SALES PROMOTION: Sun, sea and incentives

Incentive travel hits the hot spot in the race for customer loyalty,

Cathy Bond examines its allure

There’s a competition prize that never fails to pull in the punters

because everyone lusts after sun, sea and a palm-fringed beach. The

luxury holiday sells escapism and works as a consumer incentive every

time.

It’s one of the cliches of the quick-fire tactical promotion. We can all

dream. Travel is second only to cash as an incentive and it’s a classic

common denominator, scoring with ABs and DEs alike. A mature market

maybe, but the chief suppliers - travel agencies - are on the scent of

new business in customer loyalty schemes.

This market barely existed until a few years ago, and the potential is

huge. Retailers which do not have a loyalty scheme on the go are running

scared, with one eye fixed on the competition and the other on

opportunities to lure and lock-in customers. New markets are also

getting in on the act. Emap recently announced plans to reward

subscribers to a number of its titles with carefully targeted travel

offers. It is the first major publisher to do so.

‘It is definitely a changing market,’ says Claire Harrold, account

director at Page & Moy, the direct-sell travel agent which, with Thomas

Cook and Thomson’s Going Places, dominates the incentive travel market.

‘Clients are looking for third parties, strategic links on a longer

term. In that sort of relationship it’s in everyone’s interests to

achieve lasting customer satisfaction.’

Page & Moy pioneered the Holiday Club a decade ago and now runs schemes

for Barclaycard and Bupa, trading on the strength of its direct-sell

network to provide the capability for mass redemptions.

Other companies flying the loyalty flag, including Tesco, Asda and

Safeway, are enthusiastic users of travel promotions, but their regular

offers tend to mix and match suppliers. Loyalty schemes need to generate

unique and attractive rewards. If they do not, customers quickly lose

interest.

The loyalty credo promises one-to-one marketing incentives irresistible

to targeted customers. Unfortunately this clashes with travel’s key

selling point of being all things to all men.

‘Travel agents are not as creative as we’d like, although some are more

switched on than others,’ says Stephen Taylor, head of electronic

relationship marketing at Safeway, which regularly features travel

rewards in its ABC loyalty scheme. ‘Few are database-marketing literate,

so they will always come up with the lowest common denominator stuff.’

Capital Shopping Centres, the company behind retail mega-centres such as

Thurrock’s Lakeside and the Gateshead Metrocentre, last month launched a

Visa card alongside an existing loyalty card, both of which include

travel incentives.

‘We did a lot of shopper research and travel always scored well,’ says

Capital’s Heather Hudson-Oldnall. ‘People especially like the products

that seem most ‘free’ - short breaks or free flights - rather than

straight holiday discounts.’

‘Travel agents just bash out the same old holiday discounts,’ complains

Matthew Howes, advertising and promotions controller at The Daily

Telegraph, which has a rolling programme of travel promotions. ‘We need

fresh ideas. They don’t have them.’

Howes points to a recent Daily Telegraph package offering big discounts

on short breaks in UK hotels. The magazine negotiated terms with each

one of 700 hoteliers taking part and devised an editorial-rich

supplement launching the promotion.

‘It was a logistical nightmare, but it was different,’ he says, ‘and the

way it was presented added value. That’s important because travel has

become a commodity. It rewards readers who are already loyal.’

According to the travel trade, this will change. Currently the majority

of incentive business is in tactical promotions, but companies will be

working together with third parties to produce more creative solutions.

‘There are more sophisticated database marketing programmes,’ says

Harrold. ‘Companies want cost-efficient offers that are appropriate to

the market.’

Sainsbury’s opted for a ready-made solution by linking with Air Miles in

July this year. Members of its Reward club can opt for either cash

savings on their grocery bills or Air Miles points redeemable against

free flights and various other leisure offers.

‘Lots of companies are considering launching loyalty schemes but the

start-up cost is daunting. Then there is the problem of making rewards

worthwhile,’ says Judith Thorne, head of marketing for Air Miles. ‘The

Air Miles bonus is its collectability. Sainsbury’s Reward card holders

can also get points through a growing number of outlets.’

Tesco, meanwhile, has dabbled with travel in an idiosyncratic fashion,

turning the conventional offer on its head by offering Clubcard points

for Thomson holidays booked via subsidiary travel agents, chiefly Lunn

Poly.

Apart from retailers, newly-privatised utilities are a prime target for

incentive back-up. Suppliers of travel-related employee incentives are

keen to translate their strategic programmes to the consumer sector. ‘A

lot of loyalty schemes are moving into phase two and are looking to

spice up the offer,’ says Michael Crompton, chairman of Landround

Marketing, which set up the Emap deal.

He adds that the big brands can’t ignore the sheer clout that travel has

in terms of perceived value, which is helped by the fact that travel

operators supply the promotional sector with their excess capacity.

‘For example, we supply P&O mini-cruises to Asda’s loyalty club

members,’ he says. ‘P&O are filling empty cabins and they get a captive

audience buying meals, drinks and duty-free.’

Meanwhile, Asda shoppers get a holiday for the same number of points it

takes to qualify for an electric kettle.

‘However the constant struggle in sales promotion is whether to buy

short-term sales gains or longer-term loyalty. Travel suits both options

and the most efficient organisations have feet in both camps.’

This article was first published on Marketing