More Than Points

How Travel & Hospitality Brands Can Win with Millennial and Gen Z Travelers

With the travel and hospitality space becoming more crowded and competitive than ever, brands that are serious about success and growth must focus on their strategy for attracting and retaining millennial and “Generation Z” customers. This can be more easily said than done as these segments have an ever-increasing amount of choice in today’s market.

Olson 1to1 has identified three areas that brands can focus on to give themselves a competitive advantage that drives brand loyalty while providing a differentiated and memorable experience for the customer: marketing the experience versus the savings, engaging customers on social media and creating a space for them to engage with each other, and the focusing on knowing customers at a personal level.

The Focus Is on Experience, Not Points

A recent nationwide survey by marketing technology provider Adobe found that 70% of millennials would rather spend on an experience than a product. This statistic is compounded by one from the same survey in which 86% agreed they had a “fear of missing out” (aka FOMO) of life experiences. These data points signify a huge opportunity for travel and hospitality brands, as much of what they provide are the ability to enjoy new experiences.

What is so powerful about experiences for Generation Z and millennials that they have such an impact of their decision making? In a 2014 study released in Psychological Science, Cornell professors and doctoral candidates released findings that show exactly why experiences hold more long-term value than products. Experiences are more adaptable, can be more easily shared, are more tied to our personal identity, and are more unique/harder to compare. The importance of customer experience is also reflected by a 2015 Forrester Research study that shows that customer experience leaders average 30% higher stock market return than the average company on the S&P 500. Finally, a 2017 Capgemini study found that 60% of millennials would pay a higher price for a guaranteed better experience.

The most successful loyalty programs and brands have moved from focusing on just points and discounts and have transitioned to marketing and providing their members with an exceptional experience. This could come in the form of making their planning or purchasing experience smoother (UX), all the way to delivering great service at the point of experience. Marketers and program designers must remember that while the levers that affect a loyalty program may be completely logical to pull for a business, the end result for the customer will almost always have emotions tied to it. By focusing on great experiences for customers, travel and hospitality programs will differentiate themselves with the millennial and Gen Z consumer.

It Takes a Village to Book a Trip

With millennials being the oldest, “connected” generation (80% update social media at least once a month) and Gen Z being the most influenced by peer content, brands can no longer expect consumers to purchase in vacuum. Boston Consulting Group found that most millennials will consult influencers, peers, and social media before making a purchase, especially a large one. This means brands will need to drive social engagement with their brand more than ever.  Pixlee, a platform for businesses to connect with millennial influencers, identified that 89% of millennials planned travel based on what their peers share on social media.

Building an engaged consumer base, particularly a community that openly discusses the brand and advocates for it, provides consumers and advocates who will openly share and reach out on behalf of your brand. Given that 92% of all consumers will trust suggestions from friends and family over marketing messages, creating a genuine and authentic space for customers to engage with each other and the brand is a must-have. Furthermore, these spaces should also feature and recognize the experiences these customers were able to have, from their POV (user-generated content). Pixlee also found that sharing user-generated content can increase bookings over certain periods significantly.

Making sure you have a substantial and engaging social experience is the best way to expose your brand, and the experiences it can offer to millennials and Gen Z. Brands can also score bonus points for providing groups of friends or peers with shared experiences to partake in.

A More Personalized Experience

Personalization and truly knowing its consumers is no longer an incremental feature for a program, but a must. Millennial and Gen Z customers often feel inundated with brand communications, with 49% of millennials stating they would leave a loyalty program if they received too many irrelevant communications in a Colloquy survey, 12 points higher than the general population. Personalization of offers and experiences not only affects loyalty program participation, but also plays a major role in consumers’ decision to make a purchase. 88% of marketers report seeing visible lifts in performance due to personalization of their marketing. Providing your millennial customer with personalized selections not only gives them a relevant communication, but also communicates that your brand cares about their time and personal preferences. 

Personalization doesn’t stop at the marketing and product itself, but extends to the actual brand and how it represents its customers’ values. Brands can make a mark for themselves by giving their members the ability to use accumulated points or a portion of their actual purchase to support a cause. Olson 1to1 identified that more than 62% of millennials are concerned with social issues, with 42% of the total segment actually taking action for a social cause. This fact is especially impactful once it’s known that 63% of millennials find it important that their loyalty program supports causes and lifestyle choices that reflect the concerns and causes of its customers. Millennials and Gen Z absolutely believe that where they spend their money reflects directly upon them, and will allocate their funds accordingly. So much so that a survey identified that 90% of 18- to 35-year-olds would switch brands to one associated with a good cause.

Personalization of content and offers, while understanding the motivations and concerns of your customers will drive increased marketing success, while also improving on brand loyalty and engagement.

By focusing on these areas (recapped in the bullets below), brands can provide significant differentiation and meaningful experiences for their customers, ultimately converting repeat customers into loyal brand advocates. Most succinctly, the winners will be those who can shift their mindsets from treating their customers as profit centers to, as we say at Olson 1to1, “Thinking Like People,” and helping their customers reach their desired outcome by engaging with your brand.

  • Focus on the experiences your program can offer, not just the discounts
  • Don’t underestimate the importance creating an active online community that shares their experiences with and through the brand
  • Personalization is no longer a premium benefit, but a program basic