Converting Hotel Guests into Apostles

By Simon Hudson Endowed Chair in Tourism and Hospitality, University of South Carolina | April 13, 2014

Well-publicized research shows that hotels can increase profits from 25 to 85 percent by retaining just five percent more of their customers, But merely ‘satisfying’ customers is no longer enough to ensure loyalty. There is little or no correlation between satisfied (versus highly satisfied) customers and customer retention. This means that it is not sufficient just to please customers. Each customer should become so delighted with all elements of their association with a hotel that staying with a competitor is unthinkable. In a sense these customers become ‘apostles’ for their favorite hotels. A popular model that explains these behavioral consequences of customer service is the Apostle Model, developed at the Harvard Business School. Based on satisfaction and loyalty, this approach segments customers into four quadrants: Loyalists, Hostages, Mercenaries, and Defectors (see Figure 1 below).

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Figure 1. The Apostle Model. Adapted from Jones and Sasser (1995). “Why satisfied customers defect.” Harvard Business Review, 73, 88-99.

Defectors are those who have low satisfaction and low loyalty. A sub-segment comprises the Terrorists, with the lowest satisfaction and loyalty scores. In addition with the costs associated with losing them, these customers are so unhappy that they speak out against a brand at every opportunity. Hostages are customers who have low satisfaction, but still report high loyalty. This typically is due to lack of competition or high switching costs. Customers in this category feel ‘trapped.’ Hotel brands in this category often win business simply due to their location (when no suitable alternatives are nearby) or, because of the strength of their loyalty club. However, these customers exhibit ‘false loyalty’ - acting loyal even when they are just waiting for a chance to jump ship. Mercenaries are those who have high satisfaction, but low loyalty. These customers are often price-sensitive and will switch easily when they have the opportunity.

Loyalists are customers who have high satisfaction and high loyalty. Sub-segments of loyalists are Apostles, who have the highest satisfaction and loyalty scores. Some 80 percent of Starbucks’ revenues come from Apostles who visit their stores an average of 18 times a month. These customers are loyal because they love a business. But how do hotels create apostles? The key seems to lie with customization. In the travel industry in general, requests for customized and personalized vacations are rising sharply, aided by technology and increasingly expectant and discerning consumers. So, leading hotels are attempting to customize the experience for guests to make individual customers feel unique and to make them believe that the hotel has singled them out for special attention.

The remainder of the article profiles several hotels from all corners of the world who are creating Apostles out of their guests by customizing their experiences.

At the HUB Porteño in Buenos Aires, Argentina, this customization begins well before a guest arrives at the hotel. HUB recently launched a selection of curated city experiences for hotel guests to maximize their stay in the city. Working with a team of Ivy League professors, liberal arts experts and interesting locals, the hotel creates customized adventures that “offer a new way of living the city like a local, in style”. Prior to arrival, guests take part in a detailed consultation with a member of the HUB Porteño team about what they want to see and experience, and then the team creates a personalized itinerary based on the guest’s tastes and interests. Experts will then personally escort guests through the city’s history, music, architecture, literature and politics. “In my opinion taking care of the activities of the guests in the city plus personal attention in house maximizes guest loyalty”, says Founder Partner & CEO Gonzalo Robredo. Opened in October 2012, the hotel is an 11 room, all-suite palatial retreat in a converted private mansion on one of the most elegant blocks in Buenos Aires, designed to encapsulate the elegance of Buenos Aires's Belle-Époque era. Each room is individually decorated with hand-crafted pieces from highly skilled Argentine artisans, antiques and a collection of Argentine artwork.

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Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.