Smartbrief 3

February 24, 2010
Marketing: “The Allure of Loyalty“

Some say the idea of enticing customers to join loyalty programs is an idea of the past as most customers are looking for the cheapest deal. Bust according Don Berg, vice president of loyalty programs for IHG, trends have shown an increase enrollment in loyalty programs. The point programs have been enticing guests as they can be used for rooms, air travel, or purchasing merchandise. Berg noticed that nearing the Holidays they have a 26 % increase in gift card redemptions. The VP of brand management for Hilton, Jeff Diskin, said it is vital to the hotels and members that these loyalty programs continue to flourish. Not everyone is so keen on loyalty programs, a dean at NYU tourism and hospitality school claims that loyalty programs create a loyalty to freebies and not the brand, they need to find customers who are truly loyal and not just seeking a way to gain freebies. Some companies for their loyalty programs have targeted leisure travelers; by offering discounts for booking early companies are hoping to draw in more leisure guests. IHG is not targeting their leisure guests, but rather the business sector in hopes that if they gain their loyalty and trust they will continue to stay with them even on their vacations. Studies are showing that loyalty lies in abroad markets, as loyalty studies show they are strongest abroad. Hotels are using social mediums to strengthen their relationship with members. Hilton and Starwood have added new iPhone and iTouch applications in hopes of new media attracting customers.

It was surprising to me that loyalty programs are still on the rise despite the economic downturn, but it is in our nature to be drawn to freebies; for instance, at Costco I know I will wait in any line in order to try Kirkland’s mini quiches. I personally have never been enticed to join a loyalty program, as my main goal is always to find the cheapest hotel that I will not get robbed at, but I understand the concept and I especially appreciate IHG’s approach to marketing. IHG has recognized that leisure travelers are not where they gain most of their money, but rather in the business sector. It is conducive to IHG to draw the business travelers in as “loyalty” members so that when they travel regardless of whether it is work or travel they will stay at their establishment. The real issue is finding customers who want to be loyal and are not just after the perks that may come along with being a loyalty member, the perks may be there to draw a new member in, but they need substance to get people to stay. That issue can be solved by extensive training sessions, so that when a guest stays at any establishment they receive the same, in this case hopefully exceptional, treatment. Lastly, Hilton and Starwood are smart to align themselves with technology, iPhone applications are another excellent marketing tactic to gain guest loyalty.

Lodging Magazine


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