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Must Have Loyalty Programs
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Loyalty programs are extremely popular in the travel and tourism industry – almost every travel business has one kind of frequent guest program or another. From redeemable points to gift certificates to partnerships with airlines and car rentals, guest loyalty programs have seen every transformation possible. And, now, as technology advances these programs can be excellent source for client information.
However, as we get deeper into the age of the Internet, and guests become more apt to price shop, how can guest loyalty programs retain their membership, and will the guest remain loyal?
“I actually think that if people parted with money than they would be a lot more loyal,” said Candy Lee, COO of United Airlines Loyalty Service. “In the future people will have the opportunity to pay for the frequent flier program they really want – pay $10 for $1,000 in benefits.”
Charging for loyalty programs may behoove the guest to remain devoted, but for those travelers who need more of an incentive, a tiered program makes it more attractive.
A tiered loyalty program is very common in the industry because it drives customers’ loyalty with the promise of being upper tier members, but to make the program work, a business must distinctly differentiate between the ranks.
“If you are going to go with a tiered structure, make sure that there is as much differentiation between the tiers as there possibly can be,” said Jim Berra, VP of Loyalty Marketing, Starwood Hotels.
The tier configuration works, according to Berra, because a business can send a triggered campaign via email to a customer who has slowed travel from 45 days a year to 30 day a year, for example, letting them know they have been downgraded from the program.
“When someone does get downgraded from platinum to gold, there is an immediate communication from the guest about they’re status,” said Berra. “In [Starwood’s] program, we lowered the platinum to 20 stays annually and we got negative feedback.”
In the gaming business, loyalty programs should mean comfort, according to Larry Mullin, Executive VP Marketing at the Borgata, Atlantic City’s newest casino destination, set to open this summer.
“The touch point of customer loyalty programs is how they can have seamless and easy transactions,” said Mullin. “[The Borgata] is going to be a cashless environment – no coins in slots, tickets in and tickets out.”
Nowadays, guest loyalty programs also present another opportunity. Many businesses use the programs as tracking systems for demographic information. But there are certain rules to adhere to, according to Lee.
“The caution is that people aren’t testing small enough segments, and when they do test, they have it set to say if they don’t get a certain type of result they will cut it,” said Lee. “They should have some sort of benchmark.”
Loyalty programs are also a great way to advertise using those demographics to target specifically within the segments of the clientele.
“Generally, advertising and brand awareness will always be apart of the media mix,” said Berra. “Ultimately the company will look at the loyalty program in combination with what the brand spend and look deeper into the media mix.”
Reprinted from Hotels Interactive - 5/11/2004
By Alan Smithee |
July 15, 2006 by Marketing Office
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