Ms. Freud

Sales & Marketing

Qualitative Research: Loyalty Programs and their Effectiveness on the Hotel Guest

By Johnna Freud, Qualitative Research Moderator, Saul Cohen & Associates

Program Attributes

It is impossible to determine what makes consumers more attracted to one hotel loyalty program rather than another unless you ask them. Through qualitative research, we have identified loyalty program attributes that consumers find appealing -- or not. They want the rewards to be attainable. Programs that offer too few points for members' purchases, require too many points for redemptions, or have too many rules and blackout dates frustrate consumers rather than build loyalty. Additionally, consumers are more attracted to programs that enable them to acquire points from purchases at partner companies or additional bonus points for specific purchases (i.e, purchases made in the hotel or resort's restaurants or shops qualifying for more points per dollar spent).

Consumers also want options for point redemption. For example, while some loyal guests might save their hotel reward points to use for future free accommodations, others may travel so frequently that they acquire more points than they could ever use only for free accommodations. For them, it is important that the program offer redemption alternatives, such as the ability to redeem points for merchandise or upgraded accommodations.

Additionally, consumers want rewards programs to be written in simple language without legal jargon, hidden restrictions or fees. They want assurances that any personal information they provide will be used only for the loyalty program.

Targeting Your Loyalty Program

A key element to a successful loyalty program is that it offers rewards that consumers want. On this topic, a frequent business traveler once told me, "If I am loyal to a particular hotel, then I want them to be loyal to me. I want them to make the reward benefits worth my while."

Sounds simple enough, but since each person's needs and desires are different, what constitutes worthwhile benefits for one person may be different from another person's definition. The best programs are the ones that are matched to their target audience.

So who is your property's target audience? Is it the frequent traveler or the occasional traveler? And, should all patrons be treated equally by a loyalty program? A hotel can give the same rewards to everyone, but how meaningful are the lower level points for travelers who spend a great deal of time in hotels -- especially if other hotels are giving them several points for each dollar they spend because of an elite status? And, how interested are occasional travelers going to be in programs that emphasize the perks for gold or platinum level members when they do not spend enough nights in hotels to reach these levels?

Focus groups provide a means through which hotels can answer these questions and gain an in-depth understanding of consumers' attitudes and behavior regarding loyalty programs. But focus groups can provide even more information.

Hotels use rewards programs to build loyalty as well as to differentiate themselves from their competitors. Some programs look very similar. How can a hotel distinguish its loyalty program from others? Within the universe of loyalty programs, which benefits are most important to consumers? How could a hotel persuade a member of a competitor's loyalty program to join theirs? Would a sign-on bonus attract their attention? And, which benefits are missing altogether?

Focus group discussions can help identify which benefits consumers deem most important. They can also produce wish lists of benefits that hotel patrons would like, but currently are not offered. If a long wish list of benefits evolves from qualitative research, quantitative research can be used to better identify which among them are most compelling.

Evaluating Rewards Program Collateral

In addition to targeting your loyalty program, it is equally important to target your mailings and email blasts to members -- to segment them so that high level members receive mailings appropriate for their elite status while regular members receive mailings that pertain to them. Focus groups are an ideal way to test collateral materials to determine whether they deliver the intended message to the target audience.

But these are not the only loyalty program collateral to be tested. For example, we have conducted focus groups to evaluate the promotional literature that explains rewards programs, the displays for the applications and the membership card designs.

From focus groups, we have learned whether it is best to display important information in a dark typeface on a light background on membership brochures and applications - or vice versa. Consumers have told us the value of bullet points and for what purposes they should be used. We have also learned which colors and layouts are more likely to get them to gravitate toward certain brochures over others.

Other aspects of membership brochures that can be evaluated in focus groups include layout, wording and the application form itself. Does the layout flow logically for readers or not?

With regard to content, do the words on the brochure convey the intended message? Are the differences between a regular membership and an elite membership adequately defined? What are the privacy protection features regarding personal information supplied by the applicants? What are the important points that need to be amplified? Is the application easy to read? Does the brochure or application leave readers with unanswered questions?

Regarding brochure displays, focus groups can be used to investigate consumers' reactions to them in several ways. First the displays can be evaluated in and of themselves for their appearance, including how well they attract consumers' attention, and for any information they convey. Additionally, they can be evaluated for how well they work in concert with the brochures. Focus groups can also provide insights about where prospective members would expect to find brochures and displays.

Membership card designs can also be evaluated in focus groups. We have learned which color cards elicit negative reactions and which stimulate positive ones. Consumers feel that some cards are hard to distinguish among the other cards they carry. Conversely, we have learned which colors are preferred by consumers. For example, while consumers may feel that a silver card is appealing, if it looks too much like grey, whether in actuality or as depicted in the membership brochure, the grey color can evoke negative reactions. Some have taught us that they also want the option to personalize their card, either by having a choice of colors or pictures.

Taking the Pulse of Members

Fast forward -- your loyalty program now has members. Are the members happy? Has the program met their expectations? Why or why not? If not, how can this situation be improved?

Focus groups provide a way to check in with members to evaluate their reactions to the program. For example, we have learned that customer service is an important element that affects member satisfaction. How easy is it to reach a customer service associate? How knowledgeable are the representatives? In what ways do they add value to the members' experiences?

Loyalty programs consider good customer service to be critical to their success. For some, the customer service directives are handed down "from the top" and are conveyed to employees as part of the company's mission. Additionally, some use customer service as a way to differentiate themselves from their competitors. Despite this emphasis, reward programs that fall short in delivering good customer service can alienate members. This can translate into consumers' negative feelings not only toward the rewards fulfillment company but toward the hotel as well.

Conclusion

So the next time your hotel contemplates creating or revamping its loyalty program, the marketing materials that accompany it, or the design of the membership card, consider using focus groups to gain an understanding of how the new program, changes to the current program and materials will be received by target market consumers. And, consider using focus groups to evaluate the satisfaction level of loyalty program members.

Johnna Freud is a Qualitative Research Moderator with Saul Cohen & Associates, Ltd. She has experience in focus group moderating, interviewing, group facilitation and project management. She has worked with service companies, publishers, consumer package goods firms, retail chains, manufacturers, educational institutions, consulting firms, and advertising agencies. Research objectives have included concept evaluation and refinement, communications and advertising assessment, product repositioning, employee/student recruitment and performance evaluation, packaging and displays. Ms. Freud can be contacted at 203-322-0083 or scohenqual@aol.com Extended Bio...

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