The price of loyalty

After several of the industry’s largest hotel chains announced increases to the amount of points needed to redeem upgrades and complimentary stays at the select properties, loyalty programs are certainly a trending topic lately. Watching, reading and even participating in recent industry panels caused me to think about what consumer loyalty means today. Likewise, it also begs the question, what does it mean to be loyal to a consumer?

In an age when we see the effects of discounting and commoditization spill over into loyalty programs, how do we address reversing globalization? How do we connect with today’s loyal consumer in a more meaningful, personalized way as the world gets larger? 

Recent evidence suggests that where earning consumer loyalty once was as simple as offering points, free nights and upgrades, we are beginning to see an evolution and in some cases even a customer revolution. From the airlines we fly and hotels we frequent to the type of cars we drive and the clothing we buy, companies strive to instill a sense of “loyalty” and brand alignment.

I posit that providing complimentary Internet or Wi-Fi services as part of a loyalty program member acquisition or rewards strategy is necessary but outdated — and, it has been done before. It does not speak to the wide range of possible engagement for loyalty programs.

Consumers also have recently cried foul at properties that have instated 20% increases to their customer loyalty or frequent guest programs (FGP), proving that changes must be made to this system. As we are all aware, it is not just our fellow hoteliers that have tightened their loyalty belts; airlines have led the charge in increasing the number of points needed to reach elite status, with some adding a minimum annual spend in addition to earned mileage before patrons can reap the benefits, really reversing the cause and effect of loyalty altogether.

As consumers have grown used to customizing everything at their fingertips, I believe we are on the verge of a paradigm shift with regards to the ways in which we show appreciation and generate excitement amongst our valued guests. We must adapt our industry accordingly to provide at minimum an element of surprise and delight for guests by thinking outside of the traditional box (or beyond the complimentary Wi-Fi).

In China it has been found that consumers desire tangible items such as mobile phones, while Indian business travelers crave workout and spa facilities. With more people traveling today compared to five years ago, the notion of global customization also needs to come into play when discussing what is next for loyalty programs. We are challenged to appeal to the needs of all travelers — male, female, business traveler or family vacationer — in a way that hasn’t been done before.

Our industry is at a crossroads in determining what is next for loyalty programs. Do we continue with points-based ideology? Do we provide more personalized experiences and partnerships? How can we, as leaders in the service industry, directly impact our valued guests’ sense of true loyalty in a way that is meaningful to the times we live in? While it may seem odd to suggest, perhaps we look to banks and different industries altogether for direction for the ways to increase the benefits of our approaches.

The importance of a consumer’s loyalty is certainly not a new concept, but its evolution is as fresh as ever, and it begs the question: how, too, do we stay loyal?