In the first of a three-part series on the key factors that comprise loyalty in the UK hotel sector,Hotel Industry Magazine invites Iain Webster, Senior loyalty consultant at ICLP, to explain the role of marketing in loyalty.
Successful loyalty initiatives require balanced input and understanding from three disciplines in the organisation:
Marketing
Finance
Technology
The purpose of these three is to support the base of profitable customers. As with a three-legged stool, if any one of these pillars is out of kilter, or even missing entirely, the stool is not stable, effective or useful. A successful loyalty programme must therefore include a team of senior people from these three functional departments, who are committed to collaborating openly with each other to achieve the common business goal.
Many organisations make the mistake of placing their core focus on the choice of a loyalty technology platform without first identifying the core profitable customers and defining a proposition that taps into their needs. This approach runs the risk of alienating the most valuable customer altogether, it’s like fitting the words into a crossword without reading the clues first.
The marketing team must understand financial information and appreciate where the business makes the most profit. From there, they must use all means available, including transactional data analysis, customer research and social media feedback to build a deep understanding of the characteristics, behaviour and needs of this most valuable segment.
It is the responsibility of marketing to ensure the customer loyalty value proposition is attractive, valued and meets the needs of this core customer segment. With the maturity and sophistication involved in many loyalty initiatives today, there are predominantly two key principles that often need to be reconsidered to drive greater success:
Simplicity: too many travel loyalty programmes have become extremely complex, resulting in a need for continual evaluation to determine how well customers understand the programme and have the ability to extract value from their loyalty membership. The last thing a marketer wants to hear is members declaring that they have accumulated lots of points but are unsure what they are worth.
Delivering the promise: many restrictions, whether availability, taxes or fees, have been applied to the original loyalty proposition of free flights or free nights. If the promise is a free room, the customer must perceive that these are generally available without having to jump through too many hoops – or again, brands will run the risk of the value not being realised by the member.
All of this means loyalty marketers must be numerate and analytically curious and not just creative. It is no longer sufficient for the marketing department to just produce attractive communications and promotions with consistent branding that look appealing.
Marketing must lead the definition of the business requirements for the loyalty systems infrastructure by communicating to the technology team exactly what needs to be achieved at each customer touch point, in order to deliver promised benefits and services.
They must also determine the tracking requirements associated with the loyalty currency. It is vital that the technology infrastructure provides robust tracking of every single point from accrual through to redemption or expiry to be able to evaluate the success and commercial impact of the initiative (as we will see in the next article on Finance).
Additionally, the marketing department must support the evaluation of the earning and redemption potential of the programme and whether to remain focused only on core business or extending this into areas which could be regarded as non-core. Technology and platforms are clearly a consideration and a joined up approach needs to be agreed.
Many hotels still only offer their own inventory within their loyalty programmes, but all programmes can be enhanced by offering wider lifestyle earning and redemption opportunities that are appropriate to customer needs beyond the actual guest experience.
Source: http://www.hotel-industry.co.uk
HT Editor
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