How Digital Engineering is Powering Loyalty Program Transformation

By Vishal Marwah, Director, Product Management, GlobalLogic, Inc., Canada, a Hitachi Group Company

For years, loyalty programs were synonymous with earning points for hotel or flight bookings. However, travelers nowadays seek more than just discounts; they crave unique experiences.

Companies in the hospitality industry have responded by reimagining their loyalty programs, transforming how they engage with their customers – and with remarkable results.

Program managers now make regular use of mobile platforms, digital tools, and data to track the most minute behavior of their customers to make decisions based on troves of valuable data that was beyond their reach before the rise of digitization.

No longer mere marketing tools, loyalty programs are now viewed as strategic ways to foster greater customer engagement and drive higher revenue growth. Companies find it more profitable to offer incentives to get more business from existing clientele than attracting and converting new customers.

Let’s take a closer look at how this remarkable evolution is unfolding.

For decades, loyalty programs that reward customer patronage have been a staple of retail. In the Depression, big brands like Betty Crocker gave customers a way to save money on future purchases. In the second half of the 20th century, it became standard practice in the hospitality industry, where frequent flyer and rewards programs allowed customers to redeem spending points for travel, merchandise, or cashback.

Today, loyalty programs encompass many offerings, from points-based systems to tiered memberships, cashback incentives, and personalized rewards. However, these programs are no longer limited to a single brand. Instead, they often span multiple subsidiaries, partner sites, and even diverse sectors. What’s more, the boundaries are blurring with hotels, airlines, and rental platforms forging partnerships to create expansive loyalty networks so their customers can earn and redeem rewards across a wide array of travel-related businesses.

New technologies such as artificial intelligence (AI) and machine learning (ML) help analyze customer data, playing a crucial role in merging these ecosystems and ensuring that loyalty benefits seamlessly transfer between partners.

For example, companies using AI algorithms can predict a guest's preferences, allowing hotels to offer tailored amenities or experiences, such as a room with a view or a spa treatment. As they construct a more unified loyalty ecosystem, businesses can extend to their users the freedom to "earn anywhere, burn anywhere." That’s a significant change from even the recent past.

By personalizing rewards, predicting customer preferences, and optimizing offers, these advanced technologies are changing how companies understand their customers. Analyzing data from past stays, travel preferences, and online behavior, businesses can now take the initiative and even anticipate what their guests want. Instead of assigning somebody to manually dig into the details, trying to find and correlate data spread between multiple databases, AI streamlines what otherwise would be a complicated and messy process. This paves the way for a world of possibilities.

At the same time, the advent of AI-driven predictive analytics improves how hotel and airline manage their inventory. Businesses can tap this bolstered forecasting capacity to accurately assess customer demand to optimize pricing and availability. It’s also a boon to customers who can find better deals and availability due to the deployment of sophisticated algorithms.

GlobalLogic, a digital engineering powerhouse, is at the forefront of these dramatic changes in the hospitality industry. GlobalLogic, a Hitachi Group company, has vast experience with digital transformation and works with customers to turbocharge their loyalty programs. Consider the scope of a project it completed recently working with one large travel company.

The company's travel brands include several marquee names, but it wanted to unify its customer loyalty program offerings throughout its brand portfolio. But here was the problem: For businesses with multiple brands or partner sites, unifying loyalty programs can be a formidable challenge where each brand may have its own program, points system, and rewards structure. What’s more, this fragmentation hindered the customer experience and limited the program's effectiveness.

GlobalLogic leveraged its digital engineering expertise to take on several challenges. A single, unified loyalty program required merging user accounts from various brands into a single account. This seemingly simple task was, in fact, a Herculean digital engineering feat that demanded complex data migration, security protocols, and user experience design to ensure a smooth transition.

Data integration posed another challenge since merging user accounts and enabling "earn anywhere, burn anywhere" functionality required seamless data integration. Engineers had to orchestrate data flows to ensure customer information, transaction history, and rewards seamlessly synced across brands and platforms.

It was equally important to safeguard the security of the loyalty programs, which contained customers' personal data and transaction history. GlobalLogic implemented cutting-edge cybersecurity measures to protect customer information and maintain trust.

And, of course, the all-important question of creating a frictionless user experience. User interface and user experience (UI/UX) designers crafted intuitive interfaces that guided customers effortlessly through the program, whether they were earning rewards, redeeming points, or accessing personalized offers.

GlobalLogic’s engineering prowess moved beyond solving technical challenges; it built a foundation for innovation, scalability, and sustainability in the various loyalty programs. Members are now able to log and redeem points across all of a company’s brands. So, for example, someone renting a car using one of the affiliate brands can now earn points and redeem them for a room offered by another brand within the same corporate umbrella.

The upshot: Instead of competing against each other, the respective brands can now direct their energies on cultivating conditions that provide the best possible customer outcomes as well as a more common or unified cross-brand experience. In the process, the customer also wound up with a world-class loyalty program that is the envy of the hospitality industry.

For more information on how GlobalLogic, a Hitachi Group Company, can help you better engage your customers and innovate within predictable budgets, visit https://www.globallogic.com/services/offerings/software-engineering/.