Why Loyalty Isn’t A Dated Concept
But it has to be about more than just points, writes Loyalty Partner Solutions CEO Alexander Glück.
Recently, Marriott’s VP Loyalty Thom Kozik commented on the topic of loyalty. Aggressive platforms like Airbnb are displacing existing players in the hospitality industry. In view of this, Kozik is promoting a better understanding of customers, personalised communication, and the inclusion of the entire product portfolio in the loyalty program.
In my view, this is a confirmation of the conviction that interactions are the new transactions, and the loyalty program must become the constant companion of the customer.
In the hospitality industry especially, bonus programs are a commonly used relationship marketing instrument. Guests receive points for overnight stay purchases and can redeem these for an additional night at the hotel or an upgrade. Those who understand “loyalty” to mean this classic reward program have every reason to speak of an outdated concept, for awarding points to maintain customer loyalty to a business is no longer effective. Instead, the business must behave in a loyal way towards the customer.
This only works through the creation of relevance. To be more exact, it means that points alone will not keep a guest with a hotel chain. However, if this traditional point-gathering system is combined with personalized content, relevant information for the user and a smooth customer journey, then loyalty programs are the right instrument for building customer commitment to the business and in this way creating genuine added value for both the guest and the hotel.
Conventional programs merely support the actual transaction: Namely, the purchase or reservation of a hotel room. Innovative programs take into account every interaction of the customer with the brand — all products and services. This can mean sharing the stay on Facebook or leaving feedback on a well-known portal, as well as rewards for using the hotel spa or the golf course.
By creating incentives through all interactions with the brand, the customer reaches the redemption threshold more quickly for interesting rewards like free drinks, late check-out, or spa discounts. This strengthens the guest’s ties to the brand and reduces price sensitivity. Both of these items have a positive effect on the frequency of visits and consequently on sales.
It seems clear that the time for point gathering alone is over. A loyalty program must accompany customers with personalized offers across all channels on their individual customer journey.
This requires a powerful and intelligent IT platform that is capable of aggregating, processing, and making all customer information quickly available. Merging all information and interactions enables the business to obtain a comprehensive picture of customers’ interests and needs.
In this way alone can a business successfully adapt the range of offers to existing customer wishes — and keep loyalty “alive” in the mobile era.
*Alexander Glück is the CEO of Loyalty Partner Solutions. The company develops and operates customer loyalty programs based on its Loyalty Management Suite (LMS) software platform. In association with its partners LPS guarantees future-proof loyalty systems and invests continuously in their ongoing development. More information is available from:www.lpsolutions.com