Loyalty Evolves: from Rewards to Recognition
BY Katie Lark
At this year’s Coachella Music Festival, Marriott announced it would be pitching eight luxury safari tents on the festival site and that Starwood and Marriott customers would be able to use their brand loyalty points to bid for a chance to spend the night in these tents on the SPG Moments and Marriott Rewards Experience Marketplace.
The Marriott Rewards Experience Marketplace was launched last year and allows members to “pursue their passions by choosing from a wide array of curated special events and opportunities for discovery”. This demonstrates a new approach to customer loyalty in the hospitality industry: traditional in-hotel rewards of free room nights, upgrades or wifi are being replaced by a different kind of loyalty proposition. By providing access to otherwise inaccessible experiences and aligning itself with its members’ passions, Marriott is creating an emotional and lasting bond with its customers in an attempt to build a truly loyal customer base.
This observation highlights an important distinction between a customer who is a member of a loyalty program and a customer who is truly loyal to a brand. These two types of customer may both regularly purchase rooms at the same hotel but there is a fundamental difference in what is driving their behaviour. Loyalty program members are motivated by discounts and rewards, whereas truly loyal customers are driven by their affinity with and love for the brand.
As hotels face increasing pressure and competition from all angles, the benefits and importance of having genuinely loyal customers are becoming ever more apparent. Since it is estimated to cost at least five times as much to attract a new customer as to keep an existing one, brands that succeed in creating loyal fans and persuading them to keep returning have to invest far less in the long term. Smart brands have therefore developed a range of approaches to help develop genuinely loyal and lasting relationships with their customers.
Interestingly, several of the top luxury hotel brands, such as Four Seasons, Aman, Mandarin Oriental and Peninsula, don’t have loyalty schemes at all. They have realised that the best way to create loyalty is by providing a consistently amazing experience, time and time again. Consistency is the key word here – customers must feel confident that these brands will provide an excellent experience across all touchpoints, at each hotel, and in every country. As Nicola Blazier of Four Seasons says: “Whether it’s your first or 100th visit to a Four Seasons hotel, all our guests receive the same superior service. It’s this approach that has built our loyal customer base.” Brands that stick to their word and deliver on their promises will build trusting relationships and create loyal customers.
In recent years, technological innovation has provided new opportunities for brands to collect extensive data about customer preferences and purchase behaviours and thereby provide a more personalised service. This personalisation can take many formats, from surprising and delighting customers with birthday gifts, to remembering their preferences such as their ideal room temperature or pillow type. This not only makes customers feel welcome and valued but also ensures a frictionless customer journey across all touchpoints.
In this context, therefore, loyalty is less about providing discounts and more about using data to truly understand the consumer and thus providing them with personal attention and the right customer care. When viewed in this light, there is an evident benefit to the customer in being loyal to one brand and letting that brand get to know them. However, for brands to deliver on this benefit, they must invest in collecting and analysing customer data and learn to act upon their findings in a meaningful way. This is where many brands struggle today but as the field of data science progresses and more brands invest in this area, there should be significant improvements in years to come.
Interestingly, although Four Seasons does not have a brand loyalty scheme in the traditional points and rewards sense, last year they introduced an invitation-only card for their most important guests. Four Seasons explains: “This new service was developed to ensure we recognise these elite guests, show them we know them and consistently deliver an exceptional level of care and attention when they travel to any of our properties worldwide.” This illustrates the increasing importance that brands and consumers now place on personalisation and recognition.
Christoph Mares of Mandarin Oriental once said that “true brand loyalty comes from the heart, not the mind”. We have seen that hotel brands, like Marriott, have begun to evolve their loyalty programs to reflect this. Instead of offering discounts and in-hotel rewards they are building enduring, emotional relationships with their customers by providing guests with unique, personalised and consistently amazing experiences. This is a step in the right direction but there is certainly more work brands can do to gain and retain truly loyal customers.