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white paper The Holy Grail: Achieving customer loyalty in a loyalty free universe

Understanding the limitations of loyalty programs can lead to new and more reliable ways of building customer loyalty

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he Holy Grail in the hotel business is, obviously, customer loyalty. The way in which most hotel brands achieve this – or try to achieve this – is by means of customer loyalty and frequent guest reward programs. They are all extremely expensive and occupy a disproportionate amount of management time and focus. While there is no suggestion that this approach be dropped (it’s far too late for that), this article discusses some of the inherent weaknesses in these programs and some of the ways in which individual properties can build true customer loyalty by focusing on the experience they deliver to their guests in their city in real time.

Many hotel brands, especially those within a portfolio of other brands, are defined by the master-brand loyalty program (Hilton, Marriott, Starwood, Accor, IHG, etc.). There is a reliance on “smart” loyalty program strategies to drive business to the individual properties within each brand, supported by revenue management systems and online traffic generators.

possible to put this particular genie back in the bottle: 1.3 billion loyalty club memberships exist in the US alone, roughly four times the entire population1 and according to Jupiter Research, more than 75% of US consumers now have one or more loyalty card, and two thirds of the shopping population has two or more cards2.

But is this really the best way to market hotels? We’ll look at the problems with loyalty programs and the realities of the way customers experience the hotels, and see whether a mash up of the two might make a lot more sense.

If the question, therefore, is not “to loyalty or not to loyalty,” then the question must be, “how to loyalty?” or, more to the point, “how much to loyalty?” Should the entire marketing plan rest on the shoulders of the loyalty program, or should the loyalty program be one pillar of a multifaceted plan designed to maximise customer loyalty? In other words, is customer loyalty a marketing tactic or is it the essence of the business?

Like it or not, loyalty programs area fact of life in the hospitality industry, as they are in many other retail and transactional categories. While it is likely that many companies would thoroughly endorse the idea, it is not 416.967.3337 www.proteanstrategies.com  © 2013 

Loyalty, in my and many others’

1. Colloquy, www.colloquy.com  2.  Quoted by Kyle LaMalfa in his ar cle: Buying Loyalty: Do Rewards Programs Translate into Customer Engagement”, h p:// knol.google.com/k/buying‐loyalty‐do‐rewards‐programs‐translate‐into‐customer‐engagement# 

The Holy Grail: Achieving Customer Loyalty in a Loyalty Free Universe  

This article discusses some of the inherent weaknesses in brand loyalty programs and some of the ways in which individual properties can bui...

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