CUSTOMER LOYALTY:

CHALLENGES, STRATEGIES AND
DIGITAL OUTLOOK IN THE HOTEL
INDUSTRY
YOURI SAWERSCHEL

STRATEGY & BRANDING ...
Customer loyalty is like
teenage sex.!
Everyone talks about it,
nobody really knows how
to do it, everyone thinks
everyone...
LUXURY HOSPITALITY:
THE BASICS
BRIEF HISTORY OF THE
HOTEL INDUSTRY

1846%

1859%

1881%

1907%

1940%

1958%

1964%

1970%

1980%

1990%

1995%

2005%
HOTEL BRAND

Hotel owner

Profit & loss

Hotel brand

$

Management fees
OWNER

HOTEL MANAGEMENT FIRM

Own the hotel asset!

Manage the asset!

Pay operating costs!

Budget and manage operating c...
LUXURY PRODUCT

VS!

LUXURY HOTEL

High variable cost!

High fixed cost!

Stock / on demand production!

No stock (”perisha...
THE IMPACT OF INTERNET
ON THE HOTEL INDUSTRY
TRAVEL PLANNING BEFORE INTERNET…
…TRAVEL PLANNING AFTER INTERNET
MARKETING SPENDING SHIFTED
FROM PAPER TO SCREEN…
MARKETERS MUST DECIDE
WHERE BEST TO ALLOCATE
THEIR BUDGETS

Online retail!
App!
Loyalty scheme!
Content marketing!
SEO!
Me...
DIGITAL TOOLS MUST BE AT THE CENTER
OF A HOTEL MARKETING STRATEGY

92%

63%

57%

of travellers book
their trip online.!

...
CUSTOMER
LOYALTY
IN ESSENCE, MARKETING GETS
DOWN TO 3 SIMPLE STEPS…

+
ATTRACT

+
FILTER

RETAIN
… AND BUILDING LOYALTY
IS ABOUT 3 THINGS TOO

$
PURCHASE
FREQUENCY

AVERAGE
SPEND

BRAND
ADVOCACY
WHAT ARE THE TOOLS AVAILABLE
TO BUILD LOYALTY?

DISCOUNT

POINTS

TIER LEVELS

Receive immediate
discount!

Gathering poin...
TIER LEVELS (THRESHOLDS) ALLOW TO ISOLATE AND
REWARD THE MOST PROFITABLE CUSTOMERS
THE ORIGIN

AMERICAN AIRLINES
INTRODUCED A TIER
LEVEL PROGRAMME IN
1981
FOOD FOR THOUGHTS!

HOW MANY LOYALTY CARDS DO YOU HAVE?
HOW MANY DO YOU USE?
DO THEY IMPACT YOUR BRAND LOYALTY?
ALL MAJOR HOTEL BRANDS HAVE BUILT GIANT
POINT BASED LOYALTY PROGRAMMES
BUT LOYALTY PROGRAMMES ARE
EXPENSIVE TO SET UP AND TO OPERATE
SO, WHAT OPTIONS DO INDEPENDENT
HOTELS HAVE?
MANY AFFILIATIONS OFFER LOYALTY
SCHEMES TO INDEPENDENT HOTELS
FINANCIAL IMPLICATIONS OF LOYALTY PROGRAMMES!

THE MORE POINTS
ISSUED, THE MORE
LIABILITIES ON THE
BALANCE SHEET
THE AMOUNT OF AIRLINE MILES ISSUED IS
BIGGER THAN THE NUMBER OF EURO BILLS
Miles!issued!vs!Selected!countries’!GDP!
1,200,...
DESPITE HUGE INVESTMENTS MADE, LOYALTY
PROGRAMMES ARE NOT FULLY DELIVERING

30%

50%

of hotel loyalty members
are “at ris...
SATISFACTION VS BEHAVIOUR

A TRUE LOYAL CUSTOMER BUYS A LOT, OFTEN AND IS HAPPY ABOUT IT
The feelings towards a service
(w...
THE CHALLENGE WITH
CUSTOMER LOYALTY
Moving from behavioural to
attitudinal loyalty!

BEHAVIORAL LOYALTY
Frequency of purch...
BREEDING LOYALTY
THROUGH DIGITAL
The rise of digital marketing led to an
increase of customer touch points!
SOCIAL MEDIA, BLOG AND ONLINE STORE
CAN INCREASE CUSTOMER INTIMACY.

W Hotel online store!

Instagram menu by Comodo resta...
APPS CAN ENHANCE THE
CUSTOMER EXPERIENCE

Intercontinental created an app
that allows guests to browse
hotels and obtain l...
LOYALTY
PROGRAMME 3.0
The combination of gamification, digital marketing and social
circles have the potential to radically...
IS PEER MARKETING THE FUTURE
OF LOYALTY PROGRAMME?
Using information from social media circles, loyalty
programmes could b...
COULD LOYALTY PROGRAMMES
BECOME THE ULTIMATE REAL
LIFE GAME?

GAME DESIGN
GAMIFICATION!
BEHAVIOURAL
ECONOMICS

LOYALTY
PRO...
GAME = LUXURY?
FOOD FOR THOUGHT
Gamification is a powerful way to create
behavioral loyalty. But is it appropriate for
luxu...
DESIGN
THINKING
TOOLS
To add value, loyalty programmes must get “personal” with
their customers. Design thinking tools suc...
PERSONAS

The business traveller!

The young traveller!

The senior traveller!

Personas allow you to build empathy
with d...
CUSTOMER JOURNEY MAPPING

Customer journey
mapping allows to
identify all the
digital touch points
impacting customer
loya...
5 PRINCIPLES TO
BUILD LOYALTY
1. STAY ON BRAND
Don’t be everything to everybody. Be
consistent with your brand core values. !
2. BE SOCIAL
Leverage online social circles to foster
competitive behaviour as well as a sense
of belonging.!
3. PLAY YOUR PART
Use game mechanics to engage customers
and give them goals to achieve.!
4. KEEP MOVING
Business got mobile and your
loyalty programme should to.!
.5. THINK DIFFERENT
Forget the copycat approach
when trying to be different. !
IN SUMMARY

The loyalty rate isn't
that high. I could have a
big hit, then put out the
next single, and they
say, Oh yeah,...
WANT TO
KNOW MORE?
A boutique consultancy valued for
its entrepreneurial way of thinking,
Bridge.over approaches each
oppo...
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Customer Loyalty in the Hotel Industry: Challenges, Strategies and Digital Outlook

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Geneva School of Business Administration welcomed Youri Sawerschel, consultant at Bridge.over Group, to hold a workshop on customer loyalty in the luxury hotel industry.

Published in: Business

Customer Loyalty in the Hotel Industry: Challenges, Strategies and Digital Outlook

  1. 1. CUSTOMER LOYALTY: CHALLENGES, STRATEGIES AND DIGITAL OUTLOOK IN THE HOTEL INDUSTRY YOURI SAWERSCHEL STRATEGY & BRANDING CONSULTANT Geneva School of Business Administration! 12 December 2013!
  2. 2. Customer loyalty is like teenage sex.! Everyone talks about it, nobody really knows how to do it, everyone thinks everyone else is doing it, so everyone claims they are doing it.! Adapted from David Laniado!
  3. 3. LUXURY HOSPITALITY: THE BASICS
  4. 4. BRIEF HISTORY OF THE HOTEL INDUSTRY 1846% 1859% 1881% 1907% 1940% 1958% 1964% 1970% 1980% 1990% 1995% 2005%
  5. 5. HOTEL BRAND Hotel owner Profit & loss Hotel brand $ Management fees
  6. 6. OWNER HOTEL MANAGEMENT FIRM Own the hotel asset! Manage the asset! Pay operating costs! Budget and manage operating costs! Pay refurbishment costs! Recommend appropriate design and equipment (brand guidelines)! Receive the profit and the loss! Receive management fees, trademark fees and distribution fees!
  7. 7. LUXURY PRODUCT VS! LUXURY HOTEL High variable cost! High fixed cost! Stock / on demand production! No stock (”perishable inventory”) Limited inventory! Production and usage locations are different (factory + retail + outside use)! Production and usage
 locations are the same! Few or no third parties distributors! Many third party distributors! Mainly leisure customers! Mixed customer base! “make the tangible intangible”! “make the intangible tangible”!
  8. 8. THE IMPACT OF INTERNET ON THE HOTEL INDUSTRY
  9. 9. TRAVEL PLANNING BEFORE INTERNET…
  10. 10. …TRAVEL PLANNING AFTER INTERNET
  11. 11. MARKETING SPENDING SHIFTED FROM PAPER TO SCREEN…
  12. 12. MARKETERS MUST DECIDE WHERE BEST TO ALLOCATE THEIR BUDGETS Online retail! App! Loyalty scheme! Content marketing! SEO! Meta search! Email marketing! Retargeting! Social media! 3 screens ready (responsive)! Account Management! Booking engine optimization! Cloud hosting! Analytics + campaign tracker! Source:!Adapted!from!HEBS!Digital!
  13. 13. DIGITAL TOOLS MUST BE AT THE CENTER OF A HOTEL MARKETING STRATEGY 92% 63% 57% of travellers book their trip online.! of travellers consult reviews before booking online.! of business travellers access information from a mobile device.! Source:!L2!ThinkThank!
  14. 14. CUSTOMER LOYALTY
  15. 15. IN ESSENCE, MARKETING GETS DOWN TO 3 SIMPLE STEPS… + ATTRACT + FILTER RETAIN
  16. 16. … AND BUILDING LOYALTY IS ABOUT 3 THINGS TOO $ PURCHASE FREQUENCY AVERAGE SPEND BRAND ADVOCACY
  17. 17. WHAT ARE THE TOOLS AVAILABLE TO BUILD LOYALTY? DISCOUNT POINTS TIER LEVELS Receive immediate discount! Gathering points to be exchanged for products or services.! Gathering points to reach status levels.!
  18. 18. TIER LEVELS (THRESHOLDS) ALLOW TO ISOLATE AND REWARD THE MOST PROFITABLE CUSTOMERS
  19. 19. THE ORIGIN AMERICAN AIRLINES INTRODUCED A TIER LEVEL PROGRAMME IN 1981
  20. 20. FOOD FOR THOUGHTS! HOW MANY LOYALTY CARDS DO YOU HAVE? HOW MANY DO YOU USE? DO THEY IMPACT YOUR BRAND LOYALTY?
  21. 21. ALL MAJOR HOTEL BRANDS HAVE BUILT GIANT POINT BASED LOYALTY PROGRAMMES
  22. 22. BUT LOYALTY PROGRAMMES ARE EXPENSIVE TO SET UP AND TO OPERATE SO, WHAT OPTIONS DO INDEPENDENT HOTELS HAVE?
  23. 23. MANY AFFILIATIONS OFFER LOYALTY SCHEMES TO INDEPENDENT HOTELS
  24. 24. FINANCIAL IMPLICATIONS OF LOYALTY PROGRAMMES! THE MORE POINTS ISSUED, THE MORE LIABILITIES ON THE BALANCE SHEET
  25. 25. THE AMOUNT OF AIRLINE MILES ISSUED IS BIGGER THAN THE NUMBER OF EURO BILLS Miles!issued!vs!Selected!countries’!GDP! 1,200,000 ! 1,000,000 ! Millions! 800,000 ! 600,000 ! 400,000 ! 200,000 ! - ! Source:!Lars!Meyer@Waarden,!2012!!
  26. 26. DESPITE HUGE INVESTMENTS MADE, LOYALTY PROGRAMMES ARE NOT FULLY DELIVERING 30% 50% of hotel loyalty members are “at risk” of switching their preferred brand.! of hotel loyalty members’ annual hotel spend is not with their preferred brand.! 60% 90% of managers consider their CRM strategy unsuccessful.! of companies believe their loyalty programme lacks differentiation.! Source:!DeloiIe,!2013!and!Lars!Meyer@Waarden,!2012! !
  27. 27. SATISFACTION VS BEHAVIOUR A TRUE LOYAL CUSTOMER BUYS A LOT, OFTEN AND IS HAPPY ABOUT IT The feelings towards a service (willingness to recommend)! -! BEHAVIOURAL LOYALTY! The actions toward a service (frequency of purchase, average spent etc.)! -! +! SATISFACTION! Restaurant in airport/highway! ! Business hotel booked by employer/client! +! Hotel stay for a honey moon! Holiday resort visited yearly! ! !
  28. 28. THE CHALLENGE WITH CUSTOMER LOYALTY Moving from behavioural to attitudinal loyalty! BEHAVIORAL LOYALTY Frequency of purchase! Recency of purchase! Average spending! !! ATTITUDINAL LOYALTY Brand intimacy! Brand advocacy! Reduced price sensitivity! High emotional switching costs!
  29. 29. BREEDING LOYALTY THROUGH DIGITAL The rise of digital marketing led to an increase of customer touch points!
  30. 30. SOCIAL MEDIA, BLOG AND ONLINE STORE CAN INCREASE CUSTOMER INTIMACY. W Hotel online store! Instagram menu by Comodo restaurant in NYC! Four Seasons’ gastronomy map on Pinterest! The blog from the Standard Hotel, NYC!
  31. 31. APPS CAN ENHANCE THE CUSTOMER EXPERIENCE Intercontinental created an app that allows guests to browse hotels and obtain local information about destinations.! W Hotel launched an app that offers exclusive DJ mixes. The idea is to “bring a part of W hotel” back home.! Marriott developed a mobile app that permits guests to make ‘in-meeting’ requests such as coffee refills and room temperature changes.!
  32. 32. LOYALTY PROGRAMME 3.0 The combination of gamification, digital marketing and social circles have the potential to radically change the way loyalty programmes operate.!
  33. 33. IS PEER MARKETING THE FUTURE OF LOYALTY PROGRAMME? Using information from social media circles, loyalty programmes could become more personalised and addictive.!
  34. 34. COULD LOYALTY PROGRAMMES BECOME THE ULTIMATE REAL LIFE GAME? GAME DESIGN GAMIFICATION! BEHAVIOURAL ECONOMICS LOYALTY PROGRAMME
  35. 35. GAME = LUXURY? FOOD FOR THOUGHT Gamification is a powerful way to create behavioral loyalty. But is it appropriate for luxury products and services?!
  36. 36. DESIGN THINKING TOOLS To add value, loyalty programmes must get “personal” with their customers. Design thinking tools such as personas and journey mapping allows to build empathy.!
  37. 37. PERSONAS The business traveller! The young traveller! The senior traveller! Personas allow you to build empathy with different customer segments.!
  38. 38. CUSTOMER JOURNEY MAPPING Customer journey mapping allows to identify all the digital touch points impacting customer loyalty !
  39. 39. 5 PRINCIPLES TO BUILD LOYALTY
  40. 40. 1. STAY ON BRAND Don’t be everything to everybody. Be consistent with your brand core values. !
  41. 41. 2. BE SOCIAL Leverage online social circles to foster competitive behaviour as well as a sense of belonging.!
  42. 42. 3. PLAY YOUR PART Use game mechanics to engage customers and give them goals to achieve.!
  43. 43. 4. KEEP MOVING Business got mobile and your loyalty programme should to.!
  44. 44. .5. THINK DIFFERENT Forget the copycat approach when trying to be different. !
  45. 45. IN SUMMARY The loyalty rate isn't that high. I could have a big hit, then put out the next single, and they say, Oh yeah, who are you? Prove it again. Lenny Kravitz!
  46. 46. WANT TO KNOW MORE? A boutique consultancy valued for its entrepreneurial way of thinking, Bridge.over approaches each opportunity anew by providing tailored solutions for small and global businesses from London to Dubai to Beijing.! ! bridge-over.com youri@bridge-over.com Bridge.over has worked on more than 50 projects in 4 continents covering more than 25 countries. !

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