Service

marketing
Topic: customer loyalty

Hotel Brands That Employ

Stand Out Customer Loyalty
Programs
July 4, 2017
The guests of your hotel likely fall into one of three categories. There are those who are not members
of your loyalty program, those who are simply signed up and those who are devotees—they choose
your hotel based on the relationship the loyalty program provides. When a guest joins this third
group, you’ve “won”, and the prize is a loyalist that produces long-term and somewhat predictable
revenue. To keep this segment returning to your property, and to encourage the first two groups to
participate, you will have to craft a loyalty program that stands out among the rest. Here are some
examples of hotel brands that have created stand out customer loyalty programs.

The Leaders Club by LHW

The Leaders Club is the membership program for The Leading Hotels of the World (LHW). This
program simplifies loyalty benefits by foregoing a points system and rewarding guests with one
complimentary night after every five nights stayed at one of the luxury LHW. Phillip Logsdon,
Director of Loyalty Marketing at Leading Hotels of the World, says that the Leaders Club’s
straightforward program is a direct response to complicated, capacity-controlled points programs. For
$150 USD annually, club members have access to complimentary daily breakfasts, room upgrades
when available, unique welcome gifts and early check ins, in addition to the free sixth night credit
that never expires. Unlimited Level members who pay $1,200 USD annually also get passes to 600
VIP airport lounges, and free one-way airport transfers to select cities.
Tip: Make it simple—straightforward rewards programs that are easy to grasp help to keep guests
loyal and engaged.

Ritz-Carlton and Marriott Rewards

Basic perks offered by hotel rewards programs are commonplace at hotels like Ritz-Carlton and
Marriott, but they also see the value in going above and beyond to reward guest loyalty. The Marriott
Rewards and Ritz-Carlton Rewards programs include the new Experiences Marketplace, where
guests can redeem points for special excursions that cater to their personal interests. Curated events
and opportunities for discovery, such as photography workshops with National Geographic
Expeditions, or VIP attendance to your favourite sports game, are just a few of the unique options
that rewards members can choose from. This program also offers an Elite Concierge Service, a top
tier membership option which includes additional benefits such as personalized concierge services
and guaranteed late check out.
Tip: Think outside of the box—offering personalized perks and opportunities that go above and
beyond will show guests that their total travel experience is a priority.

Hilton Honors
With 5000 properties in 103 countries and territories, Hilton Honors offers perhaps the greatest
flexibility of all rewards programs. The Honors program offers members “a million ways to earn
points”, from airlines and car rentals, to credit cards and wine clubs. Rewards can be redeemed
within 14 different brands for any budget or occasion. Hilton Honors even allows members to share
points with friends and family, or donate points to charities and non-profits. And guests can redeem a
mix of points and cash, which makes the benefits accessible to less frequent guests.
Tip: Make rewards reachable—offer guests attainable benefits that are flexible and easy to redeem.
Retaining your guests’ loyalty through unique offerings and personalized benefits is a valuable
investment of both time and money. Designing the right program for your hotel will result in greater
guest satisfaction and higher customer retention. Any hotel can offer an early check in or a free
muffin in the morning, but the best loyalty programs go beyond the ordinary or expected. Consider
what you can do to make it easy to earn and redeem the kind of desirable rewards that keep your
guests coming back and relationships growing stronger.
 Customer loyalty
Meaning of customer loyalty
Customer loyalty can be said to have occurred if people choose to use a particular shop or buy
one particular product, rather than use other shops or buy products made by other companies.

Customers exhibit customer loyalty when they consistently purchase a certain product or brand
over an extended period of time. As an example, many customers stick to a certain travel
operator due to the positive experiences they have had with their products and services.

Customer loyalty is the key objective of customer relationship management and describes the
loyalty which is established between a customer and companies, persons, products or brands.
The individual market segments should be targeted in terms of developing customer loyalty.

Definition of Customer Loyalty

Considering the different conceptualizations of customer loyalty, I offer a definition of

customer loyalty that incorporates prior definitions of customer loyalty:

Customer loyalty is the degree to which customers experience positive feelings for and exhibit
positive behaviors toward a company/brand.

This definition reflects an attribute or characteristic about the customer that supports both
attitudinal and behavioral components of loyalty. This definition of customer loyalty is left
generally vague to reflect the different positive emotions (e.g., love, willingness to forgive,
trust) and behaviors (e.g., buy, buy more often, stay) that customers can experience.

Types of customer loyalty

Psychological;

Economic;

Technical/functional;

Contractual.

Example

Psychological
Customers might also develop a sense of loyalty to a certain person working for a company.
People can build up a good relationship with a bank advisor they have known for several years
and who has always fulfilled their expectations. The fact that people develop a sense of loyalty
can be described as a psychological reason to stick to a specific product.

Economic
In business-to-business markets, it might also be possible that customer loyalty results from the
fact that switching to another company would lead to the company facing economic
disadvantages. In this case, loyalty is based on economic grounds.

Technical/ functional
Furthermore, it might be possible that a company adjusted and adapted its technical
procedures to a particular supplier and a change would cause immense technical problems,
thus, technical or functional reasons are the grounds for customer loyalty.

Contractual
A contractual reason for loyalty exists if a customer is bound to the company for a certain
period of time due to a contractual agreement and for legal reasons.

Example
Many Apple customers show absolute loyalty to Apple and even dislike competing products.
Apple fans identify with its trendy brand and love its integrated and smart solutions, sleek
design and excellent product quality. These customers seem to increasingly live in an “Apple-
world”, where they tightly integrate the use of several Apple products such as their MacBook,
iPod, iPhone and iPad). They frequently download and buy software, apps, songs and ebooks
from Apple’s Store and iTunes.

The Different Faces of Customer Loyalty

There are many different definitions of customer loyalty. These are as follow:

 Esteban Kolsky proposes two models of loyalty: emotional and intellectual. In this
approach, Kolsky posits that emotional loyalty is about how the customer feels about
doing business with you and your products, “loves” what you do and could not even
think of doing business with anybody else. Intellectual loyalty, on the other hand, is
more transactionally-based where customers must justify doing business with you
rather than someone else.

 Don Peppers talks about customer loyalty from two perspectives: attitudinal and
behavioral. From Peppers’ perspective, attitudinal loyalty is no more than customer
preference; behavioral loyalty, however, is concerned about actual behaviors regardless
of the customers’ attitude or preference behind that behavior.

 Bruce Temkin proposed that customer loyalty equates to willingness to consider, trust
and forgive.

 Customer Loyalty Institute states that customer loyalty is “all about attracting the right
customer, getting them to buy, buy often, buy in higher quantities and bring you even
more customers.”
  Beyond Philosophy states that customer loyalty is “the result of consistently positive
emotional experience, physical attribute-based satisfaction and perceived value of an
experience, which includes the product or services.” From this definition, it is unclear to
me if they view customer loyalty as some “thing” or rather a process.

 Jim Nova defines customer loyalty in behavioral terms. Specifically, he states that
customer loyalty, “describes the tendency of a customer to choose one business or
product over another for a particular need.”

What factors influence customer loyalty?

In business, we often focus on attracting new customers. Whether it’s exciting introductory
offers; huge promotional campaigns; or discount codes; we’re always thinking about bringing
customers in. However, if we can’t offer them a service that they are satisfied with, or another
company offers an even better deal a few months later, chances are we won’t retain customer
loyalty. Remember loyalty should not only be measured in sales; loyal, engaged customers are
some of the best brand advocates in the business, acting as ambassadors for your organisation
within their social circles.

So, how can we keep customers? In this article, we take a look at how digital impacts customer
loyalty and what you can do to improve retention.

What factors influence customer loyalty?

Before we examine how digital affects customer loyalty, let’s first look at the business factors in
general that influence commitment. These also apply in a B2B environment as well as B2C.

 The core offer: Remember that it’s not all about gimmicks and loyalty card
programmes – it is the core offer itself that will influence how long a customer will stay
with you. You should fiercely understand what it is that your customers want and focus
on offering it every single time. This may take into account a host of different factors:
your location, the standard of your offering and the quality of your product or service.

 Satisfaction: When looked at in isolation, satisfaction can be deceptive. For example,

many carmakers claim customer satisfaction levels in excess of 90 per cent but have
repurchase levels that are often less than half that. In general, satisfaction is something
that customers have come to expect – just because they have it, doesn’t mean they will
stick with you; but without it, they will almost certainly move on.
 Elasticity: The more commoditized a service is, the more likely it is that customers will
move around – whereas if they have had to do a lot of research before investing in your
product then they are likely to show faith in that decision.
 Marketplace | Another key factor is the marketplace itself. What are the opportunities
for customers to switch? Is there a lot of competition in the marketplace? In some
industries – such as banking, for example – there are high levels of inertia because of
 the perceived difficulties in switching. However even the most traditional of sectors are
seeing disruption from technology and startups, banking and insurance included.
 Demographics: Research suggests that less affluent customers are usually the most
loyal – perhaps because they can’t afford the risk that moving to a different brand will
not suit them. Meanwhile, younger customers are generally more likely to move around
than older customers. Other demographics play a part too: including nationality, sex and
location.

How to gauge customer loyalty

Being able to react quickly to apparent dissatisfaction is vital in retaining customer loyalty.
Here, the digital environment plays a huge role. According to research by Digital Marketing
Magazine in 2014, 60 per cent of UK shoppers relied on previous customer feedback: and an
incredible 90 per cent are now using online communities and forums before making purchases.

As such, it’s become vital for companies to focus on transparency in business and community
management. Digital technologies can be the key to quickly spotting a problem and resolving it.

How digital can be used to build customer loyalty

There are several ways in which business owners can build trust and loyalty online.

 Simplicity: Make the interactions and way your customers do busy with you are
simple and easy as possible. Try and remove as many obstacles as possible from the
buying cycle and provide exemplary service while doing so. Use customer research to
find out how your customers want to interact with your organisation and act upon it.
 Social media: Building connections can be easily achieved via social media – it is
perhaps the quickest way to understand what people are saying about your company. In
a study in 2014 by Deloitte, 75 per cent said that the information they found on social
channels influenced their product decisions. Without a social media channel – or one
that is suitably managed – you can potentially scare away your consumers.
 Online customer service: While face-to-face interactions may be disappearing,
customers still have plenty to say to businesses – and the fastest way for them to do this
is through an online customer service. Users don’t want to sit for hours on hold while
they call a hotline – instead they want to be able to quickly get the information they
need via a “Frequently Asked Questions” section of a website; or by speaking to a live
agent online. According to a Loyalty360 study, 75 per cent of mobile shoppers preferred
online chat to speaking with an agent.
 Loyalty programs: It seems obvious, but loyalty programs help to retain consumers.
Use digital platforms to ensure they are implemented properly – perhaps with email
coupons and loyalty points for certain actions. Be warned, make sure the terms and
conditions of the program are clear too.
  Gamification: Some of the most innovative customer retention programs take aspects
from video games to draw customers into repeat business and building a long last
relationship, this might take the form of accruing points to compete on leader boards as
an example.
 Prominent reviews: Don’t shy away from customer reviews – make them a clear
focus of your website. People want to “test” products before they buy and reading
online reviews will help to boost their confidence. If you encourage reviews it makes
consumers think you care about their opinion and you are confident in the results.
 Payment options: Another simple way to build consumer loyalty online is to offer
several payment options – with so many concerns about identity theft, there are many
customers who will only use ONE payment method and it’s vital that you offer it.

By putting customers at the forefront of your digital platform you will not only have a greater
chance of retaining their loyalty – but there is also a greater possibility that they will spread the
good word about your business too.

How to Measure Customer Loyalty

In a world where competition between businesses is increasing, customer loyalty is
important for staying relevant in your industry. A common question in the loyalty world is “how
do I measure customer loyalty?” Answers to this might seem straightforward, however in
reality there are many solutions. Even though there are a ton of ways you can track customer
loyalty, your ability to measure it is dependent on what you track.z

Many people think measuring loyalty is only useful or possible if you have a loyalty program.
While having a loyalty program does make it easier to measure, what if you want to assess if
you need a loyalty program before implementing one?

In order to help you at every stage in your customer loyalty journey, I’ve come up with a few
ways to measure customer loyalty – regardless of whether you have a program or not!

Customer Lifetime Value (CLV)

It’s not hard to see why customer lifetime value (CLV) is quickly becoming the king of metrics in
ecommerce. CLV is a great way to assess your store’s overall health and project future success.
Rather than looking at individual purchases, CLV measures the value each customer will bring to
your store over their entire life.
Customer lifetime value is a great measure of customer loyalty because it is impacted heavily
by how often a customer shops and how long they remain a customer. It will show you if your
customers are becoming more loyal over time. Calculating your CLV will give you a benchmark
to measure if your loyalty program will increase customer loyalty and engagement. If a
customer is purchasing often and for a long time, they can be classified as loyal!
Calculate your CLV the easy way today so that you can measure improvements in customer
retention and loyalty. The sooner you can get your hands on your CLV, the sooner you can find
ways to increase customer loyalty! For more ways to increase customer loyalty, check out “The
Complete Guide to Customer Retention Tools.”
Repeat Customer Rate
While CLV is a great way to measure customer loyalty improvement over time, your repeat
customer rate is a fantastic way to see a current snapshot. Your repeat customer rate is the
percentage of your customer base that has made a repeat purchase from you.

I realize that a repeat purchase is not the same as total customer loyalty but if you can get a
shopper to purchase three times, they are 54% more likely to make another purchase. After all,
it is much easier to create loyalty in a repeat customer!
Knowing your repeat purchase rate is super valuable because repeat customers are extremely
profitable. Having an idea of your RPR allows you to realize what makes certain customers
become repeat purchasers and apply that knowledge to future campaigns for new customers.
Net Promoter Score
A simple way to measure customer loyalty is with an NPS (net promoter score) survey. This
survey looks at how likely your customers are to recommend your business to a friend. Since a
loyal customer is more likely to refer you to their friends, this type of survey is a good indicator
of how loyal your customer base is.

An NPS survey will ask your customers how likely they are to recommend your brand to their
friends on a scale from 1-10. Anyone answering 9-10 are considered promoters and 7-8 passive.
Customers who indicate 6 and under are known as detractors.

Your NPS is the number of promoters minus the number of detractors. If you’re looking for
more information about how to calculate your NPS, NetPromoter.com has a number
of awesome resources.

How to Measure Customer Loyalty When you have

a Loyalty Program
The three metrics mentioned above will work regardless of whether you have a loyalty program
or not. However, if you do have a loyalty program, you can have even more fun with measuring
customer loyalty!
My personal favorite metric is the Redemption Rate.

Redemption Rate
When you have a loyalty program like those run by Sweet Tooth, you can use your redemption
rate to measure customer loyalty. Your redemption rate is the percentage of points that you
issue that are actually redeemed for rewards.

An effective loyalty program drives customer loyalty by establishing a strong relationship

between the positive emotions felt when receiving a reward and the points used to get that
reward. Therefore, a high redemption rate can reveal just how loyal your program members
are.

If members are earning points but never spending them they may not be classified as a loyal
customer. A redemption rate under 20% is usually an indicator that your loyalty program isn’t
performing how you would like.
Steps involved in customer loyalty
1. Select the right people.
In the book, From Good to Great, Jim Collins said, “People are not your most important asset,
the RIGHT people are.” Most businesses do a poor job of hiring people. They hire just anyone
and place them on the front line with customers. Spend more time recruiting and hiring the
right people with good personalities. Focus on those who are friendly and demonstrate an
interest and enthusiasm for the job. Consider using personality profiles as part of the hiring
process. These profiles help identify true personality characteristics of your applicants.

2. Sensationalize the experience for your customers.

Good service is not good enough. A Gallup survey showed a customer who is “emotionally
connected” to your place of business is likely to spend 46% more money than a customer who
is merely “satisfied” but not emotionally bonded.

3. Set performance standards.

Outline the behaviors of how employees should act, speak, and respond to customer needs and
requests. One of our clients developed a list of twenty customer service commandments that
outline actions he wanted his service people to demonstrate.

4. Sustain ongoing training and reinforcement.

Good customer service skills are not natural for most people. Effective customer service
training must be reinforced and taught on a recurring basis. For example, the Ritz-Carlton
hotels provide a thorough customer service training program for all of its employees during
their orientation. Then each supervisor conducts a daily “lineup” to review one of the
commandments with his employees ten minutes before each shift.

5. Specify incentives for good behavior.

Yes, employees want to be paid well, but they also want to be treated with respect and shown
appreciation. The front-line supervisor has the greatest impact on motivating and retaining
employees. Reward those who exceed the standards and provide development for those who
do not.

6. Survey your customers and reduce your defection rate.

On average, businesses lose 15-20 percent of their customers each year to their competition.
All businesses encounter this defection rate, but few do much about it. To improve retention,
one client sends out a customer service report card to its top customers every month. This
requires an evaluation based on four specific criteria. They tally the results and make sure
employees see the scores. This motivates the employees to do a better job.

7. Seek customer complaints with enthusiasm.

For every complaint there are at least 10 other customers that visited your business who have
the same criticism. A portion of those 10 people just took their business to your competitor.
Look at customer complaints as an opportunity for improvement.