The History Of Loyalty Programs
Large flag hotels like Holiday Inn and Marriott have been implementing their loyalty programs since the early 1980s, not long after American Airlines launched AAdvantage in 1981. Since the creation of these strategies, these companies have continued to evaluate and refine their approach to produce the best return on investment.
In 2015, Holiday Inn grossed over 6.2 billion dollars and Marriott nearly doubled that at 14.5 billion dollars. With that said, and from someone who has stayed with both of these brands throughout the years, I have seen and used both of their loyalty programs. These brands, just like independent brands, have battled OTAs for years. The weapon of choice has been loyalty programs each time, in addition to other strategies that add value to their guest experience to increase direct bookings and reputation with guests.
The Future Of Loyalty Programs
Points or dollars? From a online/offline conversion standpoint, a loyalty program that speaks a simple language with a true value proposition is going to win every time. Points-based programs can add friction and confusion to the sale which, in the end, does not breed loyalty to your guest who at one time signed up and valued becoming a member of your rewards program.
Points-Based Example
A person travels quite often and stays with a brand who has a loyalty program that rewards with points checks into the hotel. The hotel clerk asks, “would you like to use any of your points toward this stay?” This reminds the guest he has points that he hasn’t used or, better yet, forgot about. The guest asks, “how many points do I have?” This confirms he has no idea. The clerk responds, “10,000 points, sir.”
Why should the guest have to ask that question? If he had known about or valued the loyalty program, he would have used the points at the time of booking his stay or told the clerk to use the points up front. Instead, he didn’t even know the value of these points. If the purpose of the loyalty program is to build true loyalty then the guest should know exactly what he has and how he wants to use it. Why?
Humans are hardwired to want things now. It’s called instant gratification, and it’s a powerful force. In most psychological models, humans are believed to act upon the “pleasure principle.” The pleasure principle is the driving force that makes human beings want to gratify their needs, wants and urges. These needs, wants and urges can be as basic as the need to eat. However, they can be as complex as the “need” to save money, redeem and get an instant deal or discount. When we don’t get fulfillment, our psychological response is anxiety or tension and these human responses do not breed repeat guests or loyalty. The big-picture way to give your audience instant gratification is to provide something now. We need to issue a warning and downside here since all things have positives and negatives. The desire for instant gratification does not stop once the customer gets something. Instant gratification breeds more instant gratification. In other words, once you give your customers some level of instant gratification, they will expect that same instantaneous response in future interaction. This is why rewards programs must give have an underlying plan that meets this desire, and most do not.
Dollars-Based Example
A person travels quite often and stays with a brand who has a loyalty program that rewards with dollars checks into the hotel. The hotel clerk sees the guest has already used the reward dollars he has earned toward the current stay. This proves that the guest values and understands their program. At this point, the desk clerk can use this time to tell the guest what he has earned from this stay or add value in some other way. Instead of asking if he wants to use something that, in logic, is intangible. This is where a brand can truly understand their guests and what they value.
The examples above are just one scenario of thousands that could take place. At the end of the day, guests want tangible redemption and a brand that does this can build loyalty that no other brand has built. Ask yourself: “what is going to work and grow revenue?” Points can work if they are calculated with a value proposition, but if that’s the case, it is statistically shown that people understand dollars better.
Building & Tracking Loyalty Through Guest Rewards Club Software/SAAS
Guest Rewards Club is a platform that allows any hotel in the world to implement their very own Guest Rewards Club membership, not only like the big hotel chains – even better. This platform was developed specifically to help hotels increase customer loyalty, conversion and guest retention using true value propositions.
Guest Rewards Club tracks all redemptions and subscriptions from start to finish which allows the brand to evaluate their program and optimize it to its fullest potential. This platform will support points or dollars all depending on the hotelier’s discretion. Our dollar-based systems continually adds value and feeds that human need for instant gratification while generating more repeat guests. We all now getting a past guest to return is much less cost than getting a new guest to stay. This allows for lower marketing costs and more profit margin to your business.
If your brand sees the value in this technology and would like more information about the Guest Rewards Club platform, contact our team today and let us help you improve your business!
