One of the earliest loyalty programs on record dates back to 1793. That's 223 years ago. We've been doing this song and dance for a long, long time. The burning question is: is it still relevant? In this fast-paced, technologically-driven world where the best deals are a click away, does customer loyalty still exist or has the paradigm shifted? For this three-part series, hetras had a chat to three industry leaders to get some answers…
Part 2: Real-life practical approaches
In Part 1 we talked about loyalty – if it exists, what it looks like and if millennials even have it. Now we ask our panel of experts to discuss their approach to loyalty in practical terms. How do they handle loyalty at their hotels? Do they have a loyalty program and, if so, what does it look like? What is the key to driving loyalty and direct sales in the future?
Gaining loyalty: the "experience" traveler
The travelers of today are different from those of yesteryear and different still from those of tomorrow. People are moving away from linear thinking; today's travellers are savvy, energetic researchers who look for the best deal in the best place at the best time. Aside from that, they're also motivated by trends and experiences.
In essence this means that there are two potential ins: you can compete on price or experience. Competing on price doesn't make much sense, since there are many, easily-accessible options for travelers and you don't want to undercut your own bottom line too often (even if it is a way around rate parity). Experience, however, can be worked with. If you're doing things right, your hotel should be able to deliver on a unique travel experience and this is where the loyalty programs of today come in.
In line with this philosophy, corporate director of revenue management and distribution at Pacific Hospitality Group, Christian Boerger, says his hotels are moving towards a point-less, experience-based approach to loyalty programs.
"2017 will see overall richer benefits and more exclusive experiences that can’t be had otherwise," he says, "Selling an experience [rather than] simply boiling the message down to price and perks will be essential to maintaining sustainability." Not having to account for reward points, he says, significantly reduces the liability on his balance sheets.
Antonio Hoyos, revenue manager and head of the reservations department at Infinito Hotel and Pampa Hostels, also highlights the importance of placing focus on a guest's experience. "At breakfast we make our own pastry, bread, fresh orange juice and fruit every morning. It might sound like something obvious, but it's not normal to find homemade pastry in our kind of hotel or hostel," he says adding that the staff are trained and encouraged to build personal relationships with the guests. "The relationship with customers is essential to loyalty," he explains. He adds that capitalizing on weaknesses is also vital to optimizing an experience-based stay.
"One of our elevators is very slow, so we had the interior painted as a modern art canvas, where we invite people to take a moment to relax and enjoy the art while getting to the room," he says, "Small actions can have substantial results."
And while director of revenue and distribution at Ameron Hotels, Angelika Viebahn, says that her hotel chain is too small to offer or derive any real benefit out of a loyalty program per say, guests are rewarded on an individual — and personal — basis. "Each hotel has the possibility to recognize their loyal guest by placing amenities in the rooms or hand out small gifts," she says.
What makes loyalty programs work?
Christian Boerger sums it up in four neat points. According to him a successful loyalty program needs:
- Excellent service delivery
- High value perception of products offered
- Clear differentiation from the competition
- Focus on experience rather than price alone
His program allows participants to enjoy exclusive experiences based on the member tier to which they belong. The program also offers add-ons including high-speed Wi-Fi for unlimited devices, complimentary drinking water, access to a press reader app, access to a member rate as well as targeted offers and promotions. The loyalty program is also strengthened by being shared among the 550 independent hotels, which make up the GHA member hotel network.
Viebahn agrees that in order to work, a loyalty program must offer personal value and real benefit to each guest. To this she adds that it must be effortless. "It needs to be something [a customer] otherwise would have to pay for," she says, "and it should be hassle free."
Hoyos takes a pragmatic view of his hotel's loyalty program, dividing customers into two groups: business-to-consumer (B2C) and the corporate segment in order to better address the personal needs and travel motivations of both. B2C customers are targeted during check-in, when the receptionist establishes whether a guest is likely to return and, if so, arranges for the guest to be offered membership to the loyalty program. This includes access to lower rates, suite upgrades, complimentary late checkout as well as a free night for every seven spent at the hotel. Additionally, the staff also make an effort to befriend frequent visitors and establish a relaxed atmosphere and personalized experience.
The corporate segment's program is catered more specifically to its needs and includes catering and transfer options as well as payment plans.
Since personalization and experience is the name of the game, the key to the successful marketing of a loyalty program relies on understanding each customer and adapting the marketing approach accordingly.
According to Boerger, focusing communication on exclusive experiences rather than pricing advantages and perks is particularly successful with leisure or group leisure customers. "Whereas a point based program is especially attractive for corporate customers," he says.
Likewise, Hoyos has found that more traditional loyalty program perks are effective for the corporate and government sector, because the travel motivation and philosophy of such customers is set and fluctuates very little. For example addressing specific corporate needs, such as promoting the hotel's proximity to exhibition, fair, congress, convention and event centers, helps to secure loyalty with these clients. "For the B2C segment it's a bit different; the traveling patrons are different, so it's not that easy to have the same effectiveness," he says. His strategy for the latter group relies on forming a good relationship between hotel staff and guests, which allows for the program to be offered on a personal and individual level.
Other marketing strategies that Hoyos employs include ads in the local (printed) newspaper and highly targeted emails to select guests. A separate program, specifically catered for medium-term (6-12 month) stays for students, is put together and offered directly to universities and other tertiary institutions.