Do you remember the days when you walked into a coffee shop to get your morning delight, cappuccino, or a strong double-shot espresso to kick off your day? Then, mid-way of serving your drink, the barista asks if you happen to have a loyalty card. You then hand over a classic paper card to receive your bean stamp. How many of those got lost, and how many of those got forgotten to be used or stamped? There is no doubt that some are still using this old-fashioned method for loyalty acquisition and customer retention, but is it effective? Do customers get what they want, and what DO they want? Let’s look into the subject of customer loyalty and explore what it means in today’s fast-moving environment.
Understanding Loyalty
In simple words, loyalty is a continuous relationship between a company and a customer. It occurs when a customer willingly returns to a company for repeat business over competitors. Loyalty is usually a result of a previous pleasant experience. Customer perceived value, brand trust, customer satisfaction, repeat purchase behaviour, and commitment all contribute to a person’s level of attachment to a brand. Loyal customers often become superfans or ambassadors, spreading positive word-of-mouth recommendations and driving brand affinity.
Did you know that, on average, around 65% of revenue comes from repeat business from already existing clients?
The Role of Customer Loyalty in the Hospitality Industry
In the hospitality industry, word of mouth plays a significant role in acquiring new customers. A Nielsen survey revealed that when making a purchasing decision, 88% of people trusted recommendations from friends and family more than any other form of advertising. Brand loyalty can drive brand affinity through positive word-of-mouth recommendations. The UK loyalty market is also expected to grow by 10.2% annually, reaching $9.02 billion in 2024 and $12.67 billion by 2028 (Businesswire.com, 2023).
What Hotel Visitors Want
Extensive research conducted by Global Hotel Alliance (GHA) on ‘What travellers want most from loyalty programs‘ revealed interesting insights. The study analysed more than 4000 visitors from 94 markets. GHA includes 40 hotel brands (such as Kempinski, Anantara and Bristoria hotels), which, in summary, include over 800 hotels in over 100 countries. Among the respondents, 55% expressed a desire for access to perks and benefits, followed by relevant discounts (45%), feeling valued (44%), and good value for money (37%). Preferences varied depending on the region and culture, with quality being most important in the UK and Germany and good service and value for money ranking highest in Thailand and India.
A study by Auriemma Group on US hotel visitors found that desired benefits include room upgrades, complimentary food and beverage, occasional free hotel stays, flexible check-in/check-out options, and free Wi-Fi. Notably, 49% of respondents preferred experience-based benefits over spend-based benefits.
A striking 61% of respondents indicate that their loyalty is affected when a company’s actions and ethics align with their own values.
The Importance of Service Quality
In today’s competitive business landscape, hotels must prioritise the quality of service provided to guests. Exceptional service not only drives customer satisfaction but also maintains a positive and sustainable corporate reputation. According to Richard L. Oliver’s expectancy-disconfirmation theory, meeting or exceeding customer expectations leads to satisfaction, while falling short of expectations results in dissatisfaction. Providing satisfactory service and meeting customers’ needs is vital for building loyalty.
When designing their loyalty strategy, hotels should consider the whole experience they deliver and aim to elevate it in order to increase customer satisfaction and drive loyalty. Consumer satisfaction has three levels: pleased, contented, and complacent. Customer trust is strongly linked to loyalty and satisfaction and can be improved through honesty, integrity, commitment, and principle. Customer loyalty is formed by consistently sustaining client happiness and satisfaction, shown by faithfulness, continuousness, solidarity, repetition, and redone (Balushi and Musa, 2023).
It is important to note that hospitality businesses cannot thrive just with loyalty programmes; their core elements are service and experience. Loyalty must be earned and cannot be bought. Customers expect the service to be fast and any complaints to be dealt with in a timely manner. 90% of customers want an immediate response to customer service questions, with 60% expecting a response within 10 minutes. (HubSpot Research)
Types of Loyalty Schemes
According to Hotelmanagement.net, a recent article, ‘Guest loyalty programs provide, but they cost’, shows that hotel loyalty programs help decrease custom acquisition costs, increase direct customer engagement, and decrease room occupancy shortfalls during off-peak or economic challenges. The same research highlights that loyalty membership sign-ups for significant brands have grown by a staggering 35%, meaning that hoteliers now have a vast database that they can use to encourage repeat visits.
Hotel businesses can implement loyalty schemes to promote revenue growth and improve loyalty among repeat visitors. Some common types of loyalty schemes include (Businesswire.com, 2023):
For hoteliers to understand which one is right for them, they need to know their customers inside-out. It is essential to ask for customer feedback and track sentiment to find correlations in the opinions and then to target with personalised marketing campaigns. A popular method in loyalty schemes is the points-based system. Global Hotels Alliance research has shown that guests prefer a points-based system where they can see a direct monetary value to the benefit and the points they can exchange. GHA report shows that 73 % of guests use their points for their holiday stays. Another report, ‘The state of Loyalty 2023′ by iSeatz, states that over recent years, there has been a trend in an increase in guests earning and paying with loyalty points. This could be related to the rising inflation and interest rates; therefore, visitors sign up for loyalty programs in search of discounts, deals and ways to save money. Guests value their money more than they did before the pandemic. Therefore, their expectations and needs have grown.
Personalisation and Innovation
We previously predicted in our 2024 Hotel Trends: Embracing the Future of the Hospitality Industry blog that personalisation will be one of the trending topics this year and onwards. It is anticipated that businesses, including hotels, will be investing in loyalty programs as it is trendy for younger generations and offer personalised offers (Businesswire. com,2023). The same as in advertising, people want to have personalised, tailored offers, otherwise they lose interest. Have you ever been frustrated by constantly receiving communications from a brand that you bought from, but the majority of offers are not for you? When did you stop viewing their comms? The more customers use the loyalty offers, the more personalised they will get. This will drive innovation and growth. Another trend is on the rise – the upselling and unbundling of ancillaries (iSeatz, 2023). Unset options support personalisation and preferences, such as room floor, dining or spa procedure choices or even activities. Artificial Intelligence can assist in analysing returning guests’ patterns and offering personalised offers based on similar behaviours. For-Sight’s CRM provides analytics in returning guests’ patterns, allowing you to tailor personalised offers based on similar behaviours. Additionally, the platform offers the ability to segment your guests and create targeted communications, which further enhances your personalisation approach. To achieve precision and save time, you can consider leveraging Artificial Intelligence. Within For-Sight Marketing Hub, hoteliers can access Winston AI for workload reduction through smart copy and cross-channel support.
You will need to collect relevant guest information to send communications across multiple channels—from emails to WhatsApp messages or push notifications. These points of contact will serve as reminders to your guests about your brand’s existence, reaching them through even more channels. Research shows that individuals must have at least ten touchpoints with a business before deciding to engage in a transaction. Balancing convenience and technology with the preference for in-person communication is crucial, particularly when considering different age groups. We need to remember that younger generations expect convenience, speed, and accuracy with the help of Technology; however, we need to be mindful of older generations who still prefer in-person communication.
For-Sight has recently partnered up with Inspire Loyalty, which is an innovative loyalty programme designed specifically for hospitality. They provide easy-to-apply branded loyalty solutions to collect powerful data, enhance customer experiences, increase visitor numbers and repeat direct business. Encourage returns through a branded loyalty website featuring exclusive member offers. A points-based programme to reward, engage and recognise your guests. When integrated with For-Sight, hoteliers can leverage segmentation to create targeted multi-channel communications for members and automate transactional messages.
Effective Marketing Communications
What is interesting is that the GHA report uncovers that the majority (70%) of the respondents prefer communication via e-mail; more importantly, they want to receive information on personalised offers and discounts, their loyalty account balance and how they can spend it as well as new hotel additions to the programme. The respondents are not interested in venue events, so this would not be their main reason for converting. For-Sight offers advanced messaging features that can help you create on-brand personalised email communication with customers. By using our platform, you can gather in-depth data about your audience, automate targeted messaging, save time on marketing activities, and build brand loyalty. Improve your customer journey and service satisfaction with For-Sight. If you are no expert in email marketing campaigns – don’t worry – we are. Get our expert team to build them for you. Enquire today!
Did you know that its four to five times more expensive to obtain new customers than maintaining brand-loyal customers?
The Role of Sustainability
Sustainability practices play a crucial role in attracting and retaining loyal customers. GHA’s “Green Collection” hotels, known for implementing sustainable practices, have seen growth, generating 49% of revenue. Building a positive brand reputation and loyalty is a top priority for business leaders in today’s economic environment. Specifically the China market is seeking good sustainability practices as they find it important. Customers also seek transparency and safety. They want to make sure that the business will keep their data protected and that there are no hidden clauses. Transparency and safety build trust.
Conclusion
In conclusion, customer loyalty is a crucial driver of business success, especially in industries like hospitality. By understanding guest needs, implementing personalised loyalty schemes, and delivering exceptional service, hospitality businesses can foster long-term relationships and drive revenue growth. By implementing technology and reporting, businesses will be able to dig deeper to understand their customers and create strategies that will boost revenue growth and loyalty. Unlock the full potential of your hotel business with For-Sight CRM and Marketing solutions. Our cutting-edge technology empowers you to gain valuable insights into your guests. This allows you to tailor your services, boost customer satisfaction and drive revenue growth by bringing all of your data streams under one roof. Don’t miss out on this opportunity to take your hotel to the next level.
Other references
Hussain, M. (2021). Mediating Role of Customer Satisfaction in Determining Service Quality and Moderating Role of Switching Barriers on Customer Loyalty (Doctoral dissertation, CAPITAL UNIVERSITY).
Huang, M. H., & Trusov, M. (2020). Customer satisfaction underappreciation: The relation of customer satisfaction to CEO compensation. International Journal of Research in Marketing, 37(1), 129-150. https://doi.org/10.1016/j.ijresmar.2019.06.001
Al Balushi, A.A. and Musa, H. (2023) ‘Analysing the impact factors of customer loyalty among small and medium-sized hotels (SMSHS) in Dubai’, International Journal of Professional Business Review, 8(5). doi:10.26668/businessreview/2023.v8i5.1816.
