December 13, 2022

3 Winning Customer Retention Strategies for Travel & Hospitality

Loyal, returning customers are the holy grail for travel and hospitality firms. On average, returning customers spend 67% more than new customers and help brands reduce acquisition costs by reserving directly instead of through a third-party platform like Orbitz or Expedia.

Despite the return on investment customer retention strategies can deliver, customer retention remains the least personalized phase of the customer journey. According to research by Adobe, only 19% of travel and hospitality brands say they use personalization to retain customers.

This lack of focus on the retention stage of the customer journey has left travel and hospitality with the lowest customer retention rate out of all industries. According to Statista data, customer retention rates were only 55% in the hospitality, travel and restaurant industry compared with 84% in the highest-ranked industries, such as media and professional services.

Travel and hospitality brands can do much more to reap the rewards of customer retention and build a loyal, returning customer base with a high lifetime value (LTV). Here are three strategies to help you improve personalization at the retention stage of the customer journey.

1. Recognize Returning Customers

The first step in personalization is developing a structured system to know who your customers are. This is especially important for customer retention, where customers expect you to know them and match their current experience with past behaviors.

To do this, you need to combine all your data sources—internal, external, known and pseudonymous data—into a single uniform data format. Using a customer data platform (CDP) is the best way to bring these data sources together. It will also allow you to automatically stitch together data in real time to enrich your customers’ unified profiles.

(More about this later in Strategy #3)

With a unified profile that updates in real time, you can then react instantly to customer events, such as recognizing when a returning customer is visiting your site and offering them a welcome back 20% off discount on their next booking. Or, when a customer checks in at your hotel, staff can instantly see their preferences from their last visit and make sure they are accommodating those preferences without the customer even having to ask.

2. Match Loyalty Programs to Traveler’s Lifestyle

Loyalty programs play a critical role in customer retention in the travel and hospitality industry. According to research published in Hospitality Net, over 59.2% of room nights at major hotel chains were booked by loyalty members.

The most successful loyalty programs go beyond point-based rewards to personalizing benefits to a traveler’s unique desires. Millennials and Gen Z, in particular, need something distinctive to make them join According to research by Criteo, only 25% of respondents in the 15-24 age bracket are members of a loyalty program (Airline/Hotel/Rail), compared to 43% in the 65+ age bracket.

To reach these younger generations and be more effective with older generations, travel and hospitality brands need to better match benefits to customers’ personal preferences. For example, sending a text with the best reviewed, budget-friendly restaurants nearby that other millennials and Gen Z customers love, can make their experience more enjoyable. Moreover, this kind of engagement signals that you care about their experience, rather than only offering promotional items for your brand.

Delivering relevant content to specific audience segments, such as suggesting destinations that align with each segment’s demographics, will also help retain customers because they’ll continue to feel known by your brand and get content that matters to them. For example, a tour company might suggest Disneyland packages for families, adventure travel for single young adults, and guided tours for seniors. To help deliver this type of personalized and relevant content, demographic behaviors and preferences data that provide a holistic view of the customer can be combined with a solution like Adobe Target to help segment audiences.

3. Build a Retention-focused Tech Stack

All of the opportunities discussed for personalizing the customer experience at the retention stage require technology. You’ll need to unify your data, segment audiences, optimize their experiences and have an easy and fast way to create and deliver relevant content to any customer segment on any channel in real-time.

Adobe Experience Platform, which includes a CDP, Adobe Target for segmentation and optimization, and Adobe Experience Manager for content management and delivery, brings the necessary technologies together under one hood. This makes it easy to integrate data, content and delivery so you can create experiences that will not only delight customers in the moment but bring them back the next time they’re planning a trip.

The travel and hospitality landscape is always changing, but that doesn’t mean you can’t bring your customers along for the ride. By recognizing and personalizing your customers experiences, building loyalty programs they want to be part of and having the tech stack to consistently delivery, your customers will keep returning—and keep spending.

About LeapPoint

LeapPoint Consulting is changing the way companies connect work, technology, and talent to solve big business challenges and drive successful outcomes. Established by Big 4 alumni who sought more flexibility and agility in meeting clients’ most critical business needs, LeapPoint is committed to making life and experiences fundamentally better for employees, customers and those they serve. As the go-to Adobe and Adobe Workfront partner in travel and hospitality and across industries, LeapPoint’s break-through Connected WorkTM services are the essential framework for the Future of Work. To learn more about LeapPoint and its Connected Work services, visit www.leappoint.com.