Mr. Johnson

Guest Service / Customer Experience Mgmt

Using the Loyalty Program to Drive the Customer Experience

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

Does your loyalty program promote loyalty?

While your initial response may very well be “of course it does”, I encourage you to give this question more thought.

If yours is like most hotels, chances are your loyalty program focuses on the accumulation and redemption of points. Accrue points in return for free or discounted rooms. But do reward programs such as these drive loyalty?

Many marketers mistakenly equate loyalty with rewards. Loyalty, however, denotes advocacy and commitment, not a points-based reward scheme. This belief is supported by the June 2010 Cornell Hospitality Report which contends that loyalty programs focusing on price-oriented rewards actually encourage more comparison shopping as customers seek out the most profitable loyalty program benefit. The points system, says the report, promotes loyalty to the best offer, not loyalty to the brand.

The most effective loyalty programs are an integrated part of an overall loyalty marketing strategy that is aimed at fostering a deep, emotional connection between the customer and the brand. This type of connection is not derived from points-based discounts or repeat purchases; it comes from continuous positive experiences with a brand. Effective programs are also considerate and developed in a manner conducive to adding value to multi-channel communications.

As Accenture research points out, a consistent branded customer experience plays a greater role in creating loyal customers than any other customer-facing activity — responsible for one-third of a business’ ability to maintain customer loyalty. When Loyalty 360 asked our members what makes them loyal to a brand, a whopping 78% said that great customer service is what makes them loyal.

Optimizing the customer experience involves understanding the rational and emotional drivers that guests value most, and then delivering on those drivers across their touch points with the brand. And there is no better place to get the robust data and insight needed to consistently deliver great customer experience than from your loyalty program.

Loyalty programs have long been a key weapon for marketers, but especially in today’s challenging business environment using this information more strategically to improve the customer experience and engagement process represents a distinct competitive advantage. This is because a hotel's customer loyalty program is a treasure trove of information to get to know your customers. The data on guest transactions, likes, dislikes and preferences that’s collected within loyalty programs gives brands the deep level of customer intelligence needed to deliver the most relevant, highest quality guest experience and drive long-term loyalty. Yet, there needs to be a commitment to engage, address and respond to customer service, experience and quality issues that may arise. Saying "sorry" and addressing the situation is the most effective way to create long-term advocates. Those who deny, censure and abdicate accountability find them in a poorer situation than they started.

The same Cornell Hospitality Report offers an interesting look at the depth and breath of customer data housed in a company’s loyalty program:

When we asked one gaming executive how he felt about his loyalty programs, he replied that they were the best marketing research expense on his balance sheet. He believed that even if the program provided no direct improvement in customer spending, the amount of personal information and purchase data that he can collect via his program makes it his single best source of marketing research data. Thus, hospitality operators should ensure that their programs are optimized to capture data on customers, as well as drive loyalty. Loyalty and research initiatives should be integrated to use customer insights not just for their loyalty programs, but for the broader business operations.

As Bill Gates said in Business @ The Speed of Thought, “The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage, and use information will determine if you win or lose.”

Guests want to be rewarded and recognized

The 2010 Frequent Traveler Survey from Loylogic polled nearly 40,000 people representing more than 10 loyalty programs worldwide. The survey found that redemption for experiences and unique items created a positive promoter score, meaning that people talk about the brand positively. As Steven Landuyt, Head of Global Sales at Loylogic, points out, “If you don’t have an engaging loyalty program, it’s a huge missed opportunity to win loyal customers — to acquire new customers and retain engaged customers. You have to create a way to recognize and reward your customers, whether they’re a first-time customer or a longtime customer.”

Loyalty 360 recently asked its members: What makes a great customer experience?

• 30% said “anticipate my needs”
• 21% said “recognize me”
• 21% said “surprise me”

Rewarding hotel guests is all about using relevant and meaningful forms of recognition - not points - to engage them with the brand and earn their repeat business, loyalty and advocacy. Having a thorough understanding of what your guests value most will help you determine how best to drive this engagement. A business traveler, for instance, is apt to appreciate priority treatments such as a faster check-in process. A family on vacation will value complimentary access to the hotel’s kids’ club. And what couple celebrating their anniversary at your hotel wouldn’t be thrilled to find a complimentary bottle of champagne when they walk into their room?

Looking at how a couple of hotels capture guest preferences to make this type of reward and recognition the cornerstone of their loyalty programs will bring this discussion to life. For example, Fairmont Hotels & Resorts President’s Club promotes recognition by incorporating pursuits and passions into their recently re-vamped loyalty program. Extensive customer research revealed that while members enjoyed the practical benefits of the program, they felt they could purchase most of the perks that were offered. So, the hotel concluded that the program would be more valuable if it offered rewards designed to make guests’ travel experiences easier and more memorable.

In a recent interview with Inside Flyer, Sharon Cohen, Executive Director, Loyalty Marketing at Fairmont Hotels & Resorts explained why the hotel choose guest recognition over awarding points. “Our elite tier members continue to tell us that quality of service is what they value most when traveling - our loyalty philosophy reflects that. Our goal is to offer a guest experience that is less transactional and more emotional through personal recognition of member preferences and exclusive on-site benefits.”

Fairmont’s new recognition program was designed to connect with their best customers at a higher level. For example, upon arrival at the hotel program members have complimentary use of such items as Adidas running shoes, yoga mats, and TaylorMade golf clubs.

Fairmont is also integrating personalized experiential rewards into its loyalty program by offering for its Elite members exclusive access to offers, experiences and benefits designed around specific travel-related interests. Members can update their profiles to reflect a number of unique, passion-based themes - Food & Drink, Arts & Entertainment, Sports & Adventure, Spa & Fitness, and Leadership & Philanthropy - and will receive custom offers tailored to each specific group. These Great Escapes and Fairmont Moments, which members could never purchase on their own, include exclusive access to New York Fashion Week, the Monaco Grand Prix and the PGA Grand Slam in Bermuda, to name a few. Each package includes multiple exclusive elements from meet and greets with celebrities and exclusive access to first run products to VIP access to "back of the house" areas of various events.

Fairmont discovered that incorporating guests’ personal interests and passions into their travel experiences would result in richer, more memorable, and more rewarding stays. Offering these tailored experiential rewards gives the hotel an additional opportunity to create customer bonds through intimate engagements with their best customers.

Las Vegas casinos are famous for giving away free drinks, hotel rooms or tokens to keep customers coming back. But, MGM Casino’s M Life loyalty program has found an innovative way to reward their customers and build brand loyalty. Instead of focusing solely on customer’s gambling patterns, MGM tracks members of their reward program across all resorts and all facets of their hotels, including clubs, dining, spas, shopping and gambling. MGM then uses this to offer tailored rewards that members receive rewards two ways — through personalized offers and in the form of comps that members can self-select from a menu. As Bill Hornbuckle, who oversees the program as MGM chief marketing officer, tells the Las Vegas Sun, “People won’t be redeeming points for toasters. Loyalty programs that work involve emotion.”

By monitoring the M Life card, MGM will know which slot machine a guest played, how much they spent, what they drank while they sat there, what they were doing before and after, and what they’d like to do on your next visit. Spending more money nightclubbing or at a show will let MGM know that the guest is apt to prefer an entertainment coupon versus a gambling offer.

Tracking this detailed level of customer spend over many years gives MGM the customer intelligence they need to offers the rewards that will come closest to matching members’ tastes. For example, slot-playing grandma isn’t going to be offered an Ultimate Fighting Championship ticket. But, a guest attending a Madonna concert might receive an offer for an upcoming Lady Gaga show. Or, a concertgoer attending a Trace Atkins show could receive an offer for the Country Music Awards.

When a guests’ wish is met - especially if it is met before the wish has even been expressed - it sends the message that you care about the guest. While it may seem like you need a crystal ball to make this happen, all you need to do is tap into your loyalty program which is filled with information about guests’ likes, dislikes, preferences, passions, and more. The cared-for feeling guests get when you use this data to deliver a superior customer experience and personalized rewards and recognition will engage them in your brand and drive the strongest, most enduring loyalty.

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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