The Search for the Loyal Customer

In the world of consumer products, the concept of “loyalty” has never been more important.  From the inception of airline “frequent flyer” programs in the early 1970’s to today’s rewards programs for almost any product imaginable, the “loyalty” of customers towards products has never been more aggressively sought-after.  Behind the scenes in the development of loyalty and rewards programs are countless individuals spending countless dollars on the research & development of such programs, all with the goal of securing greater market share and therefore greater performance.

When you dig below the surface, however, it becomes clear that one consumer’s definition of “loyalty” may not be the same as another consumer’s definition.  Recent data suggests  that loyalty must be looked at differently with different consumers.  For example, accepting the definition of ‘affluent’ as household income greater than $150,000 annually, the article suggests that only 50% of affluent travelers advocate for a particular hotel brand. In other words, for a customer base (“affluent”) that is so important to the hotel industry, especially at the upscale, upper upscale, and luxury levels, fully one of every two customers are not primarily bound to a specific hotel brand. 

This does not mean that these “affluent” customers are not loyal, nor does it mean that they do not respond to loyalty programs.  What it does suggest is that this customer base is looking for more from hotel brands than what existing loyalty programs offer.  So, whether your property is part of a national or global brand or independent, the most important question becomes “what do I need to be doing to secure the loyalty of my guests?”

Clearly, with one of two “affluent” customers not advocating for a particular hotel brand, one can conclude that one of two “affluent” customers does advocate.  So, we must recognize the fact that where branded loyalty programs are available to our hotels, we need to continue to maximize their impact.  We must always use every brand resource available to help us to improve performance.  The key here is that the remaining 50% of these “affluent” customers, those who don’t necessarily respond to the brand’s program, must still be the focus of our efforts to secure more of their commitment. 

Long before the launch of United’s first frequent flyer program in 1972, the loyalty of hotel customers mattered to hotel owners, brands, and managers.  Back then, however, we didn’t necessarily refer to returning guests as “loyal,” we referred to them as “satisfied” or perhaps “committed.”  This customer “satisfaction” or “commitment” didn’t happen as a response to the awarding of points or merchandise, it happened as a response to far more basic principles of our business; namely, good service, good physical products, good food, and sincere hospitality. 

Funny, isn’t it, that each of these principles are also talked about by us in today’s hotel industry, yet we often seem to have far more difficulty executing against these principles than we do against the awarding of “X” number of points based on “X” dollars spent on the guest folio?

Today, the distinction between hotel brands is more blurred than it has ever been, so our ability to latch on to the loyalty of our guests is more difficult than it has ever been.  Despite this and the fact that our industry has changed so much over the years, the demands of our customers have remained remarkably consistent.  If we can consistently meet the expectations of our guests when it comes to fundamentals such as cleanliness, hospitality, service and overall quality, it is completely realistic to think that we can steal some of that other 50% of the customers who are not bound to a particular brand.  The question really is, are we up to this challenge?