The perfect pair for long-term value
Chapter 2
The marriage of loyalty & advocacy
A matchmaker’s dream—the perfect pair for long-term value
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Combining advocacy and loyalty
A practical example
In our last chapter, we revisited the origins of hospitality loyalty programs. We moved beyond the broad definitions of loyalty and advocacy to understand each at a finer level.
In chapter 2, we’ll examine a practical example of how advocacy can complement a loyalty program using a case study from our own Advocology Archives™.
A case for loyalty and advocacy
In this example we have a resort property in a theme park destination that’s fiercely competitive. Here, if you’re not within the boundaries of the theme park you may already have a strike against you in terms of location. To further complicate the matter, hotels here compete quite heavily on price. Theme parks are getting the lion’s share of the guest’s wallet and, as a result, accommodations providers suffer.
(While not exactly the same competitive environment most hotels find themselves in, a similar story plays out in many markets across the world.)
To maintain a competitive edge, this hotel has partnered with a third-party loyalty program provider. This differentiates their hotel, highlighting their unique appeal in a commoditized market.
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Different markets compete for guests' wallets in various ways.
Advocacy—the fuel for member growth
A critical ingredient for the health of any loyalty program is member growth.
As a program grows, pathways for new member benefits are opened, and you expand the opportunity for word-of-mouth growth.
Member growth also brings us to our first key intersection of loyalty and advocacy: member/guest self-selection.
Loyalty programs and guest advocacy both thrive on the notion that if someone selects your hotel, they’ve indicated they’ve made a connection on some level between your brand and their personal identity. This is an invaluable nugget of information in the battle to win hearts and minds for your brand.
When this guest books a stay with you, it stands to reason that she may also have a propensity to join your loyalty program where she can enjoy additional benefits of continued visits to your property or network of properties. Advocacy works on this same premise, but has the added value of allowing you to invite the guest and their friends and family into your ecosystem.
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Your guests introduce their friends and family to your hotel with advocacy.
Loyalty hits a homerun
Back to our practical example. A simple incentive is offered at the right time, just when the guest has completed booking a reservation. She’s encouraged to share this exciting trip with her friends, family, and colleagues over social media. Because the hotel is asking at the right time, and making the process easy for the guest, there’s an openness to the idea. Advocacy is given the springboard it needs.
Because the hotel is asking at the right time, and making the process easy for the guest, there’s an openness to the idea. Advocacy is given the springboard it needs.
How does loyalty play into this? The soon-to-be guest received 1,000 loyalty points simply for sharing. In her mind, even if she’s not yet a member, there is some perceived value in these points. But how did we know that the loyalty points really knocked it out of the park?
To provide some context, prior to offering loyalty points the hotel was offering the choice between a 16 oz. fountain drink or an ice cream sandwich for sharing. While compelling, this incentive didn’t create any long-term value for the hotel. It drove a little business to F&B outlets, but with a breakage rate of about 80%, but only 20% of people were redeeming!
However, once the incentive was changed to loyalty points, not only did the hotel continue to generate advocates at an incredible rate, but they were able to fully convert nearly 40% of those advocates into loyalty program members. Their breakage rate on incentive redemptions dropped by half.
That last part is worth repeating: by switching to a loyalty-based incentive, the redemption breakage rate dropped by half.
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Loyalty-based incentives give hotels an edge with redemption and loyalty memberships.
In it for the long haul: lifetime guest value
Remember when we mentioned that a current or soon-to-be guest is the ideal candidate for your hotel’s loyalty club? Add to this, they also make fantastic advocates as we saw in chapter 1 since they’re connected to like-minded individuals with whom they can easily and quickly communicate.
Additionally, both advocacy and loyalty are about long-term value, not short-term spend. Incentives for desired behavior are great if they’re driving that behavior, but don’t lose sight of the larger, ultimate goal.
Take our example. Only 20% of those with the incentive were using it. It succeeded in driving advocacy but the opportunity for additional on-property spend was largely missed. These additional interactions on property also help to build brand affinity. If you’re having a great time at the hotel, you’re going to remember it, share it, and want to visit again!
Easy on your operations team
Moving beyond the customer, I want to also bring to light two compelling operational benefits for the hotel using this method.
Any of you reading this right now that have a loyalty program know the challenge of enrolling new members at the property level. It’s far more desirable to enroll them before they arrive—or at the time of booking—than it is to ask your front desk agents to allocate the precious minutes they have with a guest to solicit them to join a loyalty club.
By combining the guest advocacy component with the loyalty program, not only is the guest presented the opportunity in a natural way, but it’s done at a far more convenient time. They didn’t just step off of a plane, drive 45 minutes, and haul their luggage up to a hotel counter.
By combining the guest advocacy component with the loyalty program, not only is the guest presented the opportunity in a natural way, but it’s done at a far more convenient time.
Tracking is another important variable to consider.
Tracking incentive redemptions can be challenging, especially when you’re dealing with outlets like restaurants. Loyalty programs thrive partly because they exist in a digital space, as we saw from chapter 1. This makes keeping tabs on redemptions (or non-redemptions) far simpler so you have better intelligence about what works and what doesn’t.
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The digital space makes keeping tabs on loyalty programs far easier than ever before.
More loyalty, more affinity, more advocacy
Next, let’s look at the value these advocates/members create for the hotel. This is a subject we’re going to explore in greater depth in subsequent chapters, but for our case study I want to highlight a couple of key points.
  1. It almost goes without saying that the more information you capture about a guest prior to arrival, the better you can speak to that guest.

    By encouraging the guest to become an advocate and join your loyalty club, you create opportunities to learn more about them in a way that isn’t awkward or intrusive. With this information, you’ll derive greater value from the guest over time. It’s been shown that 67% of adults in the US would share basic personal info if it meant better services or products.
  2. Once an advocate has joined your loyalty club it’s much easier to track and understand that guest’s long-term value to your brand.

    Speaking generally, of the companies that track lifetime value of their customers, the average is just over $1,800. Factor advocacy into this and the reach the hotel is able to attain to an audience of like-minded individuals and this number will only grow.
  3. Greater brand affinity and more opportunities to cash in rewards means there are additional opportunities for greater advocacy and reach.

    Don’t think of the points redeemed as dollars out of pocket. Rather, think of points redeemed as an opportunity to broadcast your story through the voice of a delighted guest.
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Action items
  • Consider your enrollment sources today. Do you know the true cost of each in terms of hard dollars as well as opportunity costs? Where can you focus your attention for better return at lower cost?
  • What sort of point incentive means something to your guests? Bear in mind, these people are often not current members so the incentive must have an attractive value to someone not familiar with your loyalty program.

    You can test this with different values until you find the one that works and that information will help you with other efforts as well.
  • Invest in the means to collect data as you implement this process at your hotel. Outline what’s important to you while asking a simple question: how can we show our customers our loyalty to them?
 
What's next?
  • Breaking the boundaries of the loyalty model
  • Put your content to work for you
  • Improving, personalizing, and extending interactions with guests
 
A look back
Feeling like you missed something?
 
Sources
  1. 9 stats that prove the value of loyalty programs
  2. Most Customer Loyalty Programs Remain Challenged: Here Are Advised Solutions
  3. Transera and Harris Poll Survey Reveals the American Consumer’s Perspective on Big Data and the Customer Experience
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Richard Dunbar
Director of Partnerships

Hi [firstname,fallback=there]—Richard here from Flip.to. I’ve been in the hospitality space for over 15 years, including many at one of the largest providers of independent loyalty reward programs worldwide. After picking up my fair share on loyalty, I’ve been able to put it all together with revenue management, e-commerce, and now advocacy. Have thoughts about the e-course? Let me know!
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