Hear that rumble? That’s the sound of hotel loyalty programs undergoing a seismic shift.
“Points are a thing of the past,” says Duetto’s Co-Founder and Chief Product Officer Marco Benvenuti as he kicked off Duetto’s latest webinar, The Future of Hotel Loyalty, earlier this month. “Fifty-seven billion Hilton Honors points were left on the table in 2015. That’s enough points to redeem 1.6 million room nights.”
Why is that all these points are being left on the table? According to Benvenuti, it’s because customers don’t care about points; they care more about price.
Todays’ travelers—especially millennials—are picky. They seek instant gratification and they aren’t loyal to any one brand if it means they have to count, accrue or keep track of points in order to be rewarded. This new crop of customers wants personalization. They want to be recognized for being individuals.@Marco_Benvenuti on #hotelloyalty: “Points are a thing of the past” Click To Tweet
So how can hotels do that? One way is by creating a Personalized Loyalty Program that offers customers a discount or a reinvestment based on their worth to the property.
Personalized means that all discounts shouldn’t be equal. And that’s where a lot of loyalty programs currently run into trouble.
“Many loyalty programs give members some kind of discount, but it’s always static and it never changes from (a percentage off) the BAR rate,” says Benvenuti.
Instead, hotels need to look at loyalty programs within the context of Open Pricing and make their rewards or discounts equally dynamic. In this model, loyalty members are given personalized rates and experiences based on what the hotel knows about that individual and his or her worth to the property.
Now, instead of a flat rate for bronze, silver or gold rewards members, hotels can offer a flexible, dynamic rate that is tailored to the individual and adjusted based on demand.
“With points-based programs, the hotel or brand decides what they’re going to ‘give’ the customer, whether it’s free parking, WiFi or a welcome amenity,” says Benvenuti. “In each case, it’s the hotel or brand dictating the reward. The choice is never in the hands of the consumer.”
Duetto’s Personalized Loyalty Pricing program turns that model on its head.
“The goal of a loyalty program should be to give instant gratification to the consumer with a personalized rate that is always an open, flexible discount,” says Benvenuti. “It starts by having a holistic view of all your customers, each of whom have value, then giving them loyalty rewards that matter to them.”
With Personalized Loyalty Pricing, the hotel’s most profitable guests are driven to book direct. This creates a connection between the customer and the hotel. And it helps the hotel to lower its customer acquisition costs in the long-term.
“Your own loyalty program is always going to generate better ROI and be a more efficient way to acquire and retain customers than by obtaining them through an OTA booking, a marketing program or with incentives to travel agents,” he says.
How A Personalized Loyalty Program Can Work for You
Talking about it is one thing, but actually achieving personalized rates is a whole different thing. So Lahini Arunachalam, Director of Product Management for Duetto, showed webinar attendees exactly how Duetto handles Personalized Loyalty Pricing.
“First, you have to value each reward member based on whatever metric you’d like to establish,” she says. Hotels typically weigh guest value by recency and frequency, but should also be monitoring and tracking guest spend on property.
From there, hotels create loyalty segments, then determine what percentage of reinvestment they want to give to each segment based on the customers’ worth. This percentage can (and should) vary by stay date.
“You can shrink the reinvestment on high demand or increase it in a lower demand period,” she says. “We give you all that flexibility so it’s not always a flat discount like so many loyalty programs out there today.”
To watch the app in action and get a better understanding of how Personalized Loyalty Pricing can impact your hotel, view the webinar here.
- Personalization is the Most Effective Loyalty Strategy
- How Can Hotel Loyalty Evolve Beyond Discounting?
- Cookie-Cutter Loyalty Betray Hotels’ Lack of Strategy
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