Rethinking Engagement: The Transformative Power of Loyalty Programs on Customer Lifetime Value


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Customer lifetime value (CLV) is a critical metric for most companies, effectively translating the quality of customer experiences and the strength of customer relationships into financial performance. Because of this, and because CLV measures long-term impacts, it can be uniquely influenced by a company’s loyalty strategies.

Brands recognize this, of course. Our recent report, Travel Loyalty Outlook 2024, based on a survey of consumers and loyalty program professionals in the United States, found that increasing CLV is a brands’ top priority for their loyalty programs, with 29% of companies indicating this was their primary goal. This is a notable contrast to a similar survey we conducted in 2021, when loyalty providers cited customer retention (30%) and rewarding high-value customers (22%) as their top goals, far outpacing increasing CLV (16%).

What do these new findings mean? In part, they reflect two very different business environments; in 2021, brands naturally prioritized customer retention amid a drastic reduction in economic activity, whereas now, in 2024, they can take a much longer view. These findings also reveal the ascendancy of CLV as a loyalty success metric.

A shift toward CLV and loyalty ROI

But look just a little closer —and brands more generally—are perceiving their loyalty programs and in what they’re asking them to do. The traditional tasks of retaining customers and offering rewards as incentives for loyalty remain, but there’s a new emphasis on profitability and programs generating revenue of their own.

Data points from our Travel Loyalty Outlook 2024 report support this. “Capturing a greater percentage of customers’ overall spending” gained prominence as a loyalty program goal compared to 2021, up to 13% from 9%. The challenges cited by loyalty providers also reinforce companies’ focus on increasing customer lifetime value in 2024, with “introducing new redemption options” (9% in 2021 to 14% in 2023) and “maintaining appropriate customer service levels” (21% to 26%) both ranking highly in our report. New redemption options keep members engaged, and spending and excellent customer service makes it easier for them to do so over a longer period.

If an increased focus on profitability and customer lifetime value represents the new standard for loyalty program performance, then it remains for companies to identify the best ways their programs can achieve these goals. While there are a variety of tactics and strategies loyalty programs can deploy to boost CLV and profits, they ultimately boil down to two fundamental principles: giving customers what they want and meeting their expectations.

Value, expectations, and travel

To put it simply, consumers want value, especially when booking travel. They expect their travel loyalty programs to offer convenient, user-friendly, positive experiences that help them unlock that value. Over 40% of consumers in our survey said that price and value for money have become increasingly important over the last year, and 37% said it was their top consideration when planning a trip. Yet only 7% of consumers said they turn to their travel loyalty programs when booking travel. And just 23% view using their loyalty points as a potential solution to confront the rising cost of travel. That’s a significant disconnect.

Closing this gap is the most straight way for companies to leverage their loyalty programs to drive CLV. To do so, their programs need a flexible loyalty currency fund, bonus points or miles through the margin earned on other travel products. This generates direct, recognizable value for members. They also need travel booking capabilities that are on par with the online travel agencies consumers are accustomed to meet their expectations for a seamless, feature-rich experience.

When companies consistently demonstrate that their loyalty programs offer value and provide a booking experience that keeps members coming back, they can establish the kind of long-term, mutually beneficial relationships that drive customer lifetime value—for a lifetime.

Jeff Zotara
Jeff  Zotara is the Chief Marketing Officer at  arrivia. He has more than two decades of strategic and operational marketing leader experience, focusing on driving growth and marketing technology across brands and providing the best member experience at the intersection of travel and tech.  


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