Ms. Ferguson

Guest Service / Customer Experience Mgmt

How Hotel Brands Can Activate Loyalty Data to Create Great Experiences

The Persistence of Memory

By Allison Ferguson, Senior Strategist, Merkle Inc.

When I travel for business, I often return to the same city frequently - and when I do, I usually check into my favorite hotel. No matter how many times I return to that hotel, however, the front desk agents always treat me as if it's my first stay. They acknowledge my platinum status, certainly, and welcome me by name. After that, however, the desk agent will ask for my photo ID and credit card - just as they did the last ten times I checked into the same hotel.

This phenomenon may bother me more than the average traveler because I'm a loyalty marketing consultant, and I know that somewhere behind the scenes, there's a hotel property management system containing a data set rich with insight about my travel habits, transactional history, frequency of stay, preferred amenities, and other useful information about me. The problem: The hotel isn't using that data.

Imagine if, instead of providing the standard arrival greeting, the agent greeted me by saying, "Welcome back, Mrs. Ferguson. We trust you've been well since your last stay with us three weeks ago. I see by your file that you prefer room 1116 - would you like to book it again? That's great. We've already entered your usual 3pm checkout into the system. Just so you know, the workout facility is open 24-7 with keycard access. And as you've dined in our restaurant during the last two stays, we've rewarded you with a complimentary appetizer or dessert during your next dining visit. Please enjoy your stay!"

Instead of treating me as if they've never met me before, the hotel team would demonstrate memory of my relationship with them. Such a demonstration would go a long way toward locking in my loyalty.

Loyalty Program Value Lies in the Data

The real value of loyalty programs, we know, has always been in the data they generate. A "persistent ID" enables the tracking of member behavior, regardless of payment type, channel, or booking method. With this connected visibility, hoteliers can, in theory, develop a full view of their customer relationships and assess the value of individual members to the brand. In exchange for this access to their behavior, loyalty program members receive a suite of program incentives, such as rewards, upgrades, and offers, as illustrated in the Illustration 1.

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Illustration 1: The Value Exchange Inherent in Loyalty Programs

Here's the problem: While there's no question that hotels are focused on data, most have yet to demonstrate the ability to leverage that data on a personal level. Hotel companies often do mine the wealth of "big data" in their organizations to optimize pricing, forecast demand, or determine where to locate the next hotel. What often doesn't happen: the deployment of "little data" to build customer relationships through touchpoints before, during, and after the hotel stay.

In the age of online travel agents (OTAs) and Airbnb, with consumers enjoying more choice despite industry consolidation, hotel companies must capture and realize the power of customer-centric data to change the conversation. The most effective way to do so: demonstrate "memory" of your customer relationships by using customer data to demonstrate:

  • Personalization - Deliver better offers and promotions to me and personalize my experience
  • Empathy - Anticipate what I might need when I'm traveling
  • Memorable moments - Create moments that build anticipation for future stays

Without this "persistence of memory" in the value exchange, it's difficult for a brand to demonstrate commitment to its best customers. And without that demonstration of commitment, it's difficult to build sustainable loyalty.

Big Data is a Big Priority for Hotel Companies

Hotel brands have already realized the importance of data to their strategic priorities. At a recent travel conference, Airbnb executive Chip Conley said that for hotels, "data science would be the new revenue management." To stay competitive, in other words, hotels will need to develop data analytics capabilities that rival or surpass their revenue management capabilities. Some hotel brands are getting there. In a recent Forbes article, contributor Bernard Marr discusses how hotel brands large and small are investing in analytic horsepower to leverage data from weather patterns, differences in customer value, and social media sentiment. Starwood, for example, analyzes data from local and worldwide economic factors, events, and weather reports to optimize room pricing. This strategy reportedly led to a nearly 5 percent increase in its revenue-per-room (RevPAR) in key travel destinations.

For goals such as making better organizational decisions, the virtues of a data-driven marketing and customer experience strategy are clear. Where these big-data efforts often fall short is in the delivery of individual moments that collectively demonstrate memory of your best customers. The good news: Hotel loyalty programs provide an ideal home for these moments that matter, as well as the "little data" required to create them. By engaging customer-centric data - who your customers are, what they like, and what they do - hotel brands can grow profits through data, one relationship at a time.

Members want personalization, empathy, and great memories

Merkle Loyalty recently conducted a survey of 1,000 loyalty program members across North America, Europe, and Asia, asking a range of questions about their motivation for joining and engaging with a loyalty program, as well as the factors inside and outside the program that drive their loyalty. Among the top factors members cite as driving their brand loyalty are:

  1. The brand offers relevant rewards and offers (personalization)
  2. The brand understands me (empathy)
  3. The brand creates great memories for me (memorable moments)

Customer-centric data analysis and insight can fulfill these needs for members by demonstrating relationship "memory" through personalization, showing empathy, and creating memorable moments. Together, these factors comprise the guest experience - and the ultimate value of customer data lies in its ability to improve that experience. The brands that most successfully engage in these efforts will win.

A recent Retail Touch Points profile of athletic apparel manufacturer Fabletics, for example, illustrates the potential of customer-centric data to deliver on this promise - in this case, by leveraging the data from the company's 1.2 million-member VIP program to demonstrate:

Fabletics sends a personalized "monthly boutique" email to each member, using a continuously refined algorithm to build offer selection(Personalization) To improve customer service, the company provides call center agents with complete customer data, including items currently in a customer's shopping cart, those she's looked at on the website, and her purchase history(Empathy). The brand offers members community-based perks, such as digital workout classes, based on preferences (Memorable Moments).

To build sustainable, profitable relationships with travelers, hotel brands need to develop and deliver similar member-centric data and analytic capabilities that manifest in the end-to-end travel experience. Doing so requires collecting, synthesizing, and deploying distinct types of member data as depicted in Illustration 2.

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Illustration 2: Collecting and Using Loyalty Data

The combination of these data categories creates a powerful best-customer database that can be mined for actionable insights that can transform member relationships. Here's a closer look at how to deliver on these three core components of relationship memory:

Personalization - Personalization is an over-used marketing term and an under-delivered experience. For years now, for example, I've been traveling for both business and pleasure as a platinum member of a large hotel loyalty program - and it still surprises me that I never receive an email informing me of new hotels or destinations that suit my tastes, with an incentive to book my next "bleisure" adventure. Governance aside, a hotel brand's properties are the experience; as a program member, I want to know which ones best fit my taste.

One glimpse of the future of personalization may be found in the Marriott Mobile app. Marriott Mobile, should it fulfil the promises set out by Marriott, will combine sophisticated data use with a personalized concierge-like mobile experience for rewards members. Guests can use the app to chat directly with hotel staff before, during, and after their stays for special requests such as adjoining rooms, cots, extra pillows, and the like; an upcoming feature called mPlaces will use data to deliver personalized offers based on preferences, past behaviors, and geo-locating beacon technology now installed at over 500 Marriott properties. If it fulfills this potential, Marriott Mobile will successfully leverage little data to create that sense of relationship memory for their guests.

Empathy - To demonstrate empathy, hotels should leverage customer-centric data to anticipate guest needs and demonstrate a commitment to meeting them - in many cases, even before the customer asks for them. In some cases, you might anticipate these needs through self-serve tools, such as Hilton Honors' tool that allows members to choose their room the way airlines allow them to choose their seat. You can then capture the resulting data points to further refine room recommendations; for example, if that data tells you that I prefer high-floor rooms, then the booking engine might offer me those floors when staying at a new property.

In another example, Denihan Hospitality analyzes customer feedback and transactional data to change hotel room composition to better cater to travelers based on their trip purpose and party size. The chain also uses data to help frontline hotel staff anticipate what amenities guests prefer, including restaurant meals, concierge services, or local excursions. That's empathy, brilliantly illustrated.

Memorable Moments - Sometimes it's not how sophisticated your data use is, but how simple. A single piece of past stay history, for example, can create a simple but memorable check-in experience. One example: a simple "yes" or "no" flag on the PMS indicating a past stay at a hotel. If "no," then I get the standard welcome with the request for ID and credit card. If "yes," then I get a "Welcome back" greeting, and perhaps a surprise-and-delight reward. The result: a small but memorable moment.

As another example, Wyndham has built memorable moments into their program with PLUS Awards: curated by a Wyndham Rewards' "Adventure Agent." These awards range from $5 per award night when redeemed by Blue tier members all the way up to free experiences valued at up to $150 per award night for Diamond members. These offers will create memorable moments that build relationship equity.

The key to success in building program memory: Engage data to provide personalized, relevant, and differentiating experiences at every stage of the travel cycle from consideration and booking, through the stay, and on to the post-travel experience. Leverage personalization to deliver better marketing through the members' preferred channels. The result: sustainable, profitable, and loyal customer relationships.

Allison Ferguson is a Senior Strategist and thought leader with 500friends. There, she works with clients on loyalty program design and organizational transformation across industry, business model and level of market maturity. Ms. has 20 years of loyalty experience including 10 years of brand loyalty experience with IHG and Leading Hotels of the World, and 10 in loyalty consulting, most recently with Accenture. She is deeply passionate about facilitating and shaping the best ideas from her client organizations in order to create a genuine value exchange with customers. Ms. Ferguson considers herself a value creator and problem solver and takes great pride in the many brands she has served. Ms. Ferguson can be contacted at 443-542-4200 or acripps@merkleinc.com Please visit http://www.merkleinc.com for more information. Extended Bio...

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