This article was originally published on PhocusWire by Linda Fox on February 18th, 2020, and can be read here.
It’s hard for major travel brands to ignore super apps given the huge volume of consumers that they attract and their high-frequency usage.
Tencent-owned WeChat has been adding 20 million active accounts every quarter since the middle of 2011, for example, according to Statista.
At last count, in the second quarter of 2019, WeChat had more than 1.15 billion monthly active users.
But, therein lies a specific set of challenges for brands: Millions are using these apps, which also include Grab and LINE, on a daily basis, and the apps have become powerful brands in their own right.
They sit right at the head of the funnel, garnering a huge amount of data that provides them with a healthy knowledge of what users want and need.
Statista also highlights interesting user demographics of super apps, with almost a fifth aged 19 to 24, 28% aged 25 to 30 and 25% aged 31 to 35.
Against this backdrop, travel companies need to find a way to participate and stand out from the crowd, amid knowing that travel is not a high-frequency purchase.
And then there’s also the question of loyalty and whether these daily use services can drive any love for hotels, airlines and travel intermediaries.
While the answer is yes, it’s not that simple for a number of reasons, not least because super apps have only taken hold in Asia so far, driven by the need for payment platforms and with a very deal-driven consumer base across many markets in the region.
The loyalty landscape has been gradually changing over the past 15 years, with tweaks to how consumers can earn and burn their points and miles.
“On the ground” loyalty, through schemes such as Nectar in the United Kingdom, which allows consumers to earn through daily shopping, initially widened the appeal of programs that, until then, had only been relevant to frequent travelers.
David Feldman, an expert in airline and hotel loyalty with New World Loyalty, says that brands need to remember that the fundamentals of loyalty have not changed.
What that means is that consumers are inherently driven by value and the incentive offered, regardless of the booking channel.
He is also not a subscriber to the belief that newer generations behave differently. Feldman, who also advises Radisson on its loyalty programs, says millennials, and now Generation Z, also want value.
Where the differences might come is with the impatience that younger consumers sometimes have for loyalty schemes, as part of wider “program fatigue” online, alongside some degree of mistrust settling in because of all the changes in recent years of how to accrue points.
Feldman says that while the reward proposition is the “string that ties it all together,” the value of loyalty has diminished. This may be “amplified with millennials and Gen Z,” whose propensity is to just switch to a different brand or service.
Dave Canty, former vice president of global loyalty programs for InterContinental Hotels Group, believes that travel companies need to realize that loyalty programs are heavily dependent on a user base of consumers aged 45 and upwards, and they need to start thinking of a “long-term plan.”
Canty, who recently created GenZLoyalty, a consultancy to advise travel companies on loyalty, does believe Gen Z are different from older consumers because they seek a more personal touch.
“Companies need to think about what really matters and use technology such as machine learning to find out more about the individual and what’s important to them. It’s about making sure you can differentiate yourself.
“Historically, programs stacked up against each other on the number of benefits, so companies need to think about the benefits that matter to people on an individual level.”
Both Canty and Feldman agree that loyalty has its place within super apps, but what’s less clear is whether there’s a place for these kinds of services outside of Asia.
Canty says that in the United States, consumers continue to use multiple apps, and the trend is more towards airlines or hotel companies making other services, such as ride-hailing, easily accessible via their own apps.
“Brands are very sensitive to fact that it is their app being opened up in the first place and question whether to play in a super app or have their own legitimacy out there. There’s nervousness around losing share. It’s going to be interesting to see how that develops.”
Feldman adds that Asian markets, where super apps thrive, are “very specific with very nuanced behaviors which aren’t witnessed elsewhere and the entire ecosystem is online.”
He also says that Chinese airlines, for example, have less mature loyalty programs compared to their Western counterparts and that, in general, other factors such price and airline schedule or hotel location must be taken into account.
The jury is out on whether a travel super app is in the cards (although some argue that Google is on the way), with Canty saying there’s no evidence of anyone successfully “engaging a user base” across multiple elements, including shopping.
After that, he says, it’s up to the hotel or airline to make the most of that customer once it has them through the door.
Feldman stresses that the fundamentals of loyalty and the booking process do not change, whether consumers are using an integrated platform environment or simply booking on whatever platform they are currently using.
One area where airlines and hotel companies may find it easier to drive affinity within super apps is around how they are already diversifying to enable consumers to earn and redeem points for other services.
Hilton’s tie-up with Amazon, allowing its program members to redeem points for purchases on the retail giant, is one example.
Partnerships of this kind are one likely way forward for travel brands to drive loyalty within super apps, giving consumers daily earning potential and keeping those brands front and center.
Canty expects the idea of the “micro burn” and engaging customers earlier to make them feel they are earning something to become more prevalent.
In Asia, super apps such as LINE are already moving along this path.
About a year ago, Japan-based metasearch service LINE Travel JP, already accessible on LINE, joined the platform’s loyalty point program.
The program, which is also aligned with mobile payment platform LINE Pay, allows consumers to earn points for booking their travel, regardless of whether it ends up on being fulfilled via a hotel or an OTA.
Consumers see their points in their mobile wallet via the LINE app and then can use them for daily services such as groceries, also via the app.
And none of this precludes consumers from also earning points via the brand they end up booking through.
Kei Shibata, co-founder and CEO of LINE Travel JP, says the program helps generate the high-frequency usage that super apps are all about.
He also sees the evolution of traditional loyalty programs within super apps as being through partnerships.
Shibata adds that super apps often help drive demand and transactions by offering “limited time only” deals, but these can also help drive brand recognition.
“In the Japanese market, brand recognition is seen as important and when you keep offering special deals for Booking.com, which is not that well-known compared to local brands, users end up having great experiences, including earning points. We see conversion rates are higher and higher.”
But he stresses that while services such as LINE are brands in their own right, it takes time for users to associate them for their travel needs.
“They need to execute properly, but they’re definitely on the right track and seeing great progress. But it’s fundamentally a different user experience and will take time to get that brand recognition.”