The first post from our customer loyalty series Keep Customers in a Virtuous Loyalty Loop discusses the rise in guest satisfaction, loyalty, and the expanding popularity of loyalty programs. In this post we examine how loyalty programs drive guest retention around the globe.
Guests are joining loyalty programs in record numbers although recent cuts to benefits may impact this growth trend. If enrollment growth flattens out, brands will need to compete harder for members, forcing loyalty programs to be more guest friendly with enhanced benefits that will attract and hold onto these valuable guests.
In addition to offering more generous benefits, companies will need to focus on signing up their best customers. A recent study of a hospitality company found that its best customers were not enrolled in its loyalty program. The danger is spending money on loyalty without investing in your most loyal customers. Well-designed loyalty programs have impact where it matters most – with high-value, high potential or at-risk customers.
Loyalty programs drive guest retention around the world but sources of value vary by region and by demographics. Hotel and casino loyalty programs in the Americas are twice as popular as those in Europe and Asia. Not only are they more popular, they are also more effective. Hotel guests in the Americas are 4 times more likely to choose a hotel because of their program membership compared to guests in Asia. The benefits offered by loyalty programs in the US have become so compelling that even international travelers, especially French and British guests, can be motivated to travel to the Americas to earn points and other awards.
In the Americas, the loyalty program benefit that guests appreciate most is "the ease of earning free room nights". European guests put less emphasis on free nights and more value on cash rewards, upgrades and free merchandise. In addition to earning free nights, Asian loyalty programs are especially valued for their ease of earning room discounts, the ability to extend benefits to friends/family, and getting personalized, members-only services.
Globally, younger guests place more weight on a loyalty program when selecting a hotel or casino. In general, the older the guest, the less weight membership has in their decision making process. Women and pleasure travelers tend to be somewhat more influenced by their membership status. Luxury and casino brands tend to have loyalty programs that are more compelling than programs offered by midscale hotels where brand choice is less dependent on membership status.
Hotels know loyalty programs are crucial to retaining their most loyal guests. The hotels that are getting it right provide a constant stream of motivation and keep participants engaged. Which brands have the best loyalty program? Find out in the last post of this series, which will offer insight into the best loyalty programs in the world.
Source: Market Metrix
About the author
Dr. Jonathan Barsky is Co-Founder and Chief Research Officer of Market Metrix, as well as a professor of marketing at University of San Francisco's School of Business and Management.
