Loyalty Programs for Yesterday's Consumers
The Growing Indifference With Hospitality Marketing
Loyalty programs, a cornerstone of hospitality marketing, once indicated a genuine, mutually beneficial relationship between a customer and a hotel or airline. Today, both sides know that these offerings merely indicate an indifferent business relationship that, in fact, involves scant loyalty from either the company or the consumer. Consumers suffer from loyalty program fatigue. Rewards are too complicated to redeem, and the amount of points and discounts that one needs to qualify for the special club makes it almost irrelevant. Companies have turned loyalty programs into transactional numbers games focused on short-term results rather than the long-term relationships that these programs were originally set up to foster.
Loyalty program fatigue is the strongest indicator that these programs are well past their expiration date. New thinking is required, and experiments abound. The Global Hotel Alliance (GHA) has achieved significant success with its DISCOVERY program. Launched in 2011, DISCOVERY replaces free nights with personalized experiences conceptualized by staff, such as a day with pandas in Hong Kong. Widely viewed as a success, in fewer than four years, membership has swelled to over four million members worldwide, with an average new member sign-up rate of 2,000 per day.
But in today’s competitive market, offering exceptional rewards will likely not suffice in the long term. It’s a tactical response to a strategic issue: how to build stronger, more intimate relationships with consumers than ever before.