Are you loyal to the place you sleep?
We all need somewhere to lay our head at night. Usually that’s home, sweet home - but when we’re travelling, other solutions are required.
For the last 200 years, the solution was invariably a hotel. These started out as inns, where your horses could also get a good night’s sleep. Since then, hotels have added en-suites, concierges, international chains, spas, pools, bars, night-clubs, casinos mega-resorts and more. All trying to attract travellers needing somewhere to sleep.
However in all these years, nothing has impacted the hotel industry quite as much as booking platforms have. Booking platforms are great at bringing in large numbers of guests - but at the same time, they erode profit margins through the exorbitant commissions they charge.
What modern hotels and restaurants really want is for customers to book directly, through their own website - but how can any single hotel or restaurant hope to compete with the booking platforms who have global reach and bottomless advertising budgets?
Booking.com has even launched its own loyalty program called Genius where members receive 10%-15% base-rate discounts and free-breakfast at ‘Genius level 2’. Obviously hotels, hostels and other lodgings will have to step up their game.
Why loyalty programs are vital for the hospitality industry
The first loyalty programs in the hospitality industry originated from the frequent-flyer programs in the airline industry where passengers collected ‘miles’’. Hotels then adapted this to a system where members accumulated points based on how many nights they stayed.
Both programs were based on rewarding members with upgrades to business class seats and more luxurious rooms - sometimes even receiving free flights/nights, as well as combining this with unique discounts to partner programs.
But is this what customers really want? When you ask the average person what they want from a loyalty program, most will answer with DISCOUNTS! This is based partly on the fact that people are often quick to answer - and partly on a lack of imagination when it comes to thinking about what other rewards might be out there.
Even in times of financial crisis, customers don't necessarily lack the ability to pay full price, but they do make more calculated choices, when it comes to what they spend their money on.
Furthermore, when you look at the data of over 2.4 million active loyalty members (Piggy 2021), the results speak for themselves. Members love to be rewarded and keep coming back for experiences that result in life-long memories.
In other words, rewards that stay with you longer than a discount provided at check-out.
The importance of developing your own loyalty strategy
A successful loyalty program combines the best of both worlds:
- Direct financial benefits: based on discount vouchers and extra loyalty points.
- Softer non-financial benefits: Like VIP treatment, free upgrades, extra service and unique, location specific services.
When combined, these two distinct types of benefit have a positive affect in two distinct, yet equally important ways:
- An increase in Attitudinal Loyalty, based on the customers attitude towards the brand, the employees and the overall ‘feeling’.
- A measurable effect on Behavioral Loyalty, based on participation grades, point redemption activity and overall revenue.
Simply put, a successful loyalty strategy makes customers feel valued. It provides them with more than financial discounts, but also the opportunity to have special experiences, like being treated like a superstar, or even just taking part in unique local events, that they may not have even known existed.
This, in turn, creates an emotional bond, which causes customers to change their behaviour, which can be reflected in the number of times a guest stays, increased spending, increased participation in your loyalty program - as well as a host of other behaviour, such as telling their friends and family about the special experiences they had.
Examples of building loyalty in hospitality
One thing that helps both of these programs stand out from the crowd is how effective they have been by partnering with local entrepreneurs. Choosing the right partners and making your program an overall win-win-win is solid advice.
When you look at the Marriott Hotels loyalty program there are many different ways of earning points based on the type of activity you perform and the gamification level you achieved (ranging from Member status to Lifetime Platinum Elite).
One of the most important lessons we can learn from the most successful loyalty programs is that personalisation is the key to success. Collecting the right data and using the right automation tools allows you to do this without micromanaging.
You also want to ensure your program is scalable - and as hassle-free as possible. A lot of companies underestimate the amount of work it takes to create a loyalty program - let alone the constant maintenance and customer management.
So, the million dollar question - how do you combine the right partners, the right ‘feel’ and make it a perfect fit for your guests?
Omne Trium Perfectum
For those of you who are a bit rusty when it comes to Latin, the phrase ‘omne trium perfectum’ states that everything that comes in threes is perfect - or every set of three is complete.
This is especially true when it comes to referrals. If a customer asks for a good local restaurant or location, they’re not looking for tens of options. Generally speaking, one, two or three recommendations will be far more useful.
So why not do the same for your loyalty and partner program? Start with researching, if you haven’t already, why guests love your location. Then, find out why guests love to visit the surrounding area. Make a top 3 of both, and focus on building a stronger connection between what you both offer.
For each category (6 in total) create 3 unique rewards that benefit the guest. Where possible, try to choose rewards that will also increase the Average Order Value (AOV) of your customers. Ideally this will be win-win, as most people are more than happy to pay extra for a unique, special experience.
Looking to the future of hospitality loyalty
If hotels and restaurants want to compete with booking platforms, recognising the role that attitudinal and behavioral loyalty play is vital.
Not everyone will show loyalty to hotels they book.There will always be a percentage of people who book solely on price, location or availability. However there is an even larger group of people who will book places based on the experience they had on a previous holiday, weekend away or seminar.
This group needs to be further encouraged with rewards, special rates and extra service to create a sense of exclusivity, actively turning them from satisfied guests into vocal ambassadors of your brand.
Not everyone is going to be loyal to the place they sleep - but those who are, deserve to be rewarded.