Is customer loyalty dead?

Is loyalty dead? This question is far from new. Time and again, we’ve seen articles examining why loyalty has been on the decline, positing reasons like a shift in consumer buying habits, or even suggesting that it never existed in the first place.

The traditional view upon which most loyalty programs still function is that customers who visit or purchase frequently are loyal, and therefore deserving of rewards. Yet, as technology has advanced, guests’ expectations are ever increasing. According to a recent JD Power study, guest satisfaction is at its highest, which is no coincidence now that Wi-Fi, free parking and complimentary breakfasts are seen as the norm. However, loyalty as we have known it is in flux, with the percentage of members subscribed to rewards programs decreasing in correlation to age groups.

     “Things like a room upgrade during a delayed flight, or free breakfasts at hotels are seen as a given, no longer as incentives or rewards.”                                                                                                 

The problem is that we don’t know what loyalty means anymore. The real question we should be asking is: what is loyalty today? Can it be measured simply in terms of return visits and purchases, or is there more to it?

The problem with rewards-based loyalty

The current state of rewards-based loyalty is a transactional relationship based on expected behaviour, with little to no differentiation between hundreds of differently branded programs.  It’s not surprising then, that the everyday consumer belongs to an average of 13.4 loyalty programs, and six out of ten customers believe that businesses only offer rewards to drive more sales.

This system requires the consumer to jump through hoops to get what they want, usually by purchasing a certain quantity of products in order to reap the benefits in the distant future. In short, you are making a customer work for you, rather than rewarding them along the way for sticking by you.

Raised expectations and higher standards

Developments in technology, culture and behaviour have affected what consumers have come to expect from their service. For example, 66% of people attempt to login to hotel Wi-Fi as soon as they step into the lobby, indicating that this is now an expectation rather than an add-on. Things like a room upgrade during a delayed flight, or free breakfasts at hotels are seen as a given, no longer as incentives or rewards.

If you are lacking in these areas, you are falling behind. This is critical considering that 64% of leisure travellers and 52% of business travellers say that they aren’t loyal to a particular hotel brand; if you can’t provide travellers with what they need or expect, they’ll go in search of those things from other brands.

The future of loyalty starts with listening

So what do you give a generation of consumers who have access to pretty much everything? The opportunity to feel special and known. Global Travel and Hospitality Lead at J.D. Power, Rick Garlick, explains “Points are no longer a price of entry or table stakes for people who want a personalized experience. They want to be recognized for the status they’ve achieved.”

Today’s customers are flooded with choice. They have an unprecedented bounty of information at their fingertips in the form of online reviews and social media.  These online reputation forums influence the services customers expect to receive as a minimum, meaning that delivering those services only meets their expectations. It also means that you have the ability to go above and beyond in a way that makes their experiences with your brand entirely unique.

     “When guests no longer see added value in the quality of amenities they receive, the only option to truly differentiate a brand is to develop a strong service culture that makes guests feel special and appreciated.”Rick Garlick, Global Travel and Hospitality Lead at J.D Power                                                                                   

Modern-day loyalty means leveraging every visit to build an ongoing relationship with your customer, enabling you to further personalise every touchpoint they have with your brand. This applies regardless of whether or not that person is a member of your loyalty program, but is particularly critical to keeping existing loyalty members active. The truth is that the majority of consumers don’t mind sharing their information with you if it means getting better rooms or services.

The burden is on you as a business to show customers why they should come to you over someone else.  Give them a truly personal experience, above and beyond the same services they have come to expect, and that choice will be an easy one for them to make. Garlick explains, “When guests no longer see added value in the quality of amenities they receive, the only option to truly differentiate a brand is to develop a strong service culture that makes guests feel special and appreciated.”