Hotel Loyalty Programs or Customer Experience: Which is More Important to Your ROI?
By Bill Caswell Principal, Hospitality Practice Leader, North Highland | March 01, 2020
Most hotel brands today are struggling to understand the return on their investment in both loyalty programs and customer experience (CX).
The reason loyalty programs are hard to measure is their expansion to include infrequent travelers. Over the last few years, these programs were changed to make them more attractive to non-business travelers, providing these individuals with benefits earlier in the customer journey. The hope was to win brand-loyal customers, especially millennials who have so far demonstrated very little commitment to specific hotel brands (or any brand, for that matter).
Determining the success of this strategy has proven difficult, but the emerging consensus is that it may have gone too far. As we enter into 2020, we see major brands poised to alter or retool their loyalty offerings.
Like the rush to expand loyalty perks, many hotel brands also drove headfirst into CX investments without a cohesive business, customer or data strategy. During the early days of CX, millions of dollars were spent without a strong business case behind them. Hotels didn't know what customer they were speaking to, didn't understand what behaviors they were trying to influence and, as a result, didn't achieve much. This approach has recently given way to a more critical look from executive committees, starting around 2017, when they began taking a more negative perspective on CX for CX's sake, pushing for more robust business cases.
As hotel brands step back from loyalty programs and continue putting CX investments under the microscope, it is important to consider what the industry has learned from past experiments – both positive and negative. Here are five takeaways, in no particular order.
1. More Research is Needed into Consumer Travel Behaviors