6 Tips for Building Customer Loyalty

Posted by Lanyon on 05/13/2015

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“Loyalty programs have hit the maturity stage in the hospitality industries,” stated Michael McCall, director of The School of Hospitality Business at Michigan State University, “and many firms are now struggling to demonstrate the return on investment in these programs.”

But this doesn’t have to be the case. Loyalty and rewards programs can be among the most efficient mechanisms for marketing your hotel, but getting there requires thinking a bit differently about what customer loyalty is — and how it’s rewarded. These six tips are a great place to start:

Tip #1: Personalize

Different customers value different types of rewards. Leisure travelers tend to be more cost-sensitive than business travelers, and may prefer discounts on their room rates — whereas business travelers might prefer an upgraded room. We now have the technology to track customer preferences and behavior like never before, making customizable “loyalty paths” a practical option.

Creating membership levels that specifically target corporate travelers — your most profitable market segment — can help you deliver rewards that your corporate clients are more likely to value. For example, some corporate travelers may prefer extras that they can redeem while on business travel — such as spa services, so they can relax after a long day of meetings — while other may prefer to take the points they earn during business travel and redeem them later for leisure travel.

Tip #2: Think Locally

Don’t overlook (or undervalue) local individuals whose loyalty can drive repeat business. Local meeting and event professionals build long-term relationships with hotels in their area — and it’s definitely worth your consideration. Whether it’s launching a “planner points” reward system or a big-item raffle for your most loyal planners, your hotel can benefit greatly from finding ethical and contractually compliant ways to reward these professionals for their loyalty.

Likewise, building relationships with local establishments — like restaurants, boutiques, concert venues, etc. — can help you vary the types of rewards that you offer your loyal customers.

Tip #3: Think Beyond Points and Discounts

Loyalty isn’t all about points or miles. It’s about emotional, personal experiences — built in the short- and mid-term — that pay off in the long-term. The issue with room discounts is that they don’t provide much of an experience at all. Instead, you can offer your loyal guests a VIP service that’s more likely to leave a lasting impact, such as being picked up at the airport in a limousine.

Status symbols also have a high perceived value — the airlines have already caught onto this idea. For instance, First Class upgrades and early boarding are each seen as a valuable status symbol among many travelers.

Tip #4: Social Media

Social media hold enormous potential for brand identification and referral value. It’s also a place where loyal behaviors can be tracked and rewarded. Kelly McManus, director of guest experience at Hilton Worldwide, explains that low-level engagement on social media — such as “liking” a Facebook page or following on Twitter — can be valuable for hotels and should be rewarded. However, more intensive social media engagement, like writing positive reviews and posting hotel recommendations, can and should earn extra points.

Likewise, social media gives you new ways to reward your customers. Posting a personal message or a thank-you note to a loyal customer’s Facebook page or Twitter feed can provide a meaningful and personal experience.

Tip #5: It’s All Fun and Games

The rise of social media and mobile technology has brought about another powerful trend — gamification. “When you really think about it, you might say that hotels invented gamification,” says Anthony Miller, chief marketing officer at Lanyon. “It was hotels, after all, that began the practice of identifying their best customers and awarding them points that they could exchange for ‘prizes’.”

Gamification has advanced far beyond basic point systems, and hotels seeking to venture deeper into gamification need to expand both the types of rewards they offer and the ways that customers can earn them. To learn how to gamify your loyalty programs, look to the meetings and events industry — which has been very successful in using gamification to make meetings and events more engaging and interactive.

Tip #6: Experiment. Test. Be Patient.

Some might consider “Big Data” to be only a buzzword, but the ability to capture and analyze massive amounts of customer data makes it possible to test the efficacy of your hotel’s loyalty program more accurately than ever.

Don’t be afraid to test different combinations of rewards and customer segmentation — just make sure to measure the resulting behaviors. Try offering points for food and beverage purchases and reward loyal guests by waiving room-service fees. Your loyal corporate travelers might prefer to exchange their reward points for dry-cleaning services — or they might not. But you shouldn’t be afraid to experiment to see what works best.

Finally, it’s important to keep in mind that finding the best possible program for your hotel takes time. Certain types of customer loyalty, like brand advocacy and brand identification, is rarely reflected in short-term profits — and programs can take as long as three years or more to demonstrate ROI. However, in terms of long-term success, ROI may not be as powerful as ROE — return on engagement.

For more information, download Lanyon’s latest infographic: Grow Your Group and Transient Business!

Lanyon believes that when people come together, amazing things happen, relationships are built and business gets done. That’s why we’ve created the industry’s leading cloud-based software for managing corporate meetings, events and travel programs — while helping hotels better connect with corporate clients.

Lanyon is the only company to provide solutions that deliver and manage both transient and group business.

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