One of the earliest loyalty programs on record dates back to 1793. That’s 223 years ago. We’ve been doing this song and dance for a long, long time. The burning question is: is it still relevant? In this fast-paced, technologically-driven world where the best deals are a click away, does customer loyalty still exist or has the paradigm shifted? For this three-part series, hetras had a chat to three industry leaders to get some answers.
Is it time to rethink loyalty?
Loyalty is a hot topic among hotels — particularly boutique hotels. Some believe that loyalty programs work, others that they work with a few tweaks, while others still see them as relics of a bygone era — archaic, nostalgic but no longer relevant.
One thing is certain, direct business is good and it hinges on loyalty. Securing loyal guests is the way to beat out the OTAs and other competition. The theory goes: if a customer is loyal to you, they won’t cast their eyes further afield. The practice is a little messier. There are two main reasons for this:
- Technology and the environment
Technology and the environment
The immediacy and accessibility of the internet has changed everything. A bunch of recent studies have found that consumers are now researching and booking in micro moments and on smart devices, rather than in solid, dedicated time slots. Potential customers have instant access to price and venue comparison sites, photos and reviews and this is where most of the decision process happens.
“Every day a regular person has almost unlimited options for choosing one single product. That makes it hard for programs to survive,” says Antonio Hoyos, revenue manager and head of the reservations department at Infinito Hotel and Pampa Hostels. Guests can quickly and easily determine where they can get the best price and the best overall deal; they no longer rely or count on loyalty programs to make that happen. There is also competition offline. Just about every service and product provider — not just hotels — has some kind of loyalty scheme. Credit card companies, hotel chains, airlines, OTAs and various conglomerates offer rewards to returning customers.
“Savvy travelers of today don’t just participate in one loyalty program but in many. Hence the value of a loyalty member in any one program is being diluted,” says Christian Boerger, corporate director of revenue management and distribution at Pacific Hospitality Group.