Loyalty Matters
Oct 03, 12 | 12:07 am
By Clinton Farley
A number of years ago, I recall my father telling me about an experience he had when the local supermarket, part of a large New Zealand chain commenced a loyalty programme, around the time loyalty programmes first came into the New Zealand market. He had finished the weekly shop, arrived at the checkout counter; all groceries bagged and was asked if he had a loyalty card. He queried why he needed a loyalty card and was informed that if he was part of the loyalty programme he would receive a discount on some of the goods purchased. He ended up leaving the groceries at the counter, walking out of the supermarket in disgust, adamant that all customers should pay the same price and concerned that supermarkets were beginning to monitor his consumer purchasing patterns.
These days we are used to such programmes, they have become a part of everyday life from coffee shops to airline miles and hotel loyalty memberships... to name a few.
Firstly, what is loyalty?
Simply put, loyalty is when one strengthens a relationship, it is a customer's commitment to do business with a particular organisation, purchasing goods and services repeatedly. Loyal customers generally have a psychological and or an emotional bond to the good or service being purchased. Loyalty is present in all areas of life. Whether it being loyal to the place we purchase our morning coffee, the suppliers we use in our daily job, the gas station we fill up at, the supermarket we shop at or the places we visit and stay on holiday.
In a business, loyalty is about building a strong relationship with customers to encourage repeat and loyal business. In a hotel, loyalty is about ensuring a large percentage of guests leave the hotel even more engaged to return on future visits, telling friends and family of their great experience.
It costs 5 times more to acquire a new customer than retain one
Why is loyalty important in hospitality?
Hospitality is a mature industry with a continual increase in competition
Focus on growing customers/new guests - market share versus share of customer
Maintaining competitive advantage - price, service quality, loyal relationships
90% of customers who LOVE a company will repeat but only 30% of customers who LIKE a company will repeat (Opinion Research Corp.)
Many businesses the world over now offer loyalty programmes of some sort. International Hotels commenced introducing loyalty programmes in the late 1980's.
Hotels offer loyalty programmes to further engage with their guests, understand their needs and preferences and to recognise and reward repeat and loyal patronage. Some programmes simply recognise and reward number of guest nights and others offer a tiered status programme associated to room nights and total spend, offering additional benefits according to how loyal guests have been.
But is loyalty only created by being a member and holding a flash membership card? No. Loyalty has always existed; it is programmed into our make-up and can simply be gained by delivering the best of the best in hospitable standards, it is a psychological and or an emotional bond. Loyalty links very closely with my previous article on what makes good hospitality. Good hospitality creates guest experiences that are met or exceeded and results in increased loyalty. Having said this, registered loyalty programmes do allow a hotel to recognise more accurately number of guest stays, preferences and easily communicate with loyalty members on a regular basis.
Loyal Guests:
Come back frequently
Spend more on accommodation, restaurants, bars, outlets
Recommend the hotel to friends and family
Offer valuable suggestions and feedback - they want you to succeed and offer the quality experience they are used to
Get to know the team (staff) and feel comfortable returning
Trust the hotel service, accommodation, facilities and offering
Resist changing despite competitors' persuasion (brand loyal)
Are willing to forgive mistakes
Approximately 20-40% of customers bring 80% of your profits
So in short, loyalty has always existed. It is created by exceptional service and product offering, a loyalty programme assists one to deliver on that. Creating, fostering and managing loyal guests is one of the best investments any hotel can make.
Clear strategy, Segment focus, Adequate investment, Consistent execution, Continuous enhancement equals Success in gaining loyalty.
The key to making the most of a loyalty programme and gaining greatest benefit is being loyal to that company whenever possible.
About the Author
Clinton Farley runs a multi-award winning 5 star hotel in regional New Zealand and has over 15-years industry experience. Most recently named a finalist for the New Zealand Tourism Awards, PATA Young tourism Entrepreneur of the year 2012.
Source: Clinton Farley (http://www.clintonfarley.com)
