How Travel Brands Can Build Loyalty with Gen Z Customers
After a challenging few years due to the COVID-19 pandemic, the travel industry is on its way to a recovery, with an annual growth rate of around 3% and projected reach of $222.8 billion in the US alone by 2028, according to Statista. Despite brighter horizons in sight, another obstacle facing the industry is coming in the form of some of the world’s youngest travelers: Generation Z. With a global spending power of $450 billion, Gen Z comprises some of the most influential shoppers today, yet they differ greatly from other generations in how they approach brand loyalty.
As digital natives, Gen Zers are comparison shoppers by nature, frequently jumping between social media, shopping apps, websites and more to determine where and what to buy. According to research by McKinsey, 62% of Gen Zers state they would check out other options despite having a favorite brand of something, and more than half of those with a favorite brand would quickly switch to another brand that’s cheaper or higher quality. In other words, Gen Zers’ brand loyalty is hard to come by.
This is bad news for the travel industry, which is used to loyalty from those like Baby Boomers. According to a recent survey by IBS Software, “66% of Boomers prefer booking directly on airline and hotel websites to take advantage of savings earned through loyalty programs,” while 36% of Gen Z base their bookings on where they’ll get the best deal.
In order to catch Gen Z’s eye, travel brands will have to use discretion with the types of ads and offers they present to these shoppers. Building loyalty with this generation may be more difficult, but companies that do so effectively can reap the rewards of their large spending power and economic influence in the years to come. Here are three ways travel brands can engage Gen Z, driving loyalty and repeat purchases:
- Drive relevance using first-party data: Gen Z consumers are interested in brands that are authentic and those that establish a genuine connection with them according to a recent survey from the Oliver Wyman Forum. Tapping into first-party consumer data is the first step to achieving this for younger travelers. By partnering with technology providers that use advanced machine learning, travel brands can effectively use their wealth of first-party data to show the most relevant messages and offers to travelers during the booking process.
Technology providers using AI can assess each customer in real-time and determine the right offer for them based on their data. For example, one customer may receive an offer to join an airline’s loyalty program after they’ve booked their flight, while another traveler, who is already a part of the loyalty program, could be presented with an option to upgrade his or her seat. Travel brands that tailor messages to each customer on a one-on-one basis and avoid bombarding shoppers with offers that they either don’t need or have already capitalized on will build trust with these shoppers and provide that connection these travelers crave.
- Bundle relevant offers for an easier, more desirable travel experience: AI and machine learning can help travel brands drive incremental purchases of products and services from their own brand or from partner brands without overwhelming or frustrating consumers with offers they’re unlikely to act on. Travel brands can partner with technology providers to gain valuable insights into customer behaviors as well as present these shoppers with relevant and useful offers, thereby increasing customer engagement and satisfaction.
For example, an airline would know which customers have or have not been open in the past to upgrading their seat or paying for additional luggage, helping to determine the best offer to present to each individual. Additionally, travelers heading to a remote area where their hotel is 30 minutes away from the airport would be given an offer to rent a car onsite or schedule a ride-share option to ease their travels. Providing offers that are truly relevant to shoppers and those that make the travel experience simpler and more convenient allows travel brands to prove their worth with consumers, making a lasting impression that can help drive loyalty.
- Avoid consumer banner blindness by reducing the number of overall offers presented to consumers: Today’s brands are feeling profit pressures, leading them to overwhelm consumers with loads of options, such as different ads, partnerships and additional products they may like, in the hopes that shoppers will engage with at least one. However, consumers instead are experiencing banner blindness, or ignoring these messages and offers altogether. If travel brands want to appeal not only to Gen Z but to all shoppers, they’ll have to reduce the number of options they show and use discretion with when and how they’re targeting travelers. Recent data from Rokt finds that the likelihood that a customer is going to interact with an offer is at its peak the first time they see it, meaning travel brands must make these placements count.
By limiting both the number of overall offers shown for ancillary products or purchases related to the travel booking and the number of times a customer sees each offer, brands can better hold consumer attention and see dramatic improvements in both first time and repeat engagement rates and conversions. Using AI to drive relevance at an individual level will help brands make the most of each of these impressions, although fewer in number, to be more valuable overall for the brand by creating a lasting customer rather than being a one-time, irrelevant event.
Travel brands that take a customer-centric approach instead of an offer-centric approach and use AI to drive relevancy will build better, longer lasting relationships with even the most finicky Gen Z shoppers. By prioritizing what these shoppers want and providing messages that are relevant and valuable to them, brands can deliver truly memorable travel experiences for their customers.
About the Author
Anand Shah is a Senior Vice President of Strategic Accounts at Rokt, where he leads Rokt's partnerships with the world's largest travel brands. Prior to joining Rokt, Anand spent a decade in consulting in addition to being a sales leader at top tech companies Stripe and LinkedIn. He is a graduate of the University of Pennsylvania, holding a degree in Computer Science and Engineering.