National Report – A recent survey conducted by USA Today found not only that loyalty programs can boost a company’s market share by as much as 20 percent, but also that customers say loyalty programs play a “pivotal role” in their booking decisions. With this in mind, hotels have been finding new and unique ways to latch on to customers and keep them coming back again and again—but as more businesses offer more (and distinct) rewards, loyalty is becoming an increasingly elusive goal.
BY THE NUMBERS
A Red Lion Hotels study that ran on HotelManagement.net in late 2014 found that only one in four customers allocate more than 75 percent of their wallet share to their preferred brand, and that less than one in three Americans find reward program communication to be relevant; that percentage is even lower for millennials. With consumer expectations changing, points and free stays are no longer enough to keep guests coming back, especially as brands expand to different cities.
“Customer loyalty has evolved significantly in recent years in that loyalty has spread outside of the travel and hospitality industry—it’s now everywhere,” said Bill Linehan, CMO of Red Lion Hotels Corp. “Customers have many purchase choices, and customer loyalty programs must make sure that they are offering a program in which the customer sees value and also feels rewarded for their loyalty at every touch point.”
To that end, Red Lion launched Hello Rewards, its new guest recognition and membership program, last year. At the time, Linehan said that the program recognizes guests as of their first stay with “member perks,” whereas the former program restricted guests to certain booking channels to accumulate points and achieve tiers.
“In effect, we are earning the loyalty of our guests, instead of asking them to earn ours,” he said. “We recognized that loyalty programs in our industry are changing. We saw retail programs that have more meaningful relationships with a higher percentage of their members for a fraction of the cost. And we see more change is yet to come. That’s why we decided to reinvent our loyalty program into a better customer recognition program.”
Not only is loyalty changing across all consumer-based disciplines, Linehan added, loyalty programs are being consolidated by third-party disrupters. “As we move from a point-based loyalty program where consumers collect their points and earn their status, to one where consumers don’t have to worry about points and status, but rather feel rewarded where there’s business, my ‘ah-ha’ moment was that the latter is indeed their preference,” Linehan said. “By moving to the latter, it opens up doors to so many more possibilities because we don’t have points and status restrictions. We have more marketing opportunities than ever before.”
HOW NEW TECHNOLOGY CREATES THE NEW LOYALIST
As advanced technology becomes the new normal, brand loyalty has become much more complicated than a simple account and points that can be exchanged for free nights or upgrades. Airlines and hotels have partnered for years to let guests acquire room nights for flights, and vice versa. Starwood Hotels and Resorts Worldwide recently launched a partnership with rideshare company Uber that lets guests link their account to the company’s “Preferred Guest” program, gaining points for use at any Starwood hotel for every dollar they spend on their ride. Tech-savvy guests can now use their smartphones to check in and choose their rooms from digital floor plans at Hilton, for example, and the company will soon add the ability to use phones as room keys—a strong incentive to download the app and book hotels that have rolled out the platform.
Another notable tech development is the rise of social media for both brand promotion and customer engagement, both of which can encourage loyalty. “When you take a look at today’s traveler, preferences continue to evolve along with technology,” Mark Weinstein, global head of loyalty and partnerships at Hilton Worldwide, said. “We now encourage travelers to engage with us on the digital channels they prefer most—whether that’s social, mobile or online.” Hilton also takes feedback from customers on digital channels, he added.
“Effective loyalty programs meet the consumer where
they are,” Linehan said, noting the value in investing in top-tier technology. “It also allows for incredibly robust and personalized engagement to develop loyalty. High tech enables us to be high touch where we cater our messaging and perks to our member preferences without them knowing we are doing so.”
BUILDING LOYALITY THROUGH CUSTOMER SERVICE
Earlier this year, consultant Peter Shankman published “Zombie Loyalists: Using Great Service to Create Rabid Fans,” a guidebook on using customer service to build brand loyalty. Businesses, Shankman writes in the book, need to empower every employee to impress customers with above-and-beyond service, or even just human touches. For example, Shankman alludes to a stay at The Ritz-Carlton, Dubai in which a housekeeper, noting that his toothpaste was running low, replaced the dwindling tube as a courtesy, at no cost to the guest. The housekeeper’s gesture impressed Shankman enough to take to social media—and his tweeted photo of the housekeeper’s note went viral to many followers who learned about Ritz-Carlton’s dedicated customer service.
“I personally know two people who made reservations at this specific hotel when they traveled to Dubai in the following months, and they both said this picture was what pushed them over the edge to do it,” he wrote in the book. “Cost to the hotel? Probably about 48 cents. Result? Well, let’s just say reservations at there aren’t cheap. How’s that for some customer service ROI?”
But with multiple hotels filling multiple markets, how can one brand keep guests loyal from property to property? “That’s where CRM comes into play,” Shankman said. “Some hotel chains note how you like your drink at the bar. When you go to the bar at another property in the chain, your drink is made the same way. If that doesn’t raise loyalty, I don’t know what does.”
In the end, Shankman said, true loyalty is earned from experience, not points. “How are you treated? I know the difference between being Platinum at SPG and showing up at a no-name hotel with a reservation from Priceline,” he said. “It’s worlds apart.”
But points can still be a valuable asset and a strong incentive for guests to book. Hilton recently launched Lifetime Diamond Status to reward some of the brand’s most loyal and elite members, giving them access to Diamond benefits for life. “This new tier rewards those who have achieved notable accomplishments with us,” Weinstein said.