The COVID-19 pandemic will continue to have a tremendous impact across all verticals of industry long after the world returns to normal. One sector that has and will continue to face unprecedented challenges is the hospitality industry. With many hotels at detrimental occupancy levels and large percentages of employees furloughed, there is little to no consensus amongst experts on when tourism will return to full capacity.
In this environment, it has never been more crucial for executives to establish effective recovery strategies, as these will solidify whether or not their hotel brands can survive and thrive in the post-COVID-19 era. To do this, many organizations have taken a step back to reassess a critical revenue-driver in the hospitality business: loyalty programs.
While loyalty programs remain a popular tool to foster customer engagement, COVID-19 has exposed critical flaws that threaten their success. For example, there are more companies providing loyalty offers and perks than ever before, leading to disengaged consumers and difficulties for program creators hoping to stand out from the market. Consider the findings of a major 2019 loyalty insights study, which showed that of 14.8 million memberships, only 6.7 million were active.
Loyalty programs solely designed around accumulating points are also quickly becoming obsolete. For loyalty to deliver results in today’s rapidly changing hospitality sector, owners and operators need to reassess how and why they operate a loyalty program in the first place.
So what will successful loyalty programs look like in 2020 and beyond? Here are five key trends that will enable organizations to develop loyalty programs that ultimately foster trust in the eyes of their most loyal guests, this year and into the future:
- A data-driven approach to loyalty: Organizations must accrue data insights to understand not only how guests interact with their loyalty points, but also learn what matters most to them. This involves stitching together a single view of customers from disparate databases and segmentation so hotels can access relevant real-time guest patterns and react to their ever-evolving priorities. By constantly monitoring and measuring this data, organizations can optimize the personalization of their loyalty programs, driving overall success.
- Implementing personalized offers: Travelers want brands to deliver tailored information and interactions based on past behavior or personal preferences. To date, personalization has been informed by a small slice of data. However, organizations can now implement personalization long before the guest arrives on-site and long after they return home. Predictive recommendations derived from data-driven insights enable hotels to further tailor loyalty programs to members. Through this approach, hotels analyze past habits from various guest segments at a macro level to suggest loyalty offers and products that are right for individuals at every stage of their stay, resulting in the ultimate customer experience.
- Seamless transactions: Today’s consumer is all about convenience. Membership is no longer simply a card or login on a hotel website. It is flexible omnichannel approaches that allow for seamless interactions across any device or engagement channel. This fluid ability to engage hotel customers wherever and whenever they desire is ultimately about delivering convenient, always-on, experiences.
- Prioritization of experiences: Hotels exceeding traditional limits to expand loyalty programs beyond the guest’s stay are those that will prosper in years to come. The average consumer today is focused on experiences. As such, organizations need to reposition loyalty programs as experience platforms that advance the consumer’s lifestyle – whether at home or while traveling.
- Nurturing trust with guests: With COVID-19, consumers are sharing more personal information online than ever before. This, combined with newsworthy data breaches in recent years, has caused consumers to become more cautious of potential misuses of their personal information. Travelers are actively seeking out trustworthy organizations and brands. Organizations must focus on improving transparency and building security best practices to prevent security incidents and foster trust and confidence with customers.
Despite challenges facing the industry today, there is an amazing opportunity for companies to embrace new and creative ways to engage and support customers now and in the future. As we move towards a reality where people are contemplating more wide-scale travel, organizations must use loyalty programs as a vehicle for gauging sensitivity around travel choices.
If designed correctly, loyalty programs can be a vehicle for hotels to foster meaningful long-term relationships with customers. For these programs to deliver optimal benefits for both the company and customer in today’s climate, businesses need to stray away from short term engagement tactics like points accrual and one-hit offers that lack importance amid crisis. Loyalty is still a journey, not an outcome. In our new reality, organizations will realize the greatest value with loyalty programs that recognize individual wants and needs to develop sustainable long-term relationships with travelers.