Norwegian airline and Strawberry hotels create shared loyalty currency

Loyalty is one of the most desired – and elusive – elements of
a marketing strategy for travel sellers. 

Airlines and hospitality companies in particular strive to
become the brand of choice for consumers booking flights and stays, and they reward
those repeat customers by offering them the chance to earn and burn points in
return for that relationship.

According to Phocuswright’s
report, Travel rewards vs. loyalty what’s the difference?, “Trusted,
emotionally founded customer relationships not only help travel sellers create
satisfaction and long-term loyalty, but spur profitability through improved
retention, margin and customer lifetime value.” 

But traditional loyalty programs are challenged by the fact
that most people travel infrequently – limiting their ability to earn enough of
a brand’s loyalty currency to use it in a meangingful way. Today most of the
biggest hotel chains and airlines have created coalitions of partners across
travel, retail and financial institutions to help members earn rewards through
transactions they make more frequently.

Now two Nordic region travel brands have come together to try
a new strategy.

Norwegian airline and Strawberry hotels have created a joint
venture – Spenn – that will offer a common loyalty currency and platform across
both brands that they expect will drive better engagement and distribution
opportunities for them and more relevance for travelers.

Christoffer Sundby, formerly chief marketing and customer
officer for Norwegian, is now CEO of Spenn. The idea developed, he said, out of
desire by both companies to update their loyalty programs with a larger ecosystem
of benefits that would appeal to a wider range of consumers.

“We asked Strawberry to join Norwegian Reward, and they
asked Norwegian to join their Strawberry program,” Sundby said.

“And then we said instead of quarreling about who’s joining
whom, why don’t we just start a new venture and do this together? And what we
are doing is we are not creating a new loyalty program – what we are doing
together is to create a currency we can both use.”

The two companies are 50-50 partners in the joint venture,
which will launch this fall with about six to eight million participants from
combining their existing loyalty databases – which Sundby said have a “surprisingly
low” overlap of members.

Participants will be able to earn the currency – also called
Spenn – on hotel stays and use them to pay for flights or vice versa. And in
the near future the program will add more partners for earning and redemption, such
as grocery chains, fuel providers, pharmacies and banking services.

Consultant David Feldman of Catchit Loyalty said that while coalition
loyalty programs have been around for years with mixed success, this particular
partnership makes sense.

“This is a joint business venture and a very close
partnership,” Feldman said.

“You have two very highly regarded brands … who are natural partners
with each other who have realized that coming together they can create an
ecosystem that will have a greater critical mass than they can do on their own.”

And Phocuswright analyst Robert Cole agreed.

“I think it’s a really smart program because they are
focusing regionally where they can really have consumers understand the value
in that region,” he said.

This app you will use once a week. So imagine the traffic and distribution power that comes to Norwegian and Strawberry through that.

Christoffer Sundby – Spenn

“And they understand the whole travel journey of multi
components, why are people traveling, how are people traveling and how to open marketing
channels between partners. … The questions I have are the technology and how
easy is it to onboard new partners and to make it simple for an ecosystem to get
launched, promote it, start measuring. That’s critical.” 

Norwegian and Strawberry will determine the value of Spenn,
which may fluctuate depending on factors such as seasonal demand, for example.
But while other loyalty coalitions may require consumers to pay fees or
commissions to exchange currencies, Spenn is not a traditional “closed-loop”
system, providing more freedom and a more clear value proposition to members.

“Instead of having exchange rates, we say that I don’t care
if you earn your points with us at Strawberry and choose to spend them on airfare
with Norwegian… that’s up to you. You have the flexibility to do as you please,”
said Håvard Hovdahl, vice president of loyalty at Strawberry.

“The skeptical person, as we have also asked ourselves as
well, is then like, ‘So we will pay for the discounts given to the other party?’ Yes. But we believe that the incremental value of doing so will also make
people select us for bookings, because they see the points actually bring new
value and an extended value instead of being isolated with one company. So that’s
sort of like the big bet here.”

And according to Feldman, this is a smart strategy not only
because it potentially provides more value for consumers, but also because it simplifies
the use of the currency.

“Yes I can move Chase points to Marriott, but it’s sort of
an advanced move,” he said.

“The average consumer is nowhere near as savvy as people give them credit for. People
are busy they have other priorities in their lives. They don’t have time to be
a points-savvy expert. In this case what they are trying to do is make it a
simple proposition.” 

Members will use the Spenn app to link their loyalty accounts
from all participating partners and to track how they are earning and using their
Spenn currency. The app will also have a digital marketplace of offers for
earning and redemption – with booking on Norwegian and Strawberry available in
the app – and a display that is powered by an algorithm to show what is
relevant to the user.  

“Think of it as kind of Instagram for benefits,” Sundby
said.

“It’s an infinite scroll of all the different partners… We’ve
built an orchestration engine to control that. In very practical terms it’s the
art of connecting all the members with all the different content … Everything
that comes from the partners, connecting that with users using a smart
algorithm to make sure you actually get what you want to get. … This is our
attempt to solve the problem that a lot of people say they have around getting
all this irrelevant loyalty information spammed into their inboxes.”

The hope is that as more and more partners are added to the
Spenn ecosystem, users will find the app useful and engaging, and return to it regularly,
regardless of whether they have travel needs.

“Imagine the traffic that this thing will generate,” Sundby
said.

“The Norwegian app and the Strawberry app, on average, the
average traveler uses less than once a year.  This app you will use once a week. So imagine the
traffic and distribution power that comes to Norwegian and Strawberry through that.”