Loyalty programs aren’t just about rewarding customers: for companies, they deliver rich rewards to the bottom line. In fact, consumers spend 37-per-cent more with brands when they are program members, according to The Loyalty Report 2018 by Mississauga, Ont.-based Bond Brand Loyalty. When a consumer is a member of a hotel-loyalty program, their spend increases 82 per cent, behind the top sector for spend increases — gas — at 99 per cent.
However, the traditional loyalty playbook (earn points, get free stuff) isn’t what it used to be, as consumer expectations change and technology opens up new opportunities for personalization.
The Loyalty Report 2018 found that consumers spend more and remain loyal to brands with programs that offer innovative, personalized experiences in addition to points and discounts. Moreover, rewards and redemption represents only one-third of what drives members’ satisfaction with a loyalty program. Two thirds is driven by the user-experience elements of the program — those that meet real needs, make it easy and enjoyable and make people feel special and recognized.
“The weightiest drivers of program satisfaction are the experience elements, not the points,” says Scott Robinson, vice-president, Design & Strategy, at Bond Brand Loyalty. “Loyalty currency tends to do a good job in engaging a new customer for the first time, but the experience elements do better work to sustain engagement and retain customers over time. So, in terms of how consumer preferences and needs are changing, they’re continuing to show us that the experience counts.”
To better engage members and improve the program experience, some major hotel chains have recently retooled their loyalty programs. Last year, Hilton Hotels & Resorts rolled out new ways members of its Hilton Honors program can use points, including combining points and money for a hotel stay, pooling points with family and friends and extended Diamond status. It also launched Amazon Shop With Points, which allows members to use any amount of points as currency on amazon.com.
This year, Hilton made further changes, such as introducing milestone bonuses for Gold and Diamond members; rollover nights for elite members, allowing them to rollover unused nights into the following calendar year; and the ability for Diamond members (staying 60 or more nights) to gift Gold status to a family member or friend.
Some of the changes were based on customer feedback that indicated less-frequent travellers want to be able to use their points in more ways and more quickly. “When it comes to loyalty, earning points is not what engenders loyalty, it’s the value you feel when you redeem your points. And so, getting less-frequent travellers more engaged sooner was key,” says Mark Weinstein, senior vice-president and global head of Customer Experience, Engagement, Loyalty & Partnerships at Hilton.
At the other end of the spectrum, Hilton found that about 40 per cent of its Gold and Diamond members were also elite members with competing hotel chains. “What was happening is guests would be loyal to us throughout the beginning part of the year, reach the mid-point of the year, earn Gold status or Diamond status and go stay with our competitor for the rest of the year,” says Weinstein. “So, we saw a chance to get more engaged with our more-frequent travellers.”
This past August, Marriott International launched its new unified loyalty program, which brought together Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest (SPG) for the first time since Marriott International acquired Starwood Hotels and Resorts in 2016. The program now operates under one set of unified benefits and one currency. The Marriott Rewards, The Ritz-Carlton Rewards and Starwood Preferred Guest (SPG) names will continue to live on until a new program name is introduced in 2019.
“We continue to have three loyalty brands, but on the back end we’ve brought the systems together and it’s seamless for our members,” says Jennifer Bryl, Marriott International’s director of Loyalty and CRM – Canada. “The biggest change for members is that when they go onto marriott.com or log into their mobile apps — whether that’s a Marriott, Starwood or Ritz-Carlton app — and they search a particular city, they’re now able to book and redeem at all of our brands.”
Among the new perks, members earn points and achieve elite status faster. They can also choose to receive five Suite Night Awards (a one-night confirmable upgrade to a standard suite or select premium room) at the Platinum level and an additional five Suite Night Awards at the Platinum-Premier level. Marriott also expanded its “Moments” experiential platform, which allows members to redeem points for unique experiences, such as classes with top chefs; meet-and-greets with famous athletes, actors and musicians; and concert tickets with backstage access.
Internally, Marriott International reworked a customer-recognition platform from the Starwood program and rolled it out to all of its hotels. The new platform enables Marriott to have a 360-degree view of each guest’s profile, as well as relevant information from all channels, so associates can provide personalized service at every touch point. For example, weeks before they check in, loyalty-program members can use Apple Business Chat to connect with a Marriott call centre to make a special request. Then, a day before they check in, they can amend the request via the Marriott mobile app. When they arrive, the front-desk staff will let them know the request has been fulfilled.
“It’s not just about understanding what our customers’ preferences and needs are, but acting upon them,” says Bryl. “We’re hoping to do that through this tool to provide those seamless experiences and those welcoming experiences for our members.”
Jamie Russo, vice-president of Loyalty Programs and Customer Engagement at Choice Hotels International, says to earn the right to be the loyalty program of choice, members must feel rewards are simple and attainable. “We scour a number of avenues to hear from our guests on what is important to them,” he says. “Our Innovation Lab is a key resource, but active listening in our call centres, in loyalty forums and through surveys helps us to innovate based on those insights.”
In 2016, Choice Hotels launched a refreshed version of Choice Privileges (CP) with the aim to offer the most value to members starting on the first day of their membership.
For example, the company heard that many loyalty programs require too much time to achieve rewards. In response, it created Your Extras, which offers CP members instant rewards through credits from popular merchants including Amazon and Tim Hortons.
“So, if you’re a CP member, as soon as you check into your hotel, your $5 Tim Hortons gift card would instantly be emailed to you for immediate use, if that’s the Your Extras perk you select,” says Russo. And, you can collect these instant rewards on every weekday stay as you save up for a free night.”
Russo says CP hasn’t just benefited guests, but franchisees as well. “Our loyalty program drives guests directly to our franchisees’ hotels by creating a highly-engaged member base,” he says. “Choice Privileges members stay at our properties more than twice as often as non-CP members. This lowers both the owner’s transactional costs through more direct bookings and overall customer-acquisition costs.”
Looking ahead, Weinstein says currency will continue to be a major part of loyalty programs — that’s not going anywhere. “But the experiential aspect of it — that you feel appreciated, welcomed and taken care of when you’re on property and it just feels different when you stay with Hilton when you’re a Hilton Honors member — you’re going to see a lot more effort in that space,” he says.
In Weinstein’s view, what used to be “nice to have” is now a table stake. “People are now being inspired not just within the [hotel] category, they’re being inspired by Amazon Prime delivering to their house in two hours. They’re being inspired by Uber and Lyft,” he says. With these heightened customer expectations, it’s no longer good enough to be good enough in the loyalty space, adds Weinstein. “We have to be really customer-centric.”
Written by Rebecca Harris