Mr. Coyle

Guest Service / Customer Experience Mgmt

What Loyalty Programs are Successfully Impacting the Guest Experience?

By Jim Coyle, Founder & President, Coyle Hospitality Group

Over the last 16 years, Coyle Hospitality has measured the quality of the guest experience through our market research and over 20,000 hotel mystery shopping reports. By analyzing what really happens when a guest goes through a typical stay, we are able to aggregate, quantify and even isolate the behaviors that hotels routinely complete (almost all answer the phone within three rings), and rarely complete (addressing the guest by name on that same phone call).

Hoteliers can then determine the usefulness of these behaviors on their guests and deploy strategies that will at a minimum distinguish themselves in the marketplace and foster guest loyalty. This article looks at what guest loyalty really means in the modern-day marketplace, and addresses the most powerful way to build trust, the most important emotional component of loyalty.

With Guests This Loyal...

A friend of mine, Steve, is a true Road Warrior, spending 10-15 nights a month in hotels mainly in the Midwest and West Coast. Steve loves hotels. A few years back he told me about a really nice hotel he stayed at in San Francisco. He raved about the décor, the food and said that hotel employees just ‘had it’; that combination of energy and care that provided an experience that, well, ‘wowed’ him.

Imagine my surprise when I learned recently that despite dozens of trips back to San Francisco, Steve has never returned to that hotel, but instead stays with a chain that I have never once heard him rave about. I first chided him for being a hypocrite and then asked why he raved about one hotel and stayed at another. His answer was as brief as it is telling: “I like my points.”

The theory of guest loyalty is so beguiling, so intoxicating, that hotels in particular go into contortions when directing their ships towards the sweet siren song of guest loyalty. Books have been written, heroes made, theories minted, all virtually unassailable because who would challenge that guest loyalty isn’t every thing and the only thing?

That is all good and fun, but the question that won’t go away is, “What about my friend, Steve?” His loyalty is practically meaningless to his favorite hotel that his cab passes by on the way to the flagged chain hotel. Or is it?

Loyalty/Sticky Programs

If you sell a commodity, you simply have to have a loyalty program. The internet has made it too easy for the consumer to get information from you and your competitors. If the customer is truly free to choose whatever product or service provider they want, any time they want, the best outcome businesses without repeat customers could hope for would be to always be in the right place at the right time.

Most hoteliers though will insist that a hotel stay is not a commodity, it is an experience, an emotional experience at that, with words like ‘safety’, ‘welcoming’, and even ‘pampering’ appearing as metrics in their customer experience models.

So, why are hotel loyalty programs pretty much the same as the airlines and credit card companies?

1. Because they work. One of the most compelling emotions is fear. The fear of losing something of value (points) motivates the consumer to hang in there and do whatever is needed to avoid loss, even if that loss is only potential (future upgrades or free rooms).

2. A big part of the value propositions for hotels is indeed commoditized. Business travelers are arguably looking for location first and then consistency/predictability. They want a guestroom that is comfortable and technologically updated to conduct business. Estimates say that business travelers are $0.70 of the hotel industry’s revenue dollar, so it stands to reason that traditional loyalty programs work quite nicely for this relatively predictable big-ticket, high-producing customer.

3. Hotels have plenty of benefits to give their loyal points holders at little or no variable cost. The upgraded room and free Wi-Fi cost the hotel virtually nothing.

Changes Afoot

On the flip side, the advent and domination of the OTA has made traditional loyalty programs benefits much less compelling given that the entire market’s pricing is almost perfectly transparent. A $99 room at a four-star hotel in San Francisco creates acute “points program amnesia”; it’s just too good a deal. The supposedly loyal points customer has access to more information than ever.

The other change in the market is that consumers are using their loyalty programs less and less; the consumer is much less captive. IHG has over 50 million members, and only 20% are currently active, says the company.

Plus, new and better loyalty programs are always coming online creating competition and more choice.

The loyalty/sticky guest model above has worked well for a long time. Provide the value that is expected, satisfy the guest and you have a pretty good chance of retaining them. People like my friend Steve will still stay where they are going to stay, and that vote is made with real dollars.

But now Steve and every traveler like him have a megaphone. Travelers can rave to thousands of people through his social media on the likes of Facebook and Twitter. Steve’s opinion can now help that independent gem in San Francisco. The loyalty Steve expresses with his mouth, may in fact be more valuable than the loyalty expressed by his feet (and wallet).

Loyalty is Earned

Loyalty is a very complex, emotional concept, which is why it presents danger when training programs are built around increasing guest loyalty. There is also a huge distinction between the kind of loyalty that brings a guest back and the kind of loyalty that earns a positive rave.

Either way, loyalty is earned over time. If businesses want loyal customers, they have to get in it for the long haul and they will earn loyalty only after they have gained trust. Trust is built by a series of repeated actions, not words, or flavor-of-the-month campaigns.

Our biggest opportunity is the biggest liability. Each and every guest that walks in and out of a hotel’s front door is already in a fragile emotional state. They are operating without their usual safety net and resources that they have at home. They have traveled to get to your hotel and will travel when they leave. This creates tension. The purpose of their stay, whether it be business or leisure, is extremely important. If the big presentation goes poorly or the vacation gets rained out, the hotel had better be perfect, or else out comes the megaphone.

Loyalty is a two-way street, which means the variables, and outcomes are infinite. Consultants travel the world with slick PowerPoint presentations, and business books put forth myriad theories and algorithms about gaining loyalty, but consultants leave after their presentations and today’s hot business book ultimately cedes its top-of-mind position to its rightful place behind the pesky P&L. Hotel managers actually manage people, and they have to do so in a practical and sustainable manner, long after said consultant has left their magic in the conference room.

Guests are different; that’s the two-way part again. Weekday guests may be business travelers while the weekenders might be leisure guests in for a cultural buy. The challenge then becomes to look at the behaviors that build trust and build coherent training strategies around the ones that are most effective and indeed achievable.

After strategically surveying thousands of travelers, it is clear, that once the hotel supplies the expected goods and services (location, a safe clean, comfortable room, capable and available staff), the most productive trust builder is Service Recovery. And it applies to every guest in every kind of hotel.

Service Recovery

A hotel can spend millions trying to perfect the guest experience or they can often spend a few dollars perfecting the recovery. The fastest way to build trust is to correct problems or shine during a moment of truth, a situation when the guest in vulnerable and really needs you. That connects on a truly emotional level.

Our research shows that the hospitality industry in particular does a very good job of making people available. This is the first step in a successful recovery; allowing the customer immediate access to a live person. In general, staff do a very good job in addressing the complaint (gathering information). The best hotels long ago gave first line of defense staff the tools to handle complaints with companies like Ritz Carlton setting an example for all industries to follow. That’s the good news: The guest can find someone who can provide a solution.

The bad news is that that hotel staff rarely follow-up after the agreed-upon solution has been put in place. This is key, because guest problems are often complex and will ultimately need to be delegated to say Engineering, Housekeeping, and Accounting. Follow through is perhaps the most compelling behavior that earns trust because it demonstrates sincere, undeniable care. It is not that hard to practice either.

Another opportunity is born from the fact that hotel guests consume the product over a long period of time on the site of the service provider. The guest is amongst us.

Our research shows that guests are asked less than 10% of the time how their stay is going thus far during routine interactions at the front desk. The number is even smaller when telephone interactions are included in the data set. That is a huge opportunity afforded to very few businesses. After the initial purchase, the customer is offering himself or herself up repeatedly for discrete feedback before the purchase is complete. That is an opportunity that should not be missed.

Hoteliers can fix 99% of their guests’ problems while still at the hotel, and practically none after they have left it.

Ask the guest how the stay is going so far, capably and sincerely address their concerns while they are still there, follow through and you will earn a huge deposit in the trust bank.

Jim Coyle founded Coyle Hospitality Group, a market leader providing mystery shopping, quality assurance, and market research services exclusively to the hospitality industry since 1996. Mr. Coyle has acted as the president of the company since inception and has developed over 200 quality/brand measurement programs for leading hospitality companies worldwide. Mr. Coyle has also developed Qore, the first fully customizable online mystery shopping database platform designed specifically for the unique demands of the hospitality industry. With extensive and continued client collaboration, he continues to develop Coyle’s applications and programs, ensuring that clients get the most effective management tools to measure the complete guest experience. Mr. Coyle can be contacted at 800-891-9292 or jcoyle@coylehospitality.com Extended Bio...

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