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The Disruptors: Points-based loyalty programs miss the point


By Guest Contributor on 4/5/2016

I’ve been writing in this space for a year saying that hotels should refocus their loyalty programs to provide more value for the guest. Most importantly, that value shouldn’t merely be in the form of points to be redeemed later, but as an exclusive offer a person can only get by booking direct through the loyalty club.

Hilton Worldwide recently proved my point about 57 billion times. That jaw-dropping figure is the number of HHonors points that went unearned in 2015 because guests chose not to book direct but rather through a third party like an OTA, executives recently said.

Fortunately for hoteliers, the industry’s technology vendors have begun to develop PMS, CRM and RMS platforms that are up to the task of enabling personalized pricing. If a hotel’s entire tech stack is integrated, customer worth data — based on the guest’s visit frequency or on-property spending — from the CRM system can flow to the RMS, which can determine the right unique discount to offer an individual loyalty club member.

This isn’t just some arbitrary discount for the whole club; it’s an exclusive offer based on a reinvestment of that person’s contribution to the hotel’s bottom line. Even if you can’t invest in such sophisticated systems yet, you should give the reinvestment strategy serious thought as the future of your loyalty program. Start by refining the way you quantify your loyal guests’ spending behaviors in your CRM and by thinking of how to reward them and market to them.

When guests see this value proposition created just for them at the point of booking, based on their loyalty to one hotel, the instant gratification is more appealing than stockpiling thousands of points ever would be. The upshot for your hotel is retaining your most loyal guests and more direct bookings.

 


Contributed by Patrick Bosworth, DUETTO, San Francisco


 
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