Hotel Loyalty

Why Loyalty Schemes Work for Hotels

When it comes to relationships with brands, customers tend to be polygamous. In an age where loyalty is money, customer retention is vitally important and highly lucrative. A study by Accenture found that hotel loyalty schemes are some of the most successful with 46% of people belonging to at least one. Most people are attracted by the perks offered to them upon joining but they stay because the feel valued and heard.

Customer retention is highly beneficial to hotels; it costs anything between five and 25 times more to acquire a new customer than it does to keep returning one. Zach Goldstein, CEO and founder of Thanx, commented that “Most brands write returning customers off, focusing on customer acquisition instead, but customer retention is seven times more cost-effective.”

Moreover, 65% of all your business comes from customers who already know your brand. The future of your business depends on your ability to retain customers and keep them happy. Even more convincing is the fact that 80% of future profits will come from 20% of your existing customers.

If you want to keep a strong revenue stream for your business in the future, you should be thinking about how to keep customers coming back instead of attracting more. Even a 5% increase in customer retention correlates with at least a 25% increase in profit.

This is where loyalty schemes come in. Loyalty schemes allow hotels to say a virtual ‘thank you’ to their loyal guests by offering them discounted stays, loyalty points, and other perks. These gifts provide incentives for guests to book their next stay with the hotel, allowing them to feel valued whilst also helping to build a sense of loyalty for those who want to collect points in order to earn free or discounted accommodation for the future. 69% of consumers say their choice of hotel is influenced by where they can earn customer rewards program points.

Hotels often have expensive facilities that need to be operational year-round for them to provide a strong return on investment. A loyalty system, combined with suitable offers, can incentivise and influence guests and locals to use the facilities on days that might usually be quiet.

Given a tangible reason, customers will keep coming back, thus increasing footfall and purchases. They return to rack up more rewards: customers feel great receiving points or discounts as it releases dopamine, the ‘feel good’ chemical – our brains are hardwired to do things that bring us pleasure.

By investing in keeping your returning customers happy, you are also investing in the acquisition of new ones as a recent study finds that one happy customer is likely to recommend your establishment to 11 new potential customers. It has been found that these word-of-mouth recommendations are much more valuable than advertising, as consumers prefer real accounts of customer satisfaction over brand marketing.

So, rewarding your regulars is not only beneficial for retention but also acquisition of customers. Who’d have thought? Loyalty schemes are a handy tool to have in your belt, it seems…