Loyal passengers value the perks and status their loyalty has earned them. Forty three percent of passengers stay loyal to their preferred cruise line, while 56 percent of passengers choose any cruise line. That means more than half of all passengers aren’t loyal. And, when it comes to their next cruise, they’re up for grabs.
The question becomes: How do cruise lines entice the 56 percent — and retain those who are loyal?
Emphasizing the importance of improving loyalty, Jeff Zotara, CEO of cruise loyalty consultant Arrivia, says, “How do we keep these clients for a longer period of time and create longer lifetime value?”
With cruises growing at close to 10 percent annually, the scramble for undecided passengers is on. Both Royal Caribbean and Virgin Voyages announced rewards program status matching. Passengers having earned elite status levels with other brands can transfer those without having to start over with a new cruise line. This levels the playing field, erasing some of the key benefits of a loyalty program: With more points, you earn more benefits. Now those benefits are table stakes.
Winning the payments game
Given their cost, cruises are often a considered purchase, not one that is made at the spur-of-the-moment. The average cruise passenger saves for six months to two years before taking a cruise. And how passengers pay for their next cruise can determine who wins the business. Here are the most common payment types, each with tradeoffs for both passengers and cruise lines.
Credit and debit cards are the most common payment method, allowing for easy installment payments and travel rewards. Cruise lines often accept major credit cards, which provide the flexibility of paying over time or upfront, and may offer travel insurance or perks.
The details: Passengers, if extending the payment period over longer periods of time, will pay more in interest and fees than if purchasing up-front. Interest rates, set by issuing banks, will vary depending on credit scores.
Cruise line financing allows passengers to pay in installments leading up to their departure. Offered when cruise lines partner with financing companies, it’s a popular option for larger cruise expenses, as it breaks down the cost over several months.
The details: Interest can range from 10 - 18 percent APR for those with good credit, and 25 - 30 percent for those with lower credit scores. These loans can also have origination fees, ranging from one to five percent of the loan amount.
Travel agency financing offers payment plans or financing for cruises, which can include customized payment schedules and exclusive deals.
The details: Similar to cruise line finance companies, travel agencies may offer interest rates ranging from 10 - 25 percent, depending on creditworthiness. There can also be origination fees on the financed amount.
Loyalty programs and points can be redeemed to pay for all or part of a cruise fare. Co-branded credit cards with travel rewards often let customers redeem points for discounts, and some cruise lines have their own loyalty programs that offer price discounts.
The details: Besides blackout periods, limited cabin choices, and varying redemption values, rewards points may only cover part of the cruise fare, with the remaining fee often paid by credit card or cash. Additional fees, such as taxes, port fees, gratuities, shore excursions, and onboard expenses like dining, drinks, or spa services are not covered with points redemption.
Gift Cards can be used toward booking costs, which can be gifted or purchased ahead of time for savings on the cruise fare.
The details: Often purchased through a cruise line’s website or travel agencies. Some cruise lines allow gift cards to be applied directly during the booking process, while others require them to be added to the onboard account at the start of the cruise. Gift cards are often non-loadable and any remaining balance cannot be redeemed for cash.
A better way to pay: Alviere alternatives
Giving passengers a better — and easier — way to pay for their next cruise may make the decision between which cruise line to choose. Stocking up and applying loyalty points and rewards keeps some passengers loyal, but the majority of passengers may still be looking for more value in their cruise choice, including how they save and pay for their next cruise.
Dedicated funds from passengers as they start to save invigorates existing loyalty programs, and provides the additional value passengers need to make their cruise selection.Every dollar saved is a dollar towards future revenue. Offering a non-credit card payment option via a co-branded debit card can attract debt-averse customers, and avoid network merchant fees.
Co-branded debit
Some cruise lines offer a co-branded credit card where points can be earned with everyday purchases. These serve the loyalists, likely already members of a loyalty program (or two). These cards are bank-issued and require a credit check — potentially rejecting a cruise line’s best customers.
Alternatively, debit cards do not require a credit check and can be issued directly by the cruise line via embedded finance. Complementary to a co-branded credit card, debit may attract younger or debt-wary passengers.
The cruise line branded debit card allows passengers to fund their card with ACH, cash, or direct deposit, bypassing network card charges. Debit cards are closed-loop, so all funds can be used for the cruise line as pre-paid purchases. Read more on how to accelerate points earning for loyalty programs with debit cards.
Loyalty wallet
A natural extension to an existing loyalty program, loyalty wallets allow passengers to accrue rewards and points and save for their next cruise. Cruise lines can offer incentives for early purchase, encourage recurring deposits to save for the next cruise, all while saving on network fees when non-card funding methods are used by passengers.
Passengers can add funds to their branded wallet to save for their next cruise. Loyalty wallets also store rewards points for redemption, or incentives for frequent funding. Cruise lines benefit from guaranteed future revenue and yield on consumer savings as they progress towards goals. These mobile wallets can also be used during the cruise for incidental purchases and to accrue additional rewards.
Existing loyalty apps can gamify savings, rewarding progress towards the next trip. Valued incentives like early boarding access or premier seating for performances can be added to drive regular deposits to the wallet.
Capture the undecided and earn more loyalty with better payments
With more than half of all potential passengers not loyal to a specific brand, and status matching across cruise lines, the race is on to differentiate and win the undecided. By offering co-branded debit cards or loyalty wallets, cruise lines can add more value to their guests and accommodate their payment preferences, ensuring future passengers.
