Customer retention is not just a metric; it reflects a brand’s ability to maintain a loyal customer base over time. Retaining customers becomes paramount in an industry where travel is infrequent, and consumers are price sensitive.
According to Statista, the average 90-day retention for hospitality and travel apps is 44%, highlighting the need for sound retention strategies. Acquiring new customers is more expensive than retaining existing ones, making it imperative for OTAs to focus on building long-term relationships.
With the travel and hospitality industry experiencing a steady recovery, OTAs are witnessing increased user engagement. However, transforming these sporadic users into loyal, repeat customers takes time and effort. As users tend to forget their app experiences during the gaps between trips, effective customer retention strategies become a competitive advantage, preventing users from shifting to other brands.
8 step customer retention strategy for OTAs
1. Make the first impression the lasting impression
The first interaction with an OTA is similar to a first date. Optimizing the onboarding experience is crucial in showcasing the platform’s value and helping users reach the ‘wow’ moment early. Research indicates that a well-designed onboarding flow can increase engagement by 400% and boost retention rates by 50%.
2. Increase user sessions
Capturing rich data, creating advanced user segments, and adopting an omnichannel engagement approach contribute to increased user sessions. Rich data, including user preferences and behaviors, allows OTAs to fine-tune their communication and offerings, developing a stronger sense of connection with users.
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3. Bite-sized content for storytelling
Beyond transactional interactions, OTAs can engage users by providing bite-sized content on destinations. Short videos, interactive graphics, and lists of popular places create additional incentives for users to open the website/app, enhancing brand recall and increasing user retention.
4. One-stop solution for travel
OTAs can also position themselves as the go-to solution for all travel requirements. It simplifies the travel experience for end users; offerings could be real-time spending insights, enabling additional service bookings, etc.
5. Implement loyalty programs
Loyalty programs are an effective tool for customer retention. Rewarding repeat customers with points or exclusive perks encourages brand loyalty. OTAs can retain users and save on commissions by nurturing a personal connection and boosting direct bookings.
6. Assess past guests and bookings
Segmenting users based on recency, frequency, and monetary value allows OTAs to identify and prioritize ‘super-travelers.’ Formulating personalized strategies for these VIP users can turn them into brand ambassadors, contributing to long-term retention.
7. Offer flexibility
Offering flexibility in bookings – whether for free or a nominal charge – encourages travelers to complete their reservations. This strategy is particularly relevant when uncertainties are routine.
8. Gamify travel
Introducing gamification elements, such as badges and progress wheels, adds a fun dimension to the travel experience. Encouraging users to explore various services or destinations within the app enhances engagement and contributes to customer retention.
Case Studies: Major OTAs’ Retention Strategies
1. Expedia: Unifying Loyalty Programs
Aggregating various loyalty programs into one, Expedia’s ‘One Key‘ aims to leverage its massive user base and offer a diverse range of travel products.
2. Booking.com: Genius Program and Rewards & Wallet
The Genius program focuses on immediate benefits with upfront discounts, while the Rewards & Wallet feature introduces a new retention level through an overarching payment platform.
OTAs often face the challenge of building and retaining a loyal customer base. Thinking outside the box and implementing a well-thought-out strategy can create compelling value propositions for OTAs that resonate with their users, nurturing long-term relationships. The next decade is poised to be defined by those who successfully cultivate genuine customer loyalty and can create a community of loyal users.
