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Loyalty… what exactly does that mean?

Loyalty… it’s a funny word that has different meanings to different people and definitely has all of us hoteliers scratching our heads at how we ‘get it’, how we ‘keep it’ and even what ‘it’ actually is!

I recently had a conversation with a very respected hotel owner from the States and he threw a very interesting opinion into the mix, which was ‘loyalty is not about repeat guests’. I thought this was interesting as let’s face it, that is what many of us believe. If we have guests who stay multiple times they are ‘loyal’. But are they? Are these guests just staying because either they have to or perhaps they are sticking around until the next-new-thing appears and then they will disappear? His take on it was that perhaps we should measure loyalty based on who is actually talking about us. Do praise and recommendation determine a guest who is more likely to come back on merit rather than habit? Interesting concept but the fact remains that our guests’ perception of loyalty is changing and we need to keep up.

So what is changing? Well in my humble opinion, the days of having a loyalty card stuffed in the back of your wallet are coming to an end for most of us. There are a few groups that do loyalty really well – Hilton Honors is a great example, but for most, we just seem to struggle with the whole concept and that might be because we are never quite sure what our guests actually want…

However, if you look at forward-thinking groups like Accor, you will see that they are making a strategic change in how they approach the whole concept. Accor believe (and I firmly agree), that loyalty is no longer about points, but it is fundamentally about the experience. Our guests now want experience over everything and that gives us a fantastic opportunity to both communicate with our guests and build lasting relationships.

The second fundamental shift is these experiential rewards need to be instant. Our customers no longer want to build points or wait a year to be rewarded. They want great rewards and they want them now! We see ‘instant gratification’ in every single part of our lives, so why aren’t we considering simple, instant. fun ways of rewarding our guests?

The good news is that the two concepts of experience and instant allow independent hotels an opportunity to operate on a level playing field with hotel groups as the rewards can be instant and loyalty built there and then!

Many hoteliers are now considering rewards such as discounts (or free) drinks/meals/activities/days out etc that can be used immediately and not just in your hotel. Think about what your guests like to do when they stay with you. Think about what makes you unique. Then consider reciprocal partnerships with other suppliers and allow your guests to access right away.

Some hotels understand that rewards don’t have to be hotel based and are offering rewards on shopping, food delivery or even petrol! None of these ideas should be off the table and if you keep the words experience and instant right at front of your decision making, you could make a fundamental shift in business and culture – try it!

Another shift that seems to be coming our way is the unbundling of rates and services. Airlines have been doing it for years (think Easyjet or Ryanair). Both these airlines give passengers only what they want and then all of the extras are built on top. If you unbundled your services, would this allow you to add those extras in for free for loyal guests? Something definitely to consider. Perhaps it is time to consider a new way of selling and a new way of managing your rate strategy?

Many booking engines now allow you to add hidden rates that are all based around loyalty. This is a fantastic way to collect data (and don’t forget this data is freely given by customers who want to be in your gang) and it is also a great way to hide discounted rates that the OTA’s can’t parity shop! But it doesn’t always have to be about deep discounts – these hidden rates can add ‘unbundled’ extras such as cosy pillows; bottles of fizz in the room; complimentary upgrade; free pizza – the choice is yours…

So to re-cap:

  • It is time to re-think loyalty
  • It is time to make it relevant to your guests
  • Independent hotels can now operate on a level playing field as loyalty is less and less about points and prizes!
  • New loyalty is instant
  • New loyalty is an experience

The bottom line for all of us is that we need existing customers to love us and to be loyal to us – whatever that uniquely means for you. We need to reward them and we need them to keep talking to us and about us. What we also need are new customers and this new way of thinking about loyalty could make a significant change…

and for all things revenue, just ask@rightrevenue.wpengine.com