Mr. Johnson

Sales & Marketing

When it Comes to Loyalty Programs - Collaboration Drives Participation

By Mark Johnson, President, Loyalty 360 - The Loyalty Marketer’s Association

Two levels of collaboration:

1. Collaboration among Loyalty Partners

While companies continue to spend well over $1.3 billion on loyalty programs, most do not tap into their full potential. This is primarily because they have a Field of Dreams “if you build it they will come” mentality. Yes, guests may “come” to your loyalty program. But membership does not equal participation - and participation is the holy grail of loyalty programs. In fact, recent research shows that on average people belong to 14.1 loyalty programs but participate in only 6.2 of them.

Developing collaborative, multi-partner loyalty programs gives hotel marketers the insights and actionable data they need to fuel the highly coveted participation. By moving beyond transactional-based programs - which take a more simplistic view of customer behavior via looking at hotel-related purchases - collaborative programs open up new lines of communication between business partners that reveal a comprehensive, 360° view of consumer behavior. Loyalty leaders then use the predictive power of past actions to estimate and influence future behavior and drive participation.

The Kroger Co, the largest traditional supermarket retailer in the U.S., is a great example of a company that has linked with an expanding number of partners to offer a collaborative loyalty program that provides a plethora of reward offerings to its customers - and a wealth of information to its marketing team. Kroger’s loyalty card provides customers with savings on groceries, gasoline, general merchandise, pharmacy needs and Kroger brands. By capturing and analyzing the data generated via the loyalty program, Kroger has been able to pinpoint the buying habits of its customers so specifically that they’ve segmented their 65 million shoppers into seven distinct groups. In addition to using this information to more accurately target their own messaging and customer loyalty initiatives, they also sell this data to their larger customers to enhance their marketing efforts.

The hospitality industry is not without its own best-practice examples. A coalition of sponsors, reward suppliers, and affiliates, the AIR MILES Reward Program has achieved an almost iconic status in Canada with 97% of Canadians knowing it well. The collaborative program enjoys the highest activity rates of any mass loyalty program, with approximately two-thirds of all Canadians actively collecting reward miles. Program partners benefit from a shared consumer database and deep-dive analytics that reveal who is buying what, where, when, and why. And that - the insights inherent in the data that can be mined from the program - is what fuels customer loyalty. Armed with a 360° view of customers, the program partners are better able to put customer interests first, personalize the shopping experience, and convey messages that bolster the customer’s affinity with the brand. At the end of the day, these savvy marketers address not just purchasing behaviors but the fundamental drivers of customer loyalty.

Do collaborative programs have to be as elaborate those offered by Krogers and Air Miles to garner the intended results? Absolutely not. We are seeing a growing number of hotels that are actively adding partnership programs to their existing loyalty programs.

• Members of Best Western’s global hotel loyalty program, Best Western Rewards, are now able to earn Southwest Airlines Rapid Rewards credits.
• Starwood Hotels launched a preferred guest program that allows consumers to bid on special events including suite tickets to the American Idol Tour.
• Hilton Hotels has become part of Delta’s SkyMiles loyalty program

The bottom line is that although these relationships are in play, hotels are usually not using the data to derive the real value-add of collaboration - i.e. data sharing among partners and a better understanding customer behavior. Too often, the information gleaned from loyalty programs is used primarily for price discounts and the like. However, when analyzed effectively, this crystal-ball data - purchase history, brand preferences, likes/dislikes, etc. ---- can be good as gold in driving synergies between the hotel brand and consumers.

According to a new survey from the Chief Marketing Officer (CMO) Council, customers are craving the notion that hotel operators understand them and their needs. More and more customers are expecting highly personalized content with offers that feel as if they were designed specifically for them. And this revelation means that the days of mass blasts with general offers are no longer acceptable.

The survey, Loyalty Leaders: Feeling the Love from the Loyalty Club, points out that 52 percent of respondents reported they want more compelling personal deals and offers as a reward for steering their business to loyalty program operators. Also, 58 percent say they want more compelling personal benefits and services, as well as more relevant offers or individualized deals.

"Relevant profiling data continues to be a limiting factor in customer engagement," said Donovan Neale-May, executive director of the CMO Council, "Without a deeper customer insight, marketers will be limited in their ability to do meaningful predictive modeling, market segmentation and revenue forecasting. Better understanding of customer behaviors, predispositions, intentions and preferences enables more effective and relevant messaging. It is also an essential part of customer revenue optimization and lifetime value building."

The good news for hoteliers is that the information is there for the taking. Armed with the data, hoteliers can then slice, dice and translate it to enhance the customer experience with more meaningful discounts, in-hotel benefits, general merchandise offerings, and beyond.

2. Collaboration with Consumers

In addition to mining your loyalty program for meaningful customer data, how else can hotels delve into the hearts and minds of their customers? By asking them. That’s right. Collaboration in its purest, most dynamic form is the direct synergy between the brand and its consumers.

InterContinental Hotels Group (IHG), which manages the world’s largest hotel loyalty program with 43 million members worldwide, collaborates with its guests via a trio of online communities. While the hotelier’s loyalty programs are successful, IHG wanted a way to connect more effectively with select loyalty customers while increasing bookings during tough economic times. Through its three private online communities -- Priority Club Rewards Elite Community (U.S.), Priority Club Rewards Elite Community (U.K.) and Priority Club Rewards Partner Visa Credit Card - IHG aims to collaborate and engage with key customers.

Each community has about 350 members recruited from IHG’s Priority Club Rewards membership base and selected by IHG to be representative of the demographics, status levels and behavioral profiles of the membership at large. As Cassandra Jeyaram, IHG’s social marketing manager, is quoted in a recent article on eMarketing + Commerce (“Building Loyalty from the Lobby Up,” September 2009), “We decided we wanted to build and facilitate private online customer communities to engage with and listen to key customers, as well as deliver insights throughout the organization in program development, marketing, and travel experiences and needs.”

Marriott is also collaborating with its loyal customers via Marriott Rewards Insiders, a lightly moderated online community built specifically for members to share their travel stories, ask questions from other members and give advice and recommendations. “Our members told us they wanted a place where they could talk to each other without interference from sponsors trying to sell them something,” said Ed French, senior vice president, Marriott Rewards in a company press release. “We designed an innovative digital lobby to give them a place to share their stories and get authentic, honest information from other frequent travelers just like them.”

Members can either use the site to just read information or set up their profile and post questions, comments or responses. They can also sign-up for alerts, which are sent when a post is created in a forum the member wants to follow. They can be emailed or posted in the member’s profile. Marriott Rewards Insiders offers “expressive profiles” that allow members to personalize their online identification by uploading pictures or avatars, providing travel preferences and personal interests and identifying their home town.

Through these online communities, not only do hotel marketers gain an effective way for loyal fans to help grow the brand, but they also capture first-hand, authentic insight into actual and desired travel experiences at the brand level and beyond. Interaction via an online community gives travelers a place to share and exchange information and connect with each other. And it enables hotels to collaborate with guests and engage in a meaningful dialogue that uncovers a wealth of information that will help them deliver a better customer experience and grow and improve their loyalty program over time.

Mark Johnson is President and CEO of Loyalty 360 - The Loyalty Marketer’s Association. Loyalty 360 is the only organization that addresses the full spectrum of both customer and employee loyalty issues. An unbiased, market driven clearinghouse and think-tank for loyalty and engagement opportunities, insights, and responses, Loyalty 360 is the source business leaders trust for industry metrics, market driven research, case studies, and networking opportunities. A sought-after speaker and writer, Mr. Johnson is frequently called upon by media worldwide to share his expert insights into customer and employee loyalty issues. Mr. Johnson can be contacted at 513-290-5147 or markjohnson@loyalty360.org Extended Bio...

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