other different gamuts of travel to companies like American Express, usaa. We're really proud. Recently we're now the travel provider for T-Mobile and there are 100 million subscribers across the world, and so it's not only the travel provider for T-Mobile and they're 100 million subscribers across the world, and so it's not only the travel technology but it's also the customer service on the back end as well. So we have about 2,500 employees through nine different countries servicing all these different commercial brands. And then we are also very Hilton, grand Vacations, marriott, vacation Club.

Jeff Zotara:

Those types of companies are great partners of ours and have been, and we've been around for about 25 years now, and we also have a lot of different direct-to-consumer brands where we sell travel, one of those being iCruisecom, basically a direct-to-consumer online cruise retailer, and my role to your question as Chief Marketing Officer is orchestrating all of the different moving parts of all those different companies' objectives. So that can range anywhere from performance marketing, digital advertising, marketing, tech, stack around what we're doing with our customer data platform and how we're creating a more personalized user experience, all the way to brand public relations and everything you would imagine that would fall underneath that particular role.

Mike Giambattista:

The major juggle, the major marketing juggle.

Jeff Zotara:

It is. It never is boring for sure, and one of the unique things I think in my position is I do get to work with 400 plus different brands across many different verticals and platforms, and that keeps the world interesting, and thankfully I have a fantastic team that helps to make it all happen could all have.

Mike Giambattista:

All of which underpins the reasons why we should be paying more attention to some of the content that you're putting out, specifically in this case, the 2024 Travel Loyalty Outlook, because, as I mentioned before we hit the record button, we see a fair amount of research come across our desk here, and a lot of it is created for strictly for PR purposes and not necessarily for informative purposes, and therefore a lot of it's kind of thin.

Mike Giambattista:

On the other hand, your company has been doing this for 25 years. I mean even outside of this report. You're going to have a very, very good handle on what consumers are thinking and feeling as it relates to travel and rewards, as well as the companies who are serving those services and rewards up. So I'm hoping that we can kind of pull some of this apart, but I think maybe at a high level. I was really intrigued by some of the disconnects that your research uncovered specifically, and I just want to call out a few of these 43% of consumers want discounts on everyday purchases, versus 25% of businesses who think that's what their members value most. And that's only one of, I think, three major disconnect points, but let's talk about that a little bit the fact that corporations don't always see or understand what their customers really want is nothing new.

Jeff Zotara:

But that's a pretty big delta there 43% versus 25%, yeah, and we have to ask ourselves are we not asking enough questions enough times? And thank you for the compliments. And, to your point, when we do these types of, especially the travel loyalty outlook, we selfishly do it for ourselves, right? We want to find how we can serve our end users and our customers customers our clients customers in the best possible way, and we really like to go deep. And what's interesting in this travel outlook and again, we do this every couple of years is that the gap continues to become a bit larger. To your point, and it's interesting as you look and ask the consumers what they want versus, to your point, what the brand is putting their focus on.

Jeff Zotara:

There is a disparity that's quite alarming in some instances. For example, I think one of the other things that is most troubling is that how many companies have great benefits in the travel space versus how many consumers actually know that their loyalty program of which they provided us their name and email address and phone number and they're engaged with the program are completely unaware that some of these benefits do exist on their particular loyalty platform. And so, as we start to think and unravel this a bit, where we are putting a lot of our emphasis and have in the last year, and even more so as we continue to uncover this is on the education and marketing front, and I want to call it more education than marketing. I think marketing has typically a promotional spin to it, whereas if you think about education, it's truly to provide the end user with an education on where they can use their benefits, how they can use their benefits, and I don't believe that currently, most loyalty programs are doing a good enough job on this, and I think the data speaks to that entirely.

Jeff Zotara:

And to your point about consumers want discounts on everyday purchases, whereas the businesses don't really put that as a high priority. I think that's where you think about how do you create a loyalty program that's most beneficial to the end user and when we are engaging with a platform, whether you are a USAA member, as an example since you are one, and that's one of our clients they've got phenomenal programs across the board. If you want to get your tires changed at a Costco, they've got deals for you. If you want to send flowers on Mother's Day or anniversary, they've got you covered. If you want to take a cruise, of course we can help you with that at Arrivia, and so I think USAA has done a really good job in encapsulating all these different elements to help provide the consumer something that they could use on an everyday basis.

Jeff Zotara:

But yeah, and then the other thing too. As we think about it is from a user experience and personalization perspective. Especially with AI and what we're seeing in the last year, there's a lot of opportunities for the brands to close that gap around providing a more personalized user experience, and that's where another big area that we're helping a lot of our clients with is understanding the difference between zero party and first party and third party data, and how do we use the customer data platforms to merge all that data into one cohesive database specifically and then use that information intelligently to provide the right offers at the right time to the right people.

Mike Giambattista:

You know you've brought up a handful of things that are probably worth addressing here. One, anecdotally, is we participated in some research recently that evaluated essentially what customer expectations are within certain verticals versus how brands are doing meeting those expectations. You know that that that difference in that widening gap you mentioned and it's almost across the board vertically that that gap continues to widen Consumer expectations continue to increase but the pace at which brands are trying to keep up just doesn't meet that. So over time that gap just gets wider and wider and wider, which is a really interesting thing to do because at some point it creates an opportunity for somebody to step in and do something really different that really catches people's attention. So that would be one thing.

Mike Giambattista:

So consumers, I'm sure, aren't aware of the entire portfolio of benefits that are given to them through these programs, and education is expensive. It's worthwhile, but boy is it expensive to do from a marketing standpoint. But because there's just so much, there's so many variables, there's so many opportunities, there's so many different ways to earn, ways to burn, that it's really just hard to keep up with as an individual consumer. It's just, you know, we reach an overload at some point of like. I'm just going to be a part of this brand's loyalty program, because I know it's good for me, but maybe the details are kind of lost in the haze somewhere. So, because you work on this kind of thing all day long, you know how do you overcome that. What should a brand be doing to overcome that kind of you know, information overload, inertia?

Jeff Zotara:

information, overload, inertia, I think. In one of your previous podcasts I heard that you guys talked about. There's this level of sophistication at some of the top companies in the world around the use of data and around AI generative AI specifically, most recently, but around customer data, right, and then you've got this and then you've got the rest of the folks that are trying to get to that point. But I don't think enough emphasis is put onto how do the brands integrate their technology with marketing, with products, and I think it's that perfect trifecta. The more connected they are, the more likely a consumer is going to be able to experience that product in its intended fullness of what a completeness of what that program is. And so I say that marketing, product, technology trifecta coming together, what we have found is that, to your point, you can't just spray and pray and send millions of emails and all of that. We have to take a more specific and sniper level approach to how we disseminate different educational tidbits or how do we provide different offers to different people, because we are completely inundated, as we all know, of distractions and whether it's social media or notifications on our phone or kids in my household running around all the time it's how do we find the right message to deliver to that right consumer at the right time. And we put a very big emphasis and during COVID.

Jeff Zotara:

We are a travel company, so you can imagine it was a very difficult time for us, but we invested heavily into the technology side of our business, especially around the marketing technology side, because of what you just mentioned.

Jeff Zotara:

We wanted to find ways to differentiate the offerings for our clients, but we wanted disperse marketing. Usually around 10% to 15% of that marketing was attributable to a cruise booking or hotel booking without human intervention, meaning it was automatic. It was an automated email retargeting email, whatever it might be, email retargeting email, whatever it might be Post-pandemic and post the transition. We have now close to 60% of all of our marketing attributable bookies and that's using a pretty conservative approach to attribution, meaning it's happening within hours, not a 30-day, 90-day attribution. 60% now are done without human intervention, which is an incredible opportunity for our clients to spend more time doing other things rather than, and for myself and our team to do things that we can how to make the product better and how to make the user experience better, versus focusing on who do we send this to and the reason it is so high is because we're using our members.

Jeff Zotara:

So, if you're a USA member, we're using your offline experience with us, your online experience with us and all of these different channels, and we stitch all those different experiences together into one specific unified platform and then, based on 30 different unique algorithms and 300 different unique audiences, we are delivering the right educational points to the right customers when it's most appropriate, and therefore our customers are feeling and seeing that we're providing more timely and relevant offers. They're more likely to engage, and so we're seeing a higher level of engagement, a lower level of unsubscribed or disengagement. And then we're also utilizing website merchandising more than we ever have in our entire history, because those are the folks that are already actively engaged, so let's get them further down the funnel.

Mike Giambattista:

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Mike Giambattista:

There's a reason why some of the largest, most progressive companies in the world are retooling their revenue models and investing in partnerships. Find out more at tectonicco. That's T-E-C-T-O-N-I-Qco. Delivering a high level of personalized content goes beyond a traditional definition of a loyalty platform. I mean, you're talking about something that looks a lot more like a pretty sophisticated CDP with some sophisticated loyalty arms attached to it. So I'm going to ask what would amount to a really dumb question, but the you know Arrivia is, at its core, a CDP plus loyalty functions, or are you describing loyalty that would bolt onto somebody else's CDP? Existing CDP.

Jeff Zotara:

So, first and foremost, Arrivia is specifically a travel technology platform and we're providing the travel benefits to all of our clients' members at a discounted rate than the traditional OTAs out there, because they are part of a closed user group. So very similar. If you're an AARP or AAA or Costco or American Express or USAA, you are part of a membership and therefore you have some closed user group benefits that you can take advantage of. And we work with the OTAs and we work with our suppliers and to provide the best benefits. So that's our core. Now the question is all right, we do have USAA and American Express and T-Mobile and those are our clients. Well, how do we effectively market those travel benefits in a very effective and efficient way with the use of automation and our customer data platform and now AI and machine learning? How do we do that more effectively?

Jeff Zotara:

Because the USAAs, the American Expresses and those types of companies they are phenomenal marketers and they have their brands that they need to focus on sophisticated and robust platform that helps increase engagement, increase customer lifetime value and then allows us to find new and creative ways of engaging the consumer beyond just one transaction a year or whatever it is. Therefore, I think, to answer your question succinctly, the CDP and everything that we're doing around our tech is a byproduct of the advancement of the technology and us being on the innovative side of that and our focus on the consumer of how do we create a better consumer experience and the customer and the client. How do we create better platform for our and the customer and the client? How do we create better platform for our clients? And so if you take those three and you lump them all together, it means we've got to do more.

Jeff Zotara:

We've been around for 25 years, as you mentioned, and when you think of AI and where we're moving into and it's been an incredible year so far it relies on the quality and quantity of data and for a company like ours that has sold as many hotels and cruises and cars and all of that and experiences, we've got a good amount of quality data and quantity data and we're leveraging that for our clients through a myriad of different ways and different programs. So I hope that answered your question. It's a bit of a complex answer because it involves a lot of different moving parts and, as you said, a lot of arms, so we're like an octopus here. We've got lots of tentacles.

Mike Giambattista:

Yeah, plus, it wasn't a very good question. I didn't frame it up well in the beginning, so thank you for that. I wanted to talk about one of the other disconnect points here that you brought up 19% of providers think consumers value status perks, while the survey indicates the actual number is less than half on the consumer side. Half on the consumer side, um, the. I think that's. That's interesting from my standpoint because if you follow loyalty for any period of time, um, there are trends and waves and everybody's focusing on I mean, last year I think it was experiential loyalty and you know, before that it was status and before that it was something else and you know, uh was status and before that it was something else. And whatever, and loyalty. People love their buzzwords and trends and so do I. Confession, but again, this is a pretty interesting disconnect the value status perks. There's a. You know consumers, providers think one thing, consumers think another. Is this just a function of? We're just not reading the tea leaves? Well enough.

Jeff Zotara:

Yes, I believe. So I think to your point about buzzwords. When you think about it fundamentally and you think about you and I deciding on loyalty programs and especially coming out of post-pandemic, and if you think about inflation, of where it is today thankfully it's settling off now it really comes down to value. It comes down to value, convenience, usability, and I think sometimes we get lost as brands into trying to catch the next big thing and then we lose sight of some of the basic fundamentals of a travel loyalty program, fundamentals of a travel loyalty program. And as we talk with our clients and we talk with our consumers and we look at the research here, the research is very evident.

Jeff Zotara:

Consumers want a loyalty program that provides them with significant value compared to going anywhere else. They want it to be convenient, they want it to be personalized and customized and they want us to communicate in their channel of choice. If we do those four things, you're likely to win 75% of the time, and then you can use AI and you can use a lot of these different nuances and some of these different technological advancements to then separate yourself and become truly one of the top. Consumers have shifted their attitudes. They are now able to do it. They're able to do it. They're able to do it.

Jeff Zotara:

They're able to do it more discerning in which loyalty programs they're using, and the status that we speak of in this scenario is simply a moniker for a brand that puts something on it Like are you gold or platinum or are you silver? Well, does it matter if you don't have? Does it matter if the value is not entirely better than going to this other loyalty program? So we like to focus less on the monikers and on the status titles of those, and more on the product and on the value. If I book a cruise with an Aribia brand or American Express using my American Express card, is it going to be cheaper than going anywhere else.

Jeff Zotara:

And if that answer is yes, again, assuming that all things else are equal, the American Expresses are going to be very happy and the members are going to be very happy. So, yes, I think the disconnect is that as marketers, being one for many decades, you want to think there's always something else out there that you can find that will differentiate your business, and sometimes I think brands come up with things just to be new instead of focusing on the fundamentals.

Mike Giambattista:

On where the value is and then where the value is Like.

Jeff Zotara:

That's where we kind of put emphasis on how do you negotiate better with the suppliers, how do you educate people on their travel loyalty program being a truly valuable product that they're willing to invest more into the brand and spend with you versus going anywhere else? Because, let's be honest, we talked earlier about how many different distractions we hit. We've got companies spending billions and billions and billions of dollars a year trying to get people's attention to book with them or book with this company and and we don't have the same marketing dollars that that some of the big OTAs do have for our, our closed user group, our membership groups, and therefore we have to be a little bit more. We have to be a lot more strategic and precise with our marketing and our messaging.

Mike Giambattista:

While we're still on this, this topic of disconnects, I wanted to talk about what might be the granddaddy of them all. I'll just read this here 20% of brands say poor website user experience is what they think members find most frustrating about loyalty, While a small fraction 5% of consumers cite this as the main frustration. A little bit of a disconnect there. By comparison, this is worth listening to. 21% of consumers are more frustrated by the difficult or complex processes of earning and redeeming miles, and we touched on this a little early in the conversation, but clearly that's a misplaced focus. If a brand really believes that it's about website experience, which clearly plays in, Clearly it's a factor, but only 5% of the universe thinks that way, whereas 21% say it just goes back to that same old problem. It's just too complex. How do I earn what's really going into this and how do I redeem? How do I earn what's really going into this and how do I redeem? So you know. Thank you for illustrating how Aribia goes about kind of solving for those problems.

Jeff Zotara:

Fact remains, though, that, according to these statistics, it's one that is always a focal point, even for our programs. There's certain things that we're always continually attempting to find new ways and be more creative in injecting the right messaging or injecting the right user experience to clearly communicate what those particular benefits are. I think when we talk with our clients and we're suggesting different ideas, we always come back to the fundamentals. We have something you know. Explain it like I'm five years old, and, and my children are now nine years old and 11 year old, so they're my daughters, and so I use them as, as my Guinea pigs right To experiment with, and and I put them through a user experience and and it was interesting to see the kids, my kids grow up when they're. And it was interesting to see the kids my kids grow up when they're four or five years old working on an iPad and how intuitive Apple's always made it for everyone. Our loyalty program should be as easy as that, and my 10-year-old should be able to at least understand and distinguish how different points are earned and burned. If they can't, then I think we're failing ourselves. Unfortunately, I think there's just so much and too much complexity in both the earned and the burned side. That's what unfortunately creates this disconnect because the consumers are continuing to raise their hand saying it's still not simple enough. It's still not simple enough, Whereas that's what the consumers are saying and the brands are saying and well, I thought we've made it clear enough. We looked at it internally, we polled some people and they thought it was pretty clear. So I think it's about the continual feedback loop of our customers and always asking them questions, whether it's every experience on the telephone or every experience online through APS, NPS scores, and seeing how those change, how those can change, and are they becoming better or worse? And then, in what format are we delivering those messages?

Jeff Zotara:

We're leaning a lot into short video, if you think short form video. If you think of Instagram and YouTube and all of that. A lot of folks are scrolling through and they're spending five to 10 seconds on certain snippets and articles. Some folks, if it's more than five paragraphs, like I'm out. I'm on to the next one and we're living in this very distracted, ADD, ADHD kind of world where we can't pay attention anymore. Which the reason I bring that up is that a lot of companies, when they try explaining their benefits, they're doing so in a very long, antiquated format.

Jeff Zotara:

In my opinion. They're not using potentially short form video they're not using, they're using too many words, their messages are all over the place and it's not concise enough, and I think some of that stems from wanting to make it sound more sophisticated or make it sound just more impressive than it really is. On the consumer side, all they want to know is okay, how do I earn points and how do I spend them and what are my restrictions? Give it to me, explain it to me, like I'm five years old, and that's the filter I think that companies probably would want to take a look at is it's not necessarily that they're not communicating. They're just not communicating effectively enough to make the impact and the difference. And instead of investing in all this fancy UX UI work, just simplify it and consumers are going to react more appropriately to it. And that's what we do every day is try to figure out, from a UX perspective and overall customer service perspective, how do we simplify, simplify, simplify.

Mike Giambattista:

That's my opinion on that yeah, well, you know you're qualified, you've been at this a while. Your, your opinion means something, but isn't that always? The more difficult thing in communicating is how to simplify that message. I mean that that's historically, that's really where it's at. How do I just say this simply, so it's receivable and digestible?

Jeff Zotara:

yeah, we, we spend uh, as, as you and I know, being part of the corporate world, we'll spend more time trimming something down to a board slide than we would writing a novel, because it's much harder to simplify than to expand and just say a lot of things. And it takes some dedication, it takes the right kind of people and it takes the right kind of attitude to really make sure it's customer-centric first, and getting that feedback, because I think too much technology is deployed that I've seen throughout the industry without iterating upon it, meaning okay, we're going to revamp our communication strategy to our customers. Okay, well, let's do that. Maybe it's a different email, maybe it's a different website landing page, they deploy it and then that's it, that's done. We're on to the next thing and it happens time and time again and there's not enough emphasis to stop, take a breath, let it marinate a bit, get some customer feedback and then iterate upon it to make it better. Instead, we're moving on to the next shiny object within whatever we're doing in our careers.

Mike Giambattista:

So shiny object-itis will be the topic of our next conversation, which could be lengthy.

Jeff Zotara:

There's a lot of them, and I love what Steve Jobs said. He said I'm more proud of the thousand things that Apple has said no to than anything that we have said yes to, because it allowed Apple to stay singularly focused on a few key products that, of course, as we all know, have been very successful, and I've always taken that to heart when I'm communicating with our team and our clients that it's okay and it's healthy, and it's actually much, much better to say no more than you're saying yes, because you know, whether it's marketing or loyalty, there's no shortage of new, shiny things that we can focus on, and that's, I think, a key mantra that we live by each and every day.

Mike Giambattista:

Yeah, word, jeff Zotara is CMO of Arrivia. I'm going to encourage everyone who's listening and reading the follow-on article here to check out the new report, the 2024 Travel Loyalty Outlook, from Rivia. There'll be a link there. But, jeff, thanks a million for the time and for the conversation and for the insight and genuinely looking forward to the next time we get to do this.

Jeff Zotara:

Thank you, Mike.

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