Loyalty: The Next Generation

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Loyalty: The Next Generation

By Dorothy Creamer, Managing Editor - 07/29/2015
Loyalty marketing has been defined as “the business process of identifying, maintaining and increasing the yield from best customers through interactive, value-added relationships.”1 That value-add is a two-way street. Just as operators expect to yield benefits such as increased sales from loyal customers, faithful guests are expecting and demanding more in exchange for their loyalty.

Hotels and restaurants need to find ways to address loyalty as an ever-evolving entity in order to keep programs relevant. Being able to react nimbly to an audience’s needs is just one necessary component.  Intercontinental Hotels Group (IHG; www.ihg.com) prides itself on having one of hospitality’s oldest and largest loyalty programs, however remains cautious about becoming complacent and losing sight of what guests care about and motivates behavior.

IHG re-branded its loyalty program to the IHG Rewards Club in 2013 and announced a restructuring of membership tiers to make it easier for guests to attain elite member status while creating a new rank that focuses on highest value members. “I believe we have been effective at evolving our loyalty program to both improve awareness as well as improve the perks available to our members,” says Jason Shorb, global manager, CRM & Customer Experience.

Don’t Become Lost In Transaction: Make Offers Relevant
Finding ways to make rewards meaningful is vital in order to keep loyalty programs robust. For IHG this included moving from a “points” to “perks” model. “Points still matter, but our hotels and staff understand the value of going above and beyond points in recognizing our members and showing our appreciation,” Shorb details.
 
Twist Marketing, which leads the marketing initiatives for the Northern Ontario SUBWAY (www.subway.com) region, wasn’t specifically looking for a loyalty solution when it turned to Turnstyle Solutions (www.getturnstyle.com) for a way to monetize WiFi. However, the team realized that the partnership provided a way for SUBWAY to learn more about customers in order to effect loyalty. Diners just have to opt-in to the WiFi network at any Subway location that has Turnstyle installed to be recognized as a loyal customer. “We realized that with social WiFi marketing and analytics we could develop a seamless loyalty program that didn’t rely on staff the way that gift cards or stamp cards would. It broke down barriers to success,” Melissa Gallagher, vice-president of Twist Marketing, says.

From an analytical standpoint, Subway can now to drill down to know actual consumer behavior. While research provides perceived behavior, this offers real-time behaviors linked to specific WiFi devices. The goal for Gallagher is to learn about Subway’s customers. “Beyond giving them a generic coupon, we want them to know that we understand what they like and dislike and that we are listening to them,” she says.

The Global Hotel Alliance (www.gha.com) runs a customer loyalty program known as Discover on behalf of its brands, providing a technological systems platform for members to use. “We provide knowledge and insights to help our member brands run a loyalty program,” Folker Heim, director of loyalty marketing, says.

Hotel brands that had legacy loyalty programs have all merged into the Discovery platform, an umbrella program offering benefits that apply to hotels worldwide. Individual hotel brands have the freedom to adapt and to add brand specific benefits that they think would be valuable for their markets.

The backbone of the program is the OPERA customer informa­tion system (OCIS) which is connected to the OPERA PMS (www.oracle.com/hospitality).  “We exchange data on loyalty program members, profile, preferences, card members, join dates, amount of rewards, rewards redeemed and so on,” Heim explains.  

The Discover platform doesn’t offer a points system, but rather provides rewards called “Local Experiences.” These memorable experiences are redeemable in all GHA member hotels. “The idea is to provide something where members have an opportunity to discover the local region and culture through excursions that are normally not accessible for the regular tourist,” Heim describes.

The OCIS stores the data for GHA properties, capturing the interests and preferences of travelers such as where guests traveled, what they paid, what type of room was booked, and whether they stayed the weekend. This information is analyzed and used to send specific and appropriate campaigns.

“Loyalty marketers have to work very closely with what is possible on property by capturing any interest of the customer,” Heim stresses. “Ultimately, the objective is to drive more business to properties and provide guests with relevant benefits based on data that we have captured. If a property is not able to translate that data into the right service and delivery, then the customer experience is lost. Whatever we are doing we have to do hand-in-hand with what is possible on the operational level.”

Siphoning Details to Improve Loyalty
With the ability to gather personal information in order to create customized offers, comes the need to manage how that is used without overstepping privacy boundaries. Shorb, for one, believes that loyalty should result in enhanced personalization, saying, “Customers are willing to share more information as long as it’s in fair trade with receiving a more personalized experience in return.”

By letting customers choose the way they receive messages, brands can avoid looking inappropriate or invasive. For Subway, Turnstyle offers several options for guests, allowing them to opt-in through Facebook, SMS or email which is subsequently how the guest will receive messages. “People are expecting brands to know what you’d like,” Gallagher notes. “Guests are getting online ads based on behavior. When it comes to an in-store experience, it is more than just giving people anything, they are expecting customization.”

Brent Desmond, director of platform development, Elevation Burger (www.elevationburger.com) agrees saying that the next buzz term is going to be “hyper-personalized.” “Everyone needs personalized marketing, the key is making it relevant,” he says. To identify, understand and engage its most valuable customers while subsequently motivating behavior, earning loyalty and building evangelism, Elevation Burger deployed a consumer management platform from Clutch (www.clutch.com). “With all this data, I can engage them and offer relevant things that they like.”

Shorb believes that technology and customer relationship management (CRM) will play a key role in helping to bring these capabilities to life. “We are starting to see traditional loyalty programs moving beyond just the stay and aspiring to positively impact members’ entire travel experience and even their lives when they’re not traveling,” he says.  “One example is offering discounts and reward points at local restaurants and spas as well as invites to special events only available to loyalty members.”

The Social and Loyalty Connection
According to data from HT’s 2015 Customer Engagement Technology Study, lodging and foodservice operators are looking to social media activity as additional criteria for awarding loyalty rewards. When comparing 2015 data to 2014, all areas saw an uptick on the lodging side. In 2015, 38% of operators admit to rewarding users that like or follow a brand, compared to 29% in 2014.  Meanwhile more than half (54%) provide loyalty rewards for users that check-in, while only 43% did so in 2014. On the restaurant side, the biggest increase was seen in loyalty rewards given to users that check-in, with 41% in 2015 up from 28% in 2014.

“Tracking ROI around social media activities has been one of the harder things to measure,” Elevation Burger’s Desmond concedes. Clutch offers a toolset that allows Elevation Burger to track what guests are sharing about the brand. “There is also a ‘Refer-a-Friend’ option, so guests can share a link to the Elevation Burger membership and encourage friends to sign up. The link is specific to each guest and the platform can track how many people a specific person has referred, how many have signed up, and how much money those people are spending.”

IHG’s Shorb acknowledges that social listening and responding has been embedded into the group’s culture for some time, but has not integrated social media activity into its loyalty program as much as he would like. In the past IHG provided loyalty points for checking in, but that didn’t show clear results of boosting social interaction. The company does provide special recognition badges to members who provide frequent guest reviews and feedback. “We would like to be able to better understand our members’ social media activity so we can allow them to share experiences and enable us to interact with them via their preferred social channels,” Shorb admits. “The social CRM data also give us more insights into our members’ interest areas which can be used to better serve them and cater to their interests.”

Guest Satisfaction Breeds Loyalty
Monitoring and responding to feedback has become an integral component of loyalty strategies. Scott Weiler, vice president of marketing & communications at Sonesta Hotels (www.sonesta.com) saw a need for the management group to get more serious about listening to guest comments in order to improve the loyalty program as well as other elements that got guests to come back and tell others about Sonesta.

“The hotel experience is the only thing that drives lasting loyalty, so monitoring and measuring is at the core of our strategy,” Weiler says explaining why the brand turned to Clarabridge (www.clarabridge.com) for its customer experience management solution. The system provides real-time information to help managers understand what guests are saying and enables them to make rapid adjustments to service and experience to improve loyalty.

“The hotel industry has been measuring guest satisfaction for more years than any other industry, but what has changed dramatically is that it used to be a process built on paper and looked at in aggregate at the end of the month or quarter,” Weiler muses. “With these tools, we have access every minute of every day.”

The Clarabridge dashboard provides the tools to see what programs are succeeding, allowing managers to prioritize time and initiatives to focus on the right things. “The more you know about who guests are and how to market to them effectively to be more relevant in offers, that helps from a marketing perspective,” Weiler says, “but it doesn’t drive loyalty – it augments it.”  
TradeWinds Resorts (www.tradewindsresort.com) uses Guest Research, Inc. (www.guestresearch.com) to filter internal comment scores, but found those comments weren’t necessarily translating to what was being said online. In order to merge those two entities, TradeWinds turned to Newbrand Analytics (www.newbrand-analytics.com), recently acquired by Sprinklr, to merge the feedback and get a comprehensive look at what guests were saying.


“We have seen there is a direct correlation between guest expectations and not only frequency of comments but the severity of comments,” Keith Overton, president & COO of TradeWinds Resorts says. “If you don’t know about it and are not able to deal with it, you’re kind of lost.”

Weiler agrees citing the growth of the Millennial marketshare as a major factor, pointing out that the generation has come of age in a world where they would never go to a hotel without checking online to see what others have said about it.

“You have to have good things being said about you,” Overton stresses. “Hotels and restaurants are held to higher standards than ever. An operation is judged on every single consumer’s opinion and is held accountable.”