By the numbers, loyalty programs have never been more popular. Most US adults (90%) belong to at least one loyalty program, and 53% are in three or more. Yet many brands struggle to find ways to engage customers. More than half of loyalty memberships are inactive, according to Mintel’s 2019 US Loyalty Programs report. And Covid-19 has added an unprecedented challenge.
But Covid-19 has also accorded the hospitality industry an unprecedented opportunity to reinvent and reinvigorate itself. Recovery strategies can go beyond surviving and thriving to redefine the future of hospitality.
Hotels are now beginning to understand the need to move loyalty programs away from points-based programs and instead nurture long-term relationships. Digital transformation is no longer an option—it’s a critical component of the experiences customers have come to expect. And it’s the only way understanding customers, anticipating their needs and demonstrating value can be done efficiently and at scale.
Five themes underpin hotels’ technology-driven loyalty program plans. Supported by interviews with top executives, real-world case studies and research, these trends span data insights, personalization, omnichannel access, experiences and trust.
“90% of US adults belong to at least one loyalty program but more than half of loyalty memberships are inactive.”
— Source: Mintel 2019 US Loyalty Programs
Data insights are at the core of today’s most successful loyalty programs. Hotels coveting the data-first approach of large brands need to develop sophisticated systems for gathering, managing and acting on their own data insights.
That begins with building a single view of customers, incorporating information such as program members’ preferences, past interactions and purchase histories, and then cleansing it and combining it into a unified profile. Disparate hotel databases from mobile apps, email campaigns, social media accounts, central reservation systems and point of sale terminals are all part of this foundation.
With a holistic view of loyal customers, hotels can go beyond traditional demographics to focus on behaviors and preferences. More robust membership segmentation allows hotels to better adapt to changing market conditions and evolving scenarios, such as occupancy rates. Using a “test and learn” approach, hotels can then measure and monitor performance to optimize decision-making based on real results.
Personalization used to be driven by a narrow slice of data, such as transaction history, and fueled a limited set of rewards, such as perks based on loyalty program tiers. The next wave of tailored experiences isn’t confined to the travel experience—it reaches the consumer before they travel and continues after they return.
By understanding guests’ needs during and between stays, hotels can provide a brand experience that’s relevant on multiple levels. They can also create opportunities to engage with a wider set of guests that expands beyond the most frequent travelers.
Membership cards and customer portals are no longer the be-all and end-all of loyalty programs. Instead, brands need to be able to meet the consumer where they are by fitting smoothly into their lives.
From the hotel key or airline ticket to bank branches, retailers, credit cards and mobile phones, all touchpoints are opportunities to create fluid brand interactions. And hotels need to give equal attention to every channel. A weak experience in one can reflect poorly on the entire customer experience. Hotels should invest in solutions that combine disparate data streams to inform their activities at every interaction.
Nowadays, consumers value experiences over traditional points programs. As hubs for entertainment, coworking, socializing, dining, nightlife, retail and cultural experiences, hotels have an opportunity to help consumers find the experiences that will let them enjoy their ideal lifestyles.
Loyalty programs must undergo a transformation from strictly points and miles to true experience platforms spanning time away from home as well as at home. From creating new ways to reward loyalty members on everyday spending to providing redemption options like unique events or insider access, experiences are taking center stage.
Concerns around privacy and data breaches are at an all-time high. As important as technology may be to a loyalty program’s scalability, hotels need to think beyond the numbers and find ways to provide more human-powered hospitality as well.
If trustworthiness and ethical business practices aren’t reason enough, compliance with regulations, such as the General Data Protection Regulation (GDPR), should be. Hotels should focus on improving internal and external data transparency and implementing data best practices.
As the hospitality industry works to overcome setbacks prompted by Covid-19, loyalty programs will play a critical role in determining future success for hotels. Those that adapt to changing market conditions and consumer desires will make the strongest comeback in the months and years to come.
To learn more, read the “Skift Trend Report: Five Hotel Loyalty Trends for 2020.”