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The loyalty sector is thriving, with businesses across retail, travel, transportation, and financial services increasingly relying on loyalty programs to expand their customer base and deepen relationships. Loyalty programs have transformed from basic retention tools to complex ecosystems that boost profitability and sales, leading some to refer to this current era as “the golden age of loyalty.”
“As more businesses recognize the importance of loyalty in driving customer engagement, we’re seeing an influx of loyalty programs,” said Adam Daniels, CEO at IAG Loyalty, a company specializing in customer loyalty programs and the driving force behind Avios, the loyalty currency shared by British Airways, Iberia, Aer Lingus, Vueling, Qatar Airways, and Finnair. “Consolidating these into a unified currency makes sense, as it simplifies the process for consumers who can’t realistically manage numerous different programs.”
To better understand the growing importance of currency consolidation in loyalty programs, both from the consumer’s perspective and within the business community, IAG Loyalty conducted two comprehensive surveys. The first survey gathered responses from a nationally representative sample of 2,000 UK consumers, while the second focused on over 400 UK business leaders in retail and adjacent industries.
Assessing Consumer Preferences
According to the survey, two thirds of consumers (65 percent) are members of at least three loyalty programs, with 27 percent members of five or more. Keeping up with multiple loyalty memberships can be cumbersome and confusing, leading to consumers feeling overwhelmed and disengaged.
Reflecting this frustration, the survey also revealed a strong preference for consolidated loyalty programs, with two-thirds (67 percent) of respondents favoring the idea of combining programs into a single, unified system.
“The fact that two-thirds of consumers prefer unified loyalty programs was striking,” Daniels said. “It underscores the importance of making loyalty programs more accessible and easier to use.”
Accessibility and ease of use are the hallmarks of a consolidated loyalty currency, where multiple loyalty programs are integrated into a single, unified currency that can be earned and redeemed across various brands, products, or services.
Four in ten consumers (40 percent) said they would be more loyal to brands with consolidated currencies, which would make it easier and more versatile for them to use their rewards. Singling out responses from Gen Z consumers, that number rose to 48 percent, reflecting a growing expectation among younger generations for simplicity and flexibility.
It’s worth noting that a significant majority of consumers expressed a desire for greater flexibility. Three-quarters of consumers (74 percent) wanted more flexibility in collecting loyalty points, and 76 percent wanted more flexibility in spending or redeeming points.
“Consolidated currency allows consumers to pool their earnings across different programs, like having one bank account instead of several, making it easier to attain rewards,” said Veronica Vicars, chief growth officer at IAG Loyalty. “Essentially, it enables your currency to go further, faster. On top of that, knowing that one Avios equals one Avios makes it easier to understand and compare value, reducing the friction that often accompanies loyalty programs with multiple currencies and partners”
Business Leaders Need to Catch Up
The majority of business leaders (52 percent) underestimate consumer demand for consolidated currencies. This perception gap suggests that many businesses may be missing opportunities to enhance customer satisfaction and engagement by not fully embracing or prioritizing currency consolidation.
However, business leaders seemed to acknowledge that current loyalty programs might not be fully meeting evolving consumer needs. In fact, 71 percent of them believe loyalty programs will change over the next two years, with many anticipating a rise in interconnected loyalty networks.
“For partners, linking with a unified currency offers the advantage of scale, which attracts more customers and enhances marketing effectiveness,” Daniels said. This is evident when customers shift their shopping preferences based on currency alignment, as we’ve seen with grocers in the UK.”
The Value of Consolidated Currency
A consolidated loyalty currency offers dual benefits, providing consumers with the convenience of everyday point collection and leading redemption options, while simultaneously driving growth, increased engagement, and stronger customer loyalty for brands.
“For consumers, it brings their relationships with various brands under a single loyalty umbrella without diluting the individual brand identities,” Daniels said. “For partners, it enhances customer engagement while allowing them to maintain their brand strength.”
According to Vicars, tapping into a consolidated currency is a cost-effective way to attract new audiences and retain existing members: “It provides a way to cut through the noise and offers a scalable way to reach new audiences while retaining control of your program.”
As Vicars noted in a report published by Skift and IAG Loyalty earlier this year, “each new partnership effectively adds millions of customers instantly, offering a turnkey solution. As more currency partners join or as currencies further consolidate, a network effect takes place. Each new partner amplifies the benefits, creating a virtuous circle that enhances the value of the program for all involved.”
Tapping Into IAG Loyalty’s Avios Currency
IAG Loyalty introduced its Avios currency to Qatar Airways in March 2022, allowing Qatar Airways Privilege Club members to transition from Qmiles to Avios seamlessly. This integration opened new opportunities for members to earn and redeem rewards across a wider network of partners. Following this, in August 2023, Finnair announced that it would also adopt Avios as its loyalty currency starting in early 2024, further expanding the use of Avios across Oneworld airlines like British Airways, Iberia, and Aer Lingus.
“With Qatar Airways and Finnair using Avios currency, we’re already seeing material benefits,” Vicars said. “Qatar Airways has seen a 26 percent increase in customers, a 50 percent increase in points collected, and a 75 percent increase in points redeemed year over year, partly due to consolidated currency.1 Avios is a shortcut to value.”
Partners with loyalty programs powered by Avios retain full control over their audience, perks, and reward structures. IAG Loyalty doesn’t design its program benefits or control its customer data or liabilities. This autonomy allows partners to tailor their offerings to their unique customer base and ensure their brand identity remains intact, all while leveraging the broader reach and flexibility of a consolidated currency.
Providing Everyday Value for Consumers
Beyond the travel sector, IAG Loyalty is exploring partnerships that make Avios more relevant in consumers’ daily lives. For example, customers who earn points through Sainsbury’s Nectar loyalty program can transfer their balance to Avios via the British Airways Executive Club, which they can then use for flights with British Airways, as well as for upgrades, hotel stays, and other rewards.
“By partnering with retail brands like Sainsbury’s, the UK’s second-largest grocery chain, we’re facilitating frequent, high-engagement interactions for customers and giving them the ability to convert everyday spending into special travel experiences,” Vicars said.
According to the survey, six in 10 consumers (61 percent) want to collect more points from day-to-day shopping to spend on holidays. On average, consumers are willing to spend 17 percent more on their weekly shopping to collect points for travel and holidays. Avios data from real-world transactions supports these findings, with basket size increasing by 50 percent after members link Nectar cards to Avios.
“By appending our partner’s ecosystems to ours, we create a compound effect — more options to earn and spend across categories. For example, you could earn points on British Airways and spend them at a local restaurant in Helsinki. We’re effectively expanding into lifestyle categories beyond traditional frequent flyer programs.”
Beyond simplifying loyalty programs with Avios, IAG Loyalty is reframing how customers think about loyalty itself. According to Vicars, consolidated currency “doesn’t just make loyalty a lifestyle choice — it helps you attain a lifestyle. It allows your currency to turn everyday activities like shopping and dining into opportunities to access experiences and rewards that matter to you.”
Looking Ahead
Looking to the future, IAG Loyalty is ambitious in its plans to expand the reach of Avios.
“We’re actively talking to global brands in core markets and beyond,” Vicars said, underscoring the company’s commitment to extending Avios across more airlines and travel verticals. This expansion will help further consolidate the use of Avios, allowing customers to accrue and redeem points across multiple categories and regions, making it even more valuable for a diverse customer base.
Additionally, Vicars highlighted IAG Loyalty’s ongoing investment in the brand to boost awareness, which will make it easier for partners to market and co-market globally, further extending the impact of the Avios brand.
Perhaps one of the most significant takeaways from IAG Loyalty’s recent research is the incremental value that currency consolidation can unlock for all stakeholders.
“As the loyalty sector evolves, the key to staying competitive lies in embracing a new era of cooperation, creating value for customers, which in turn generates value for everyone involved,” Vicars said.
The loyalty landscape is becoming more interconnected, and companies like IAG Loyalty are leading the way by fostering cross-category collaboration. By remaining open-minded and adaptable, the loyalty industry can continue to thrive and deliver meaningful benefits to customers and partners alike.
“The loyalty industry is still young, and we’re continually learning,” Daniels said. “Moving forward, the key will be to listen to our customers more effectively, especially the silent majority who quietly engage with loyalty programs without much feedback. At IAG Loyalty, we’re focused on demonstrating that loyalty can be beneficial both for the customer and the business.”
To learn more about IAG Loyalty, click here.
This content was created collaboratively by IAG Loyalty and Skift’s branded content studio, SkiftX.
