This is a common pain observed by loyalty program managers in retail, travel, hospitality and myriad other businesses. While loyalty programs widely abound, achieving excellence can be elusive. It is not easy for everyone to make it, for instance to the JD Power Top Loyalty/Rewards Program Report.
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Based on our deep experience with global loyalty analytics, we’ve highlighted best practices that we found to have significant impact for hospitality clients. Here are ten tips to manage your Loyalty Program better:
- Manage Tiers to drive customer behavior AND profitability
Set small and achievable targets for your loyal customers, without altering or complicating the basic construct of the program. When they reach these smaller targets, incent them to go for more and reward them appropriately. Run simulations to predict expected tier levels, and offer incentives to customers lagging behind.A leading hotel chain recently changed their loyalty program to allow customers who have already achieved tier upgrade, to use their additional points for the current year towards maintaining that higher tier for the next year. This stopped the disengagement of customers after achieving their tier upgrades.
- Align promotional offers to segment preferences
Guests love it when their loyalty program gives them relevant and enticing options. Analytics and data mining help create customer personas, which can help create customer level offers based on their needs and preferences.Consider a customer segment that is price sensitive, travels mostly to the east coast and is on the lookout for the best deal. Targeting this segment with premium rooms at luxury properties in Hawaii will be of no use. So we need to target this segment with last minute deals at the lowest price at properties on the east coast.
- Align your partnerships with guest preferences
Partnerships play a key role in driving guest loyalty and require substantial investment to set up and maintain. Guests feel more connected to your program when they receive benefits from associated brands that align with their lifestyle and to other programs they use.For example, a cruise line that targets retired travelers should forge partnerships that also focus on serving this segment.
- If they earn, make them burn
True loyalty is built when members reap the benefits of the loyalty program. Redeeming a free flight builds far more loyalty than accumulating 100K points. Most members lose track of their points, and often have their points forfeited, or need to put on their thinking caps to keep track of when points can be redeemed. Redemption analytics helps design promotions that will be valued by your passengers, and increases engagement.
- Focus on incremental value and not volume
Hospitality loyalty programs often supplement value through promotions offering bonus rewards. Most of these bonus reward promotions target volume; their success is tracked by the number of customers attracted and the stays and nights generated by these customers during the promotion period.Promotions are meant to drive incremental business, and in most cases they only result in migration of “business as usual” to promotional business. It is important to segregate Persuadable Guests (customers who would be lured by the promotional offer to generate additional business) and Sure Fires (guests who would come even if the promotion is not available). Targeting sure fires is a case of promotion benefits gone to waste.
- Identify sub-brands that drive loyalty and champion them in your marketing
For global brands which operate across a spectrum of brands, it is imperative to know what drives your guests’ loyalties for a specific brand. Customer lifecycle analytics helps loyalty program managers identify the lifecycle stage of their guests and then deals with them in the most appropriate fashion, including sending offers and promotions.Take a global cruise line with several cruise brands. For a particular customer who has traveled with multiple brands, identify brands where he/she had the highest guest satisfaction and had repeat stays. Targeting the customer for this particular brand will drive loyalty and engagement.
- Use technology as a differentiator
Millennials are very tech savvy, and you earn their respect when you adapt to the changing technology landscapes. For your loyal guests, the technology behind the loyalty program should enable different stakeholders in the hotel’s ecosystem to capture the guests’ experiences and preferences.A tech-connected ecosystem captures travelers on their honeymoon, and takes targeted actions close to anniversary dates, to provide a more personalized experience. This ensures high repeat and loyalty.
- Be Social
Social platforms have revolutionized the way we communicate and interact with others. They have greatly amplified the “Word of Mouth” phenomenon and have even transformed the way we formulate opinions. Loyalty programs that excel have a strongly stitched social story. They engage and target customers on social platforms and often use social data mining to better understand their customers’ preferences and psychographics to improve their understanding of “Who is the customer”.Hotels capture psychographics information of their guests through social media to improve customer targeting. Sports lovers are targeted for properties in regions having sporting events, and music lovers are targeted for properties near concert locations.
- Be Nimble and Mobile
Hospitality loyalty programs are moving with the customers and are becoming mobile friendly. Loyalty members of successful and forward looking programs are being offered app-based hotel check-in, room selection, mobile room key and other solutions to transform the member experience. However, the launch and success of an app alone is not the end of an achievement for the loyalty program. The landscape and consumer preferences and engagement behaviors are changing so fast that unless you have an analytics framework embedded into your web, social and app-based environments, you will soon lose the pulse of your guests.
- Enhance your Customer 360 degree view
Even after getting all the above aspects together, hotels miss a few key areas of information around their guests:
- a. How much do guests spend outside of their brands: Wallet share information should be captured and augmented with existing data.
- b. Satisfaction survey results are often restricted within the market research department. When this data is combined with richer transaction data, web data, social data and app data, it can help run synergistic strategies across Hotel Operations and Revenue Management groups.
When you run predictive models on this combined data set, along with the customer lifecycle journey, this powerful analytics combo drives a comprehensive strategy for your loyalty program. This helps marketers and brand managers to develop customized programs for their loyal guests, with a competitive view in mind.
Recently a hotel chain was not able to clearly identify the reason behind the fluctuating customer satisfaction scores; so they delved further into it with data from multiple sources. By looking at social media and operations data along with the feedback scores, they finally figured – through twitter feeds – that the satisfaction levels dipped around the time there were shift changes. This information provided a specific area to address, and further improve customer satisfaction.
Building a world class loyalty program is not as difficult as it may sound. Hope the above tips help you achieve the success you desire.