Hotels are constantly striving to crack the code of just how to appeal to high- and lower-value guests alike, ideally to transform new guests into engaged loyalty members over time. However, different customer segments require different rewards– each member tier has its own priorities. How can hotel brands engage guests at all levels early on and cultivate them as long-term loyal program members? The key is to understand each loyalty member’s preferences based on his or her current status and point balance in your program. This article will explore powerful strategies using a mix of different rewards to engage different customer segments and build lasting loyalty.
Engage lower-value members early and often
Lower-value guests may travel less often than your brand’s other guests, may seek out more budget-friendly cart options, or may simply have lower loyalty point balances if they are new to the program. Perhaps they’re recent signups to your brand’s travel credit card who don’t yet have the loyalty point balances needed to redeem for most rewards. Nonetheless, given their sheer volume, they are all potentially a strong source of revenue. To appeal to these members who have not yet accrued a large number of loyalty points, hotel brands need to get creative with loyalty program strategies to engage this customer segment.
Segment guests by point balances: Segmentation is a loyalty program feature utilizing guests’ point balances to group them and allow for targeted discounts and communications. For example, by segmenting via point balance, hotels could market to guests with fewer than 20,000 points announcing a discount on coffee and bakery items during their stay. This provides hotel programs with a means to personalize offers based upon members’ point ranges, identifying exactly which guests are an ideal fit for certain promotions and for the brand’s marketing efforts as a whole.
Empower guests with a partial pay process: Under a points-only program redemption model, members must pay for their entire redemptions using only their current point totals. This poses an engagement barrier to those who lack the total number of points required to redeem rewards. Points-plus-cash is a partial payment method powering early engagement by allowing guests to redeem by combining loyalty points and cash (or credit card payments). This flexibility allows guests with fewer points to realize the benefits of their program loyalty, instead of waiting to accrue enough points alone to redeem rewards. The more opportunities guests have to interact with their brand, the higher their level of engagement, which builds loyalty over time.
Ensure rewards are attainable: Imagine receiving a promotional email from a hotel ahead of an upcoming stay, with a special promotion to rent a luxury SUV during your vacation. But when you log into your loyalty account, you discover you don’t have enough points to redeem the luxury car rental. What a tease! Before sending out a promotion, it is crucial for loyalty program managers to ensure that all minimum point requirements for rewards are met to avoid causing a frustrating customer experience (which will likely lead to disengagement). Much like the program flexibility added by offering guests a partial payment option, a good mix of affordable rewards helps keep members engaged. Tailoring program rewards to individual members also shows them that you value their time, which in turn maintains a strong loyalty relationship.
Engage high-value guests by recognizing their value
Higher-value guests are your brand’s greatest source of referrals and travel spend. These members may be frequent travelers with platinum status who stay 50 nights in a calendar year. However they could also be members in entry-level loyalty tiers who have high point balances slowly accrued over many previous stays, or they might be frequent users of your brand’s credit card (especially benefiting from a sign-up bonus).
These guests are extremely valuable to a hotel brand. Switchfly’s internal data finds that when offered points-plus-cash redemption, high-balance members are more prone to ‘splurge’ with a larger average cart size, higher average booking price and more average points purchased. However, they have high expectations for value-added perks, personalized service and acknowledgement of their elite status. Successful engagement strategies are those which directly recognize your program’s most loyal members.
Segmentation by loyalty program tier level: Just as with segmentation by point balance, loyalty programs can also utilize members’ loyalty tier data to offer specific promotions to all members of a given loyalty tier. For example, hotel’s loyalty programs could offer all Gold-tier members a 10% discount on a high-end car rental. When offering these types of discounts, be sure your promotions also list the product’s original MSRP along with the amount saved so that members will directly attribute the discount to their loyalty tier. Loyalty data (in this case the tier level of a loyalty program member) can be parsed with each member sign-on, allowing your brand to send out more effective promotions for members of certain tiers so they can take best advantage of it.
Create intimate moments for guests: Additionally, loyalty programs can create intimate ‘surprise and delight’ moments for elite-tier members by applying this segmentation logic to offer truly unique experiences. Tailored promotions (such as a free spa visit or an upgrade suite) give your high-value members direct proof that their privileged loyalty status is recognized and rewarded.
Boost engagement with the right reward for the right guest
By offering different guest segments customized rewards, hotel brands can engage both high- and low-value guests with targeted offers which truly speak to them as individuals. This personalized approach is an ideal way to engage all customer segments by offering the right reward to the right guest at the right time. Using the right mix of affordable products, discounts and promotions can help ensure loyalty programs engage guests at all levels to create a positive customer experience and lasting loyalty.
About the author
As the Senior Director of Client Loyalty & Analytics at Switchfly, Ryan Draude has worked with global reward programs like Marriott Bonvoy, United MileagePlus and IHG Rewards to expand the flexibility and power of their loyalty currency. Ryan formerly led Choice Privileges, the hospitality reward program for Choice Hotels, and over a five-year period completely overhauled the program via the scrutiny of member data and the respect to listen to what members sought from the program. He earned his M.B.A. from Georgetown’s McDonough School of Business and is currently an adjunct professor at Georgetown University’s Global Hospitality Leadership Program.