Addressing Guest Loyalty From a Strategic Business Perspective
By Mark Johnson President, Loyalty 360 - The Loyalty Marketer's Association | April 2011
Comprehensive, well designed and successful loyalty initiatives are intended to drive interactivity that has been pre-determined to drive value for the hotel. The problem is that while most hotels have loyalty programs, they are not living up to their potential. The Loyalty Traveler Blog reports that on average, only 20 to 40% of program members regularly accrue points toward award redemption. This means hotels are missing the opportunity to encourage at least 60% of their customers to become repeat and loyal customers. And, given the profitability of repeat, loyal customers, this means that hotels are leaving a lot of money on the table.
Building an effective guest loyalty strategy is a three-step process:
- Determine your objectives. Know the business outcome you want to create.
- Understand how those objectives are in accord with your current and
- Translate this understanding into a customer-focused strategy that is
driven by the initial program design and but continually updated via voice
of the customer feedback from your constituents and potential customers.
Following these three key steps requires that hotels move customer loyalty to the center of a business strategy - and not just a tangential strategy. This mindshift is critical to effectively drive a successful customer loyalty strategy and gain a deeper, more thorough understanding of the customer relationship. Yes, hotels must build competencies in defining, planning, executing and monitoring a customer loyalty strategy. But, doing so arms them with new customer loyalty insights which can then be used to refine/define their value propositions, determine how to allocate resources, increase the efficacy of their marketing spend and to enhance customer experiences.
Finding the link between your hotel's business objectives and your customers' priorities is where many loyalty, CEM, CRM and engagement marketing initiatives break down. Here are a few best-practice examples that illustrate the value derived of integrating business goals and customer-focused loyalty strategies:
International Hotel Group's "Win It In a Minute"
Realizing that up to 40% of US frequent travelers play online games (as reported by Forrester Research) and that members of its Priority Club appreciate new and unique ways to engage with the program and earn more points, IHG launched "Win It In a Minute" and online game in which loyalty club members can score thousands of loyalty points for simply answering travel trivia questions. Each round of "Win It in a Minute" takes less than one minute to play - players have a maximum of 12 seconds to answer each of their five daily questions.