Understanding Brand Experiences that Lead to Customer Loyalty
By Laurence Bernstein Managing Partner, Protean Strategies | March 2014
The fact is that using the word loyalty in the context of the hospitality business is something of a misnomer and can, when not contextualized, lead to focusing on the wrong business issues and spending valuable resources on programs and projects that, in the end, achieve no real business improvement.
The Encyclopedia Britannica defines loyalty as 'Allegiance to the sovereign or established government of one's country' and 'Personal devotion and reverence to the sovereign and royal family' (notably leaving out any reference to hotel or hotel brand). Loyalty is a strong term, massively imbued with emotional resonance that, in the end, makes a mockery of the way it is used in business. "The only honest reaction and true loyalty we get is from our animals. Once they're your friends, you can do no wrong". (Dick van Patten)
While the quote is clearly extreme, there is a ring of truth to it – for many of us in the hospitality business, the fantasy of true customer loyalty is that our guests will view us as do our animals – that we can do no wrong. Or, should we do wrong, that it is really of no consequence, and we should be forgiven. Our expectation of loyalty is, ultimately, an expectation of how our guests should treat us, not how we should treat them. We define loyalty as, in the end, a demonstrated behavior toward us: how many times do "they" stay, how much do they spend, and we "reward" them accordingly.
This understanding, or, more accurately, customer loyalty fetish, is leading many brands to classify guests – those that are worthy (good guests) and those, the vast majority, who are not truly worthy (bad guests). The delineation between the two is based on how the guests behave toward us – how often they visit us – and, lately, how much they spend. Good guests, who wind up in top-tier levels of loyalty membership, receive added services in some cases, and/or free rooms (discounts); bad guests who stay less frequently (or we think stay less frequently because they have carelessly neglected to sign up for our loyalty program) are treated less well. The airlines are masters of this – they treat their bad guests even worse, giving them substandard service and rewarding good guests with services that would, five years ago, have been considered "the least they could do".
Call me old fashioned, but I believe that all guests are created equal, and, while it might be smart to throw a bone to regular customers, such as a free room or drink at the bar, it's probably not smart to treat non-status guests like pariah. In other words, loyalty programs that are focused on returning value based on frequency, are good business; loyalty programs that delineate service and experience levels based on frequency, are probably bad for business in the long run. Sure, they keep the top tier guests coming back, maybe, but they mitigate against non-status guests becoming status guests. If I am going to have to stay at a brand's hotels 15 times in a year in order to avoid standing in line for 20 minutes to check in, and I only travel 3 times a year, surely I'm likely to look for a hotel that treats me better in the first place?
The other problem with this loyalty-program fetish, is that it doesn't work – sure, it may help some hotels within a brand portfolio, but for the most part travelers are not paying attention – among those with memberships in loyalty programs, the percentage that recognize which brands are covered by the program is truly dismal (for instance, in a recent survey, only 1 in 2 US business travelers even took a guess at which loyalty program Westin Hotels and Resorts was associated with; and only 1 in 5 actually correctly associated Westin with SPG; the numbers are even more startling for other brands (Protean Hospitality 2013 Study of Loyalty Program Brand Associations).