Banks and credit card companies have long had a love affair with travellers. They provide a broad range of targeted benefits and offers to this cohort of consumers, including airmiles for card spend or complimentary access to airport lounges to relax, refuel and make the most of their time at the airport before boarding.
These are value-added services and challenger banks, such as Monzo, Revolut and Starling alongside established players, such as Halifax and Barclays, understand the appeal that these benefits have and make a point of offering free or low fee transactions abroad to allure those with a jet-set lifestyle.
Some critics would argue that these initiatives focus on such a small target audience that banks may be missing an opportunity for revenue and in the process are reducing their margins, but the reality is simpler.
More frequent and pleasurable travel is something most people aspire to. Global tourism is a growing industry, which has increased by over 4% this year. This trend is set to continue, with a forecasted increase of nearly 4% annually over the next two years.
Our recent Customer Airport Experience research found that over half of travellers globally (60%) find the airport experience an enjoyable part of the journey.
Added to this, research conducted by YouGov on behalf of our airport lounge and experiences programme, Priority Pass™, found that holidays are most valued by Brits in terms of how we spend our time and money, beating activities such as dining out, going to sporting events or buying luxury items.
Travellers represent an important and highly profitable market for banks, which is why engagement is key, warranting investment to deepen this relationship.
Travel indicates a valuable customer
Even with the rise of tourism in recent years and travel becoming much more affordable for the masses, it remains an accurate indicator for a mid- to high-net-worth consumer.
These individuals have the potential to be valuable to the business in the long-term; a happy customer will, more often than not, turn into a valuable customer. Our research found that the more enjoyable the airport experience, the more customers were likely to spend, with those rating the experience 88% or above spending over £200 before even boarding their flight. Unlocking cross-border spend once travellers are at their destination is also a key value driver for banks.
The long and the short of it is that it’s worth devoting enough time and effort to retain the loyalty of these lucrative customers. Investment can manifest itself in a variety of ways, but the key is to make sure that the benefits offered infiltrate the everyday lives of these seasoned jetsetters, hence the provision of travel-related products.
There are many stages throughout the travel journey where small additions can make a big difference to the customer, generating goodwill and enhancing loyalty towards a bank – from providing lounge access while the customer waits for their delayed flight, to discounts on insurance. Banks such as Ulster Bank and NatWest offer travel and car insurance as benefits with their premium banking accounts.
Experience-impacting, contextual benefits and rewards don’t need to cost the earth to leave a positive and memorable impression with customers. Banks have plenty of data available and if used correctly, it enables them to deliver relevant and timely travel incentives.
All this combined will serve to help boost a bank’s brand recognition and even more tangible business metrics such as its Net Promoter Score. It will also arguably drive higher card spend – including cross-border spend – and help the bank differentiate to retain existing customers and acquire new ones.
Travel creates opportunities for banks
The success of any brand in today’s digital economy is ultimately dictated by its access to data and ability to interpret it and offer a selection of tailored and meaningful benefits and rewards. Banks sit on a wealth of important data that gives them an advantage over other brands.
Airports themselves present a valuable opportunity to access customer data, almost every shop in an airport collects ‘origin and destination’ (OND) data, which shows where a traveller has departed from and where they are travelling to. Banks can easily identify which of their customers are frequent travellers by tracking how often they use their card at the airport or locations abroad.
With the right systems in place and armed with a deep understanding of what makes customers tick, travel presents a range of opportunities to boost engagement and loyalty for banks, and even grow relationships.
Card-linked offers (CLOs) is rich territory in this space. They work by enabling offers or rewards – whether cashback or loyalty currency – providing an easy way for customers to view offers, load them onto their payment card and redeem them when paying online or in-store.
The process is significantly reducing friction and benefits both the bank and traveller. CLOs themselves provide an abundance of valuable data. Leveraged effectively, banks can use these insights to deliver more personalised offers and experiences for customers – further increasing engagement and driving loyalty.
More than a third (35%) of travellers would be more likely to spend money at the airport if they had the ability to earn cashback or discounts via their payment card, while 30% cite receiving airport retail offers ahead of travel as a strong incentive.
Taking this beyond the airport experience, if a customer purchases plane tickets, or frequently logs into the mobile banking app as opposed to the website, the bank could use this transaction and access data to upsell annual travel insurance via a message in the app, for example.
Capitalising on data from a variety of sources in a smart way helps to embed the bank in the customer’s life and create emotional loyalty.
Competition across the financial services industry remains fierce. Customers don’t want to be an afterthought – they want a brand that understands them, their lifestyle and interests, and this extends to their bank.
To retain customers and boost the brand loyalty that they crave, banks have been forced to reinvent their strategic approach, placing customer experience front and centre. By embracing new partners and technology, and using data available to them, banks need to infiltrate the everyday lives of customers with relevant benefits and offers that are compelling to the individual. Travel is an ever-important gauge of this, and short-term investment will help to drive long-term gain when banks marry the two.