A loyalty program aims to make its member faithfulness of commitments.
NB: This is an article from Catala Consulting
By managing the customer experience and providing customers rewards, businesses can turn them at their advantages. In today’s environment there are different hotel loyalty program systems:
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Points Loyalty Program
Customers earn points for any transactions, engagement or visits; however, those points are earned once the transaction is done. The objective for customers is to accumulate a maximum of points to redeem different rewards. The point loyalty program can be used to encourage direct bookings and attract brand ambassadors. Due to the change in customer’s needs, many points programs started to reward non-transactional behaviours such as following social media page, downloading an app etc. Even though many hotel loyalty programs are money-based systems, the hotel industry prefers booking-based systems or a mix of both.
Example: IHG Rewards Club offers points for stay, travel, shop, or diner within the group or partners. The points can be redeemed within a 12-months.
Tiered Loyalty Program
The objective of this program is to keep customers engaged by setting levels of rewards. Using gamification techniques shows to increase by 47% customer engagement, such as reaching the next tier status, and to increase by 22% brand loyalty. This approach mainly targets high-value customers with higher purchasing power and requires strong communication strategies.
Example: Wyndham rewards program provides different Member Level Perks such as Blue at enrolment, Gold after 3 nights booked, Platinum after 9 nights and Diamond after 24 nights.
Paid Loyalty Program
Fee-based loyalty programs are gaining more and more popularity, especially among millennials. The customers accept to pay an up-front membership fee to get benefits. Therefore, customers are guaranteed to enjoy them immediately. This approach allows collecting a large amount of data about valuable customers who are more likely to get involved. However, premium loyalty can prevent the average customer from entry.
Example: For $399 per year the Accor Plus membership provides exclusive accommodation and dining benefits across the Asia Pacific.
Cash-Back Loyalty Program
The system redirects a certain percentage of each pound a member spends to his loyalty account. Even though this program is easy to implement and avoids the stigma of “discounts”, this approach is not the preferred one for hotels as it is more complicated to keep members engaged, and it only involves financial rewards.
Coalition Loyalty Program
The coalition loyalty program is operated by more than one business and relies on strong partnerships. Customers can benefit from different partner’s rewards. The customer data collected are used by all businesses involved. This program is valuable to get access to a broader customer base, save on program costs and enlarge the possibilities of rewards. The coalition loyalty program focuses on enhancing a business’s value perception and not on limiting the rewards to the business core activities.
Example: The Marriott Bonvoy’s program allows all his members to redeem their accumulated points within the hotel group (based on their amount spent per stay) for one of its airline company partners’ Avios. Other industries are partnering such as car rental (Hertz, Sixt).
Why Are Hotel Loyalty Programs So Important?
The important role of hotel loyalty programs come at a moment where ensuring core business activities are not enough to compete on the market. Instead, providing an ‘augmented service’ becomes crucial to set a service apart from its competitors and impact the experience quality perception. Loyalty programs provide advantages to hotels such as:
