The Strategic Role of Margin Control in Building Premium Bank Loyalty Programs

One of the best and most productive ways to boost customer involvement, retention, and satisfaction is to incorporate travel benefits into loyalty programs offered by banks and financial institutions. 

However, this integration requires extensive management so the bank or financial institution can meet its revenue goals. These organizations must partner with a private label provider like Custom Travel Solutions to provide flexible margin controls for these travel benefits. 

Benefits of Having Margin Control For Bank Loyalty Programs 

Let’s explore how banks or other financial institutions can benefit from partnering with a private-label travel services and benefits provider offering margin control and the ability to build their own margins.

1. Cost Efficiency Optimizing

Awarding travel rewards is getting expensive, with premium perks such as upgrading flight seating or staying in luxury hotels. Margin control also helps ensure the bank and organization do not pay too much for the reward.

The ability to add desired markups to travel rewards is crucial. By adding these benefits to their loyalty offerings, financial institutions can build their profits on top of the wholesale rates offered by providers such as Custom Travel Solutions, ensure the cost of providing these benefits is recovered, redeem good profits, and establish a stable revenue stream. 

Suppose a bank and organization wants to offer upgrades on first-class flights as a reward  Margin control allows the bank and organization to ensure that such upgrades are never more costly than a bank and organization allocated to its budget for travel awards, thus keeping the financial health of the program intact. 

Banks and organizations can afford to offer attractive travel rewards without competing on overspending, thereby ensuring long-term financial stability.

2. Tiered Reward Personalization

Such benefits can be customized according to a customer's loyalty tier, and what is offered should align with the consumer's level of engagement with the organization.

It can enable financial institutions to accord varying budget levels to each loyalty tier, offering more rewarding benefits to higher-tier customers while giving base-level rewards to lower-tier customers.

For example, a bank and organization could offer free lounge access, fast passport and visa processing, etc., to Platinum tier members and allow Bronze tier members to access member-only discounts on accommodations only. 

This personalization nudges customers to upgrade their membership level, making them more active and loyal. This way, the organization remains profitable because customers have full control over their spending on each tier. 

3. Customer Retention and Acquisition

One of the challenges traditional banks face is customer acquisition and retention, especially given the launch of several neo-banks, which, with their ease of use and applicability in daily life, are emerging as major competitors. 

Adding travel benefits at different tiers gives banks a strong point to attract new consumers and retain existing ones for a bank loyalty program. 

Having margin control over these travel benefits allows these banks to stay within their budgets and achieve their revenue goals. For example, a bank or organization can easily decide its markup on every hotel booking made through its loyalty program. 

This controlled approach allows banks to attract new customers and retain existing ones by offering very appealing travel benefits without sacrificing profitability.

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4. Balancing Reward Costs with Revenue

A successful loyalty program must balance rewards costs with the revenue generated from increased customer engagement. Travel benefits can encourage higher spending, but their cost must be offset by the additional revenue generated.

Financial institutions can monitor how specific travel benefits, such as increasing credit card usage or account balances, influence customer behavior. By adjusting the margins, they ensure that the rewards offered have a net positive impact on the organization’s bottom line.

Suppose data shows that offering a certain travel benefit encourages customers to spend more on their credit cards. In that case, the bank and organization can adjust the cost of that reward to maximize its profitability.

By balancing costs and revenue, financial organizations can ensure that their loyalty programs are sustainable and continue generating profit over time.

5. Applying Data in Strategic Decision Making

Effective margin management depends on data-driven decisions. With customer data, banks and organizations can determine which travel benefits are most highly valued by customers and then negotiate better terms with travel partners.

Using customer data, organizations will derive which travel rewards are the most popular and actually favored by their customers. This will let them adjust their margin controls and bargain for a better offer with the travel partners while still giving the same benefits.

Suppose the data of a bank and organization specifies that the customers often redeem their points for travel to certain places. In that case, the bank and organization can negotiate special reduced fares with airlines about these routes, keeping the charge of the reward items low and the customer satisfied.

If data is used effectively, banks and organizations can strategically optimize the cost of their travel rewards, making them attractive to customers yet not too pricey.

6. Strengthening Program Sustainability

Long-term success of any loyalty program is enabled by sustainability. Keeping margins within control allows these institutions to offer attractive travel perks while also staying profitable.   

Basically, the bank and organizations track the cost implications of this travel reward offer and make up the margins accordingly to ensure that this scheme remains profitable. The savings are sustainable and they can continue offering rewards in a financially sustainable way without harming the program.

A bank and organization could reassess the travel rewards every year, which means increasing its cost of redeeming points and reconsidering the benefits in case the current benefits are too expensive to maintain.

A sustainable loyalty program creates long-term customer trust. Since the value of the reward will be continued, the customer will be loyal to the bank and organization.

Custom Travel Solutions’ Completely Customizable Travel Benefits Program 

At CTS, we have spent years forming our supplier partnerships and negotiating the best prices for our clients. Here is what the program offers: 

You Choose The Benefits You Want 

Give your members the world with a wide range of travel benefits that you can choose from: 

• 3M+ accommodations, including hotels, apartments, resorts, vacation rentals 

• 30+ other benefits, including travel insurance, medical and legal assistance, fast passport and visa service, and more 

• Member-only pricing on car rentals 

• Member-only pricing on 27+ cruise lines and 45k+ cruise itineraries

• 25k+ curated tours and activities

All benefits can be customized to suit your members’ needs and wants and are available as APIs that can be integrated into your existing program.

You Build Your Own Markups 

Leverage our wholesale rates to increase your markups on the benefits you choose to offer, ensuring you can achieve your revenue goals. 

You Retain All Your Data 

We serve you. This means your customer data is always yours and is controlled through your back office. 

Launch within 10 Business Days 

Our solutions are market-ready and can be quickly private-labeled to your brand, as well as our world-class customer and marketing support. 

Schedule a demo with one of our specialists to understand what we can do for your bank loyalty program.