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Consumers are spoilt for choice in a way that defines today’s markets. However, although price undeniably influences consumer habits, it’s customer experience that forms lasting impressions. This is especially true for the hospitality industry, and Hotels in particular. High levels of interaction with guests – from reservation to checking out, and all that falls between – means that hotels are perfectly positioned for reaping the benefits of loyalty.
Loyalty programmes operate on a bigger picture principle of understanding customer value beyond a single sale. That’s because consumers trust a business when they feel valued by it. And trust is a priceless asset. It promotes brand loyalty and builds reputation. Ultimately, it increases revenue.
- Increase repeat & direct business
The central philosophy in loyalty is to ensure that customers think of you before your competitors when satisfying a particular need. Establishing this sort of relationship couldn’t be more important than now, when so much business is filtered through online search engines and third-party comparison sites.
This is where hotels can really benefit from loyalty programmes (and especially those with a growing reliance on online travel agents). Rewarded guests are engaged guests, and therefore encouraged to bypass third-party sites on subsequent visits. And by offering rewards at the initial point of sale, new customers can also be motivated to book direct with your hotel. This stands to substantially reduce costs of acquisition by cutting third-party commissions.
- Better guest relations
This is a big one for hotels. Loyalty programmes allow them to provide a more personalised service by building familiarity with enlisted guests. This could be as simple as having a name to greet them with when they use a service or the ability to see, from past transactions, how they like to spend their time. Do they dine in the restaurant or prefer room service? Have they visited the spa before? If so, what treatments did they have? A capacity to anticipate the answers to such questions results in a more focused, personalised kind of hospitality. Achieving familiarity improves customer experience on a basic psychological level: they are more than just another person passing through and valued as more than just money in the till. This is the best place to start when creating those lasting impressions, because we all know it’s the small things that count.
- Guest value over customer cost
The first hurdle companies have when considering a loyalty programme is expense. Effective rewards must be meaningful and exclusive, but a narrow view of the costs involved is problematic, because it discounts the bigger picture principle we’ve already touched on.
Rewards do not need to be huge discounts and one-off giveaways. To be truly effective, they ought to work at establishing long-term customer relationships. This is the bigger picture: the value of an engaged customer outweighs the cost of engaging them. Rewards motivate customers to prioritise your product in filling their needs, creating a habit of purchase and substantial cuts to acquisition costs. For hotels, this could simply mean offering exclusives such as later check out times or airport transfers in addition to point accumulation for experience and monetary vouchers to use on a repeat visit.
- Cross-selling potential
Cross-selling cuts acquisition costs and boosts profits. And the unique advantage that hotels enjoy here should not be ignored, given the variety of services they offer – all under one roof. This allows for the nurturing of that treasured lasting impression, by adding diversity to the guest experience. Additionally, cross-selling opens doors to encouraging product loyalty elsewhere in your business.
Loyalty programmes have considerable value at both ends of the cross-selling process, both feeding and drawing from it. By rewarding transactions, hotels can encourage guests into those new markets without giving the hard sell. For example, they may stay for the spa, then come back for the meal. Their preferences can then be logged to encourage them back. For the cocktails, perhaps.
- Warm market dialogue
The key to a healthy relationship is good communication, right? So, why treat customer relationships any differently? The conversation is started, don’t cut it short when your guest checks out.
The information gathered as guests register with a loyalty programme and use it throughout their stay can be used for more effective marketing once they leave. This allows you to communicate with guests using contact details they provide in a way that is relevant to their interests, by using specific data or from viewing trends across your loyalty membership.
