It's a fact - companies with the most loyal customers (we call them Brand Advocates) are the most profitable by a wide margin. 

So the recent research on travel industry loyalty marketing programs conducted by Colloquy research spells bad news for larger hotel brands and good news for smaller luxury properties.

According to Colloquy, travel programs have seen a 31.2% decline in active participation since 2007!  So large hotel companies are scouring data bases in an effort to consolidate best customers and prospects in their programs.

The Small Luxury Hotel Advantage

As the research shows, these "loyalty programs" aren't loyalty programs at all.  They are points based programs that primarily reward frequent travelers and are better adept at reading behavioral patterns, but not necessarily creating real loyalty.  They focus on transactions while smaller hotels focus on the guest experience.

They are a far cry from the service and attention consumers can receive before, during and after a stay at a small luxury property.  While the hotel manages the actual stay experience it does need a well planned customer relationship management program (CRM) in place to manage the experience before and after the stay.

Instead of expensive points-based programs smaller hotels need to be focusing on surprise & delight - offering a guest an unexpected upgrade, late check out, special amenity on the fifth stay or personal invitation to a repeater's cocktail party.  A personal thank you letter or call to ensure the guest made it home safely while getting feedback on their stay are the personal touches guests see as genuine.

This genuine and personal touch from the GM and staff allows smaller properties to offer a truly unique personalized experience that builds loyalty.  And the hotel's CRM program should be designed to efficiently keep the memory of a great vacation alive for years if necessary.  It is the key to long-term profitability through multiple repeat visits and referrals to friends and relatives - a hotel's most effective marketing tool

The fact that transaction based loyalty programs are waning should be good news for progressive hospitality marketing professionals with a well thought out CRM strategy in place.

What do you think? Safe travels - Madigan Pratt.

|Madigan Pratt is Managing Director of Madigan Pratt & Associates, Inc., an innovative CRM company dedicated to acquiring and retaining profitable customers for luxury hotels. Prior to founding MP&A in New York two decades ago he held senior management positions overseeing marketing communications for several Fortune 500 companies.

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