How do you know you have loyal customers? Is the number of subscriptions to your loyalty program really the indicator? What motivates their loyalty?
Every benefit of loyalty
Hoteliers have strived for and nurtured, not only contemporary but a future connection with guests. No wonder, having a loyal customer base creates a virtuous circle. Foremost, it is proven in numerous studies that the cost of retaining an existing customer is lower than the acquisition of a new. In fact, the cost of acquiring a new customer is about 5-25 times higher. Also, loyal customers buy more and often. In fact, they are willing to spend extra 25 dollars on their favorite brand. Besides, they drive ancillary revenue up by purchasing related products. These satisfied loyal customers will generate positive word-of-mouth, feeding back to less marketing investments.
Millennials are now a large buyer cohort, and we are curious to know what the modern travelers think about loyalty, and how it is different than before. So what does it mean to achieve customer loyalty in 2018?
Anatomy of a traveler’s choice
OTAs together with metasearch websites created an unprecedented abundance of choice for travelers. In this era where the accommodation has earned a ‘commodity’ status, the competition is hyper and finding an alternative to ‘one room I saw today’ has never been easier. Modern travelers are averaging 3+ loyalty programs each, and they don’t blindly decide on a brand because they hold the loyalty card. Have you ever imagined what thoughts the travelers are juggling in their mind?
With the growing influence of on-demand economy, consumers are trained to postpone purchase decisions and they expect an instant gratification after a purchase takes place. Traditional loyalty programs rewarding a complimentary stay after 50 nights just won’t cut it. Moreover, growing buyer demographic is fluent in social media settings and less risk-averse. They tend to be more excited for than afraid of new experiences they found online, at a good value. Therefore, I imagine the travelers are weighing these scenarios when they are in their research phase: