What's the ROI of a guest feedback program? A lot of people in the hospitality business would take it on faith alone that feedback programs deliver a solid return. But for the hard-nosed, dollars-and-cents cynics out there, we have an answer. Actually, we have answers for three hospitality segments.
Of course there are many valuable benefits from a well-run guest feedback program. For our purposes here we are calculating value based narrowly on guest loyalty. So the results, we think, are very conservative. We looked at every Market Metrix customer program over the last 10 years and measured guest loyalty at the start of the program, and then again at the end of year one and year two. These cases include hundreds of programs in every segment of the hospitality industry, every region of the world, and all kinds of economic conditions. We looked at both the average case and the top quartile.
Across these hundreds of programs, the average guest loyalty score as measured by Net Promoter Score (NPS) went up significantly. The top 25% went up a lot. Based on these results, an investment in a guest feedback program is likely one of the best-performing investments you can make.
Our guest value model shows how this works. It considers the number of visits, length of stay, room rate, non-room spend, repeat visits and referrals that come from positive experiences. Guest values are shown below for prototypical hospitality companies competing in the economy, luxury and casino segments.
Now the fun part. By looking at the number of new guests booking from referrals, and multiplying by annual guest value, we can determine how much an increase in Net Promoter Score is worth. By correlating increases in reported referrals with increase in NPS, we have come up with figures for three segments, and calculated hypothetical ROI using average industry pricing.
The average guest satisfaction program pays out pretty handsomely. For an economy hotel, a guest satisfaction program pays out more than 2x over the first two years. Top-performing programs pay out over 20x. And for the average casino, return on investment is nearly 32x. That's like hitting the jackpot!