It’s no wonder that customer loyalty is a primary goal of smart hospitality industry operators, consider the evidence: Acquiring a new customer is five to 25 times more expensive than retaining an existing one, according to the Harvard Business Review, while a study by Frederick Reichheld shows that a 5% increase in customer retention can increase business profits by 25%.
As a result, loyalty schemes proliferate. It’s estimated by industry consultancy, The Point of Loyalty and Directivity, that the average number of loyalty program memberships per Australian adult is four while those earning over $100,000 (the kind of customers everyone wants) have five or more memberships.
But do these programs work and has loyalty been devalued by its devolution into a tradeable commodity?
Loyalty is Big Business
The power of travel loyalty programs to surprise, delight and disappoint was brought into sharp focus when Marriott bought Starwood last year. The $US12.2 billion transaction created a hospitality behemoth with 29 brands across 6700 hotels in 130 countries. There was so much to discuss but all everyone wanted to talk about was their loyalty points. It’s human nature – what about me?
Read the full story here.