Loyalty programmes remain relevant for consumers but to extract the full value of the loyalist customers, the travel industry needs to work more closely and share data, according to Booking.com VP Global Partner Services Fiona McDonnell.
As the accommodation booking app looks to expand its services and become more granular about how it rewards loyalty and repeat custom, McDonnell believes that a more granular and joined up approach is required.
Currently Booking.com’s loyalty categories are relatively basic, with Genius Level 1 for anyone who signs up and therefore identifies themselves, then Genius levels 2 and 3 reflecting the number of reservations made during a year.
McDonnell says the company is working to segment different offerings and to bring higher value travellers in and will make its loyalty programme more personal and individual as it grows in sophistication.
However, she points out that there is a disconnect currently between the loyalty data held by Booking.com and with the partner hotels.
“Rather than fighting over the pie, we should create a bigger pie,” she insists. “The sum of the parts is much larger when you tackle customer service from several angles. For example, we know who our Genius customers are but when you arrive at the front desk and it is a blank start for the check-in staff. So there is an opportunity to come back and work together. What that looks like I don’t know, but for example it might be free room upgrades.”
She says that this will take a new approach for the various elements of the industry – “If we are going to do that then need to grow collaboratively, maybe take a trial to see how we share the data” – but warns that there is a danger that assumptions about loyalty overlaps may well be wrong.
Incremental gains through cooperation
“There is this idea of ‘incrementality’, bringing incremental business to the chain,” she says. “We start off by thinking that we have a super-high overlap of high loyalty customers between our app and the hotel but what you often find is that in reality there is a very small overlap and generally little crossover. So we are starting with a false assumption about crossover.”
She points out that Genius customers typically spend 15 per cent more than other customers and typically book twice as far in advance.
BWH Hotel Group Italia CEO Sara Digiesi adds that travel operators and hotels need a more nuanced view of the customer and to understand the “rational and irrational” reasons about the choice of using a brand. These can be very different depending on the path the customer takes and can be linked to saving time, collection, upgrades and additional benefits during the stay.
“We have to take care of a customer right through the journey,” she says. “Points and loyalty cards are still relevant. It also depends on what type of customers the hotel has. So for business, the customers are not paying so they are no so interested in the price but perhaps more the experience. Therefore, we see points still as providing value and the way customers are using them often stays within the hotel.”
Digiesi also points out that, just as Booking.com cannot see its job as complete until the customer has concluded their stay, so hotel groups need to consider the full experience, not just while someone is staying at a property.
She adds that social media provides a chance to communicate personally and interact with customers.
“It is also an exceptional tool to collect information about our customers. It complicates our lives because managing social media is not like managing a campaign but we immediately receive a reaction and feedback,” she says.
And she adds that although there is a cost in terms of providing loyalty rewards, it is much better value compared with the cost of acquisition of new customers.
“Each property needs a business mix, considering the loyal customer but always needing to look at attracting new customers,” she says. “Loyalty can be rewarded through the final consumer but can also be the through the business and the way we make the corporate client loyal is to make the service easier, to make reporting expenses easier, it is a matter of building the entire platform of a relationship.”
Personalised loyalty initiatives
McDonnell says that although the methods of delivering rewards are growing more sophisticated and personal, loyalty remains essentially about reward and recognition but says it is also about understanding the customer and that even those travelling and booking rooms most regularly are still becoming more value conscious.
“They [loyalty points] are a great way to work out how you better delight people. It’s about using data through that. For example, although our Genius programme customers spend more, respondents to our recent research showed that customers (63%) are considering how they get more bang for the buck and considering points as a way of getting more out of it,” she says.
Both McDonnell and Digiesi also feel that loyalty and sustainability and ESG could be more closely linked, although Digiesi points out that good intentions and sustainable actions are not yet fully aligned in terms of the customer.
She says that in the company’s efforts to continue to personalise their loyalty offers they have tried to give the choice to the customer in terms of taking points for rewards or donating them to environmental initiatives.
“We allow the customer for example to use their points for selected charity or community projects because we need a stronger link between loyalty and ESG,” she says. “I see at the moment that our customers are not that generous, and only about 10% donate them to other causes. However, when it comes to renouncing room cleaning for additional points, 40% choose this option, especially where their stays are short.”So clearly customers can be incentivised with offers that are good for them, while also benefitting business costs and the environment.
“We know [from research] that over 40% of our customers would look at sustainability and their points,” says McDonnell. “Again it’s about understanding the customer motivation. We need to spot the one who wants the room upgrade and the one who wants access to the spa.”
All those quoted in the article appeared on stage at the International Hospitality Investment Forum held in Berlin between May 15 and 17, in a session called - What’s in It for Me? Re Evaluating Distribution and Loyalty Programmes