Beyond Miles: Building true loyalty with Gen Z

Transcript

Peter Smith:I'm going to talk to you a little bit about Gen Z today. Having mixed amongst many of you, I think it's a fairly safe bet to say that there are very few people who fit into the Gen Z category in this room. I hope I'm not offending anybody. The current age is age 13. To 28. So I would say that most of us in here probably sit above that. So hopefully you'll learn a little something today about Gen Z. Um, they are the most informed, connected, and socially conscious generation ever. Gen Z don't just buy brands, they buy from brands that really align with their values. And Gen Z is the future of travel. In fact, 61% of this generation prioritize travel over consumer goods and material possessions, and that represents a massive opportunity for our industry. In fact, over 30% of the global population is Gen Z. If you go east and you look into places like India, that's significantly inflated. It's more like 40% in many parts of Asia. Here in Europe, it's less but not an insignificant 1 in 5 of the population is Gen Z. And this generation love to travel. 63% of them made travel purchases in the last 12 months, and they spend more than you might imagine. This number astonished me when we did our research. They spend on average nearly $12,000 per year on travel. So as you can imagine, this represents a really significant opportunity for our industry. And consider that Gen Z are also the influencers. This is a generation of influencers, so they are even more important because they influence the decisions of others. Sadly, many people refer to this generation as the anxious generation. We prefer to call them cautious travelers. It's really sad to hear, but growing up in a world of uncertainty, 50% of Gen Z experience anxiety every single day. This means that when they engage with brands, they have a real desire for trust, for safety, and for peace of mind. That's very important to them. And of course, in a world of ever-changing global uncertainty with everything going on right now, one thing they really, really crave is a sense of control. They want to be able to customize and personalize their buying experiences with the brands they engage with. In fact, 75% are more likely to buy a product that they can customize. But the key word with this generation is trust. 79% of Gen Z say that it's more important than ever before to trust the brands that they buy from. That's according to the Edelman Trust Barometer, the same piece of research says that 67% of Gen Z value brands that prioritize and promote safety and security. They value that over adventure and thrill-seeking, in fact. And that number just continues to grow year upon year. And so trust is not just a marketing ploy or marketing speak. It's about really ensuring that we align with the values of this generation if we want to win their loyalty. Win their trust and you secure their loyalty long term. But how do you build trust? Let's have a look at some examples from both within our industry and a couple of examples from outside the industry as well. Revolut needs very little introduction. They are the largest digital bank in Europe, and they have aligned themselves perfectly with Gen Z's mobile-centric way of living every single day. We talk about the fact that they're influencers. You see it all the time. They sit behind their devices constantly. And so Revolut have done a sterling job at aligning themselves with that way of behavior. But they recognized— Revolut recognized a need within this generation for financial freedom, for protection, and of course digital-first services. And so they do things like they offer instant access to their cash, they offer flexibility around daily plans and annual plans. And they offer protection embedded directly within the app, whether that be travel protection, purchase protection, or indeed device protection. And their Gen Z consumers praise them for the all-in-one centricity of bringing this all together in one place. They really value that. Next is Delta. Again, needs no introduction. Probably a few of you sitting in the room right now. Delta have built trust with their customers by prioritizing transparency, by prioritizing proactive customer communications. So when it comes to things like flight status, Like where's your baggage, baggage updates, gate changes, this sort of thing. They're proactively pushing out comms to their customers to keep them informed all of the time. Furthermore, they have very transparent policies when it comes to disruptions. They offer free flight changes with no hidden fees at all. And for those of you that know Delta well, they tend to be pretty reliable. And so customers really value this. Delta consistently ranks high in the customer satisfaction and customer loyalty stakes. And these are just some of the reasons they're able to do that. Home2Go, you may or may not have heard of them. They are the market for the marketplace for the world's largest selection of holiday homes. And they valued flexibility amongst their customers. They recognized that 54% of their customers wanted to be able to protect their purchase, protect their trip. The way they responded to that was they embedded travel protection, travel insurance directly within the purchase path to protect customers when they need it most. They backed that up with a digital-first claims experience that focused, really honed in on UI and UX and making it super simple to put in a claim and get their cash back when they need it most. And again, their customers really praise Home2Go. It's a sign of their reliability and the customer satisfaction. Their NPS, which their Net Promoter Score, which they regularly measure, is higher than it ever was since these introductions. So flexibility is key for Home2Go and their customers. And finally, Scandinavian Airlines. Scandinavian Airlines have built trust with their customers through offering tailored, personalized protection. They were— they started working with CoverGenius in May 2023. By offering embedded protection directly within the booking path, very relevant to what it is that a customer's core purchase is. And since introducing this in May 2023, they've seen a significant uplift in their revenue per passenger. Furthermore, they've seen customer loyalty and customer satisfaction increase in line with that. But Scandinavian Airlines did something else over the last couple of years as well. They increased the number of ancillaries they sell. And interestingly, they tell us that since doing that, they've measured customer satisfaction from those customers who buy ancillaries to those customers who didn't. Importantly, they make assumptions about what the customer might want. Through using data, or they enable the customer to pick and choose from unbundled products. They tell us, and other airlines have told us the same, that customer satisfaction for those guys that take out ancillaries is, contrary to popular belief, higher than for those that don't. Anecdotally, the reason that they've got to the bottom of there is that they feel they're enriching the customer trip. And in doing so, customers have a much better experience. And I urge you guys to do the same. You know, when you think about ancillaries, for example, don't just think about the top 3: car rental, hotels, travel insurance and/or protection. Think beyond that. You know, think what else can you do to really enrich a customer's trip? There are a number of things on the wall here, and some of you sell most of these, some of you none, some just a few. But things like eSIMs, you see it everywhere right now. Every conference you go to, there's 10 booths selling eSIMs. But what that does represent is the fact that it's becoming an important item that customers want to purchase. We call them micro benefits. So think about the different sort of things that you can offer to your customers. When it comes to experiences, I mentioned Home2Go earlier. What they do when customers search for properties is they highlight properties that are perhaps off the beaten path or slightly different, I guess in a similar sort of way to Airbnb, for example. So that's a way of recognizing that these things are really important, particularly to this generation. So ensure that you align yourself with those values and then think outside the box. So you might wonder what food is on the wall. I'm not talking about onboard catering. Think a little bit differently. The example here is Zipper, owned by Japan Airlines. They enable their customers to buy premium-grade Wagyu beef and take it into the US, for example, without any problems when it comes to the border. The way they do it is they— Zipair work to ensure that all the paperwork's completed, any regulations are completely legitimized. And so they make it really easy to take Wagyu beef as a souvenir into the US. If you go into Singapore, they ship it directly to the luggage belt. So when you collect your luggage, you collect your Wagyu beef at the same time. Now, it's a strange example, but it's something that demonstrates it. You can think differently. And there's a revenue line there for you as well as delivering what your customers really want. But remember, guys, Gen Z are influencers. 68% of all consumers said that students and teenagers had influenced how and where they shop. And so they are a really important generation to get it right with. I can give a real-life example here. My son Sam, he just about fits into the Gen Z category. He's 13 years old, and for about 12 months now he's been learning Japanese. And so he spent many, many months trying to convince myself and his mum to take him to Japan, and we'd never considered that as a holiday. Anyway, after much sort of going on and on and on, we booked a 3-week tour of Japan last cherry blossom season, and I fell in love with the place. It's It was an incredible destination. We're actually going to go back again for 3 weeks next year, all driven by my son who is Gen Z. So he's completely influenced where we go, how we shop, and what we do with our time and money. CoverGenius is helping airlines like you to build trust through embedded protection that's personalized and that aligns with what customers really want. We're doing this today with dozens of airlines around the world, as well as every major online travel agent on the planet. And we also work outside of travel with major global digital-first brands. So I'll end with the fact that Gen Z is not just another customer segment. They are digital natives who really value authenticity, personalization, and purpose. And Gen Z are ready to take off. The question is, will they be flying with you? Let's make sure the answer is yes. Thank you very much. Thank you.

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