Hotel Loyalty is Dead…or is It?
Back in 2016, I first took a closer look at loyalty, ultimately asserting that hotel loyalty is dead. Well… not dead, but rapidly evolving, with points and redemption models failing to impress the modern traveler. After nearly two years of healthy debate with numerous hoteliers on this topic, and some alarming new research from McKinsey, it’s time to revisit this complex and sometimes controversial topic.
Holiday travel provides ample time for podcasting, and McKinsey’s recent episode on the consumer decision journey (CDJ) caught my eyes and ears. McKinsey has been researching and tracking the fascinating evolution of the CDJ for almost 10 years. Their latest installment has some mixed findings for marketers:
- Let’s start with the good news. The good news, or opportunity, is that there is a fundamental shift happening in marketing, more centered on the consumer than ever before. This means that smart brands can capitalize and gain competitive advantage
- The bad news? Across 125,000 consumers and 30 categories, only three of those categories were “loyalty driven.” This means that the majority of consumers aren’t repurchasing the same brand without shopping around, sobering news for any marketer
So what does this all mean for hotels?
First of all, your brand is highly vulnerable. You’re up against competitors, OTAs, and increasingly Google and Airbnb. Consumers basically have endless options when booking a trip. Second, travelers can be fickle as they move through their research, adding and subtracting brands as they go.
Therefore, it’s critical for hotels to focus on initial consideration, meaning you’re top of mind when travelers have an upcoming trip or purchase occasion. And even if you’re in the initial consideration as a brand, you have to stay there. Let’s dive further into these concepts.
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All too often, I hear hoteliers fall into the trap of paying for initial consideration, pouring money into paid search and loyalty programs. For example, I spoke with a hotel marketer last week who said her usual PPC budget is $20K/month and the ROI is only 3 to 1. Ouch!