I recently participated in a Linkedin discussion about SPG (Starwood Preferred Guest program) where the topic was around their aggressive expansion of their top tier benefits is warranted by the research supporting it.
I shared a survey that SPG commissioned which yielded some surprising results about how top tier members of hotel programs viewed their tier levels. While the study pointed to an extreme emotional engagement by those members, other members of the discussion found the results hard to believe. Below is my response -- which captured our thinking about the importance of building tailored loyalty programs targeted to key customer segments. Funny how a little discussion can bring out the best content from us!
Here's the original news item:
SPG Survey: 73% Of Travelers Would Choose Loyalty Program Benefits Over A Spouse If They Could Take Just One On The Road | Fear Of Losing Loyalty-Program Status Looms Larger Than Lost Luggage, Missed Flights
It may no longer be a stretch to say travelers are married to their frequent traveler programs. In fact, 73% of travelers would choose loyalty-program benefits over a spouse if they could take just one on the road, according to an eye-opening survey of nearly 10,000 globetrotters released by Starwood Preferred Guest (SPG).
Relationships with hotel loyalty programs may even outlive marital unions, the survey said. Seventy-six percent of respondents revealed they felt their status in a hotel loyalty program would last longer than their marriage or current job. And, in a travel emergency, 70 percent of respondents said that their elite status in a hotel loyalty rewards program would be handier than their smartphone, tablet or even their personal assistant.
Here’s the linkedin post in its original form, which we thought would be worth sharing:
I’d agree that this type of 'extreme' result of a internally run survey warrants a skeptical look. The statistic about spouses is a good attention grabber for the press release (otherwise we wouldn't be discussing it, right), but the other two -- willingness to take extra trips for rewards + fear of losing elite status -- are probably more significant in terms of business impact. We run across a lot of different industry studies/surveys in our day-to-day review of 100s of industry news and vendor releases for our loyalty portal ... our angle is to look for ones that suggest fresh thinking for the companies that are operating or considering loyalty or incentive programs. This survey press release fits the bill on that count.
Much like Apple showed us that superior product design could generate fanatical loyalty (and strong margins) in an otherwise commoditized PC industry, we look to similar examples which can inspire companies to aim higher when seeing their loyalty program goals rather than just playing follow-the-leader with basic rewards programs. It's just a matter of investing the time and systematic VOC approach to understand what creates emotion among your KEY customer segments (those triggers vary a lot by segment and industry).
Your comment that "by and large most people don't want to be friends with their hotel etc" is right on target -- the strong emotional connection to rewards and tier membership doesn't cut across the entire customer base of each company. What hotel chains have figured out (as have airlines) is that the much-sought-after frequent business traveller cares a lot more about elite rewards than the less frequent traveller. That makes the tiers of loyalty program a smart way to avoid unnecessary rewarding while still promoting loyalty among their most valuable customers. The trick is for each company to invest the time to figure out what that big loyalty opportunity is -- and with the ROI of rewards programs goes skyward.
Experience tells me that loyalty programs are a lot like pricing models -- most companies don't invest the time in what is a tremendous strategic opportunity. Typically, companies keep their pricing simple from an operational perspective and the same goes for loyalty programs: one size fits all. But that's usually not the right approach -- most of the time targeting loyalty programs to individual segments works better.
As a guy who's travelled internationally for business for most of the last four years -- I can tell you that loyalty program obsession among frequent business travelers is not a myth :) I've met many "elite" level members who love those special benefits from hotels and airlines -- because it takes the edge off hotel stays that seem endless (no matter how exotic the destination). Most importantly, they stay with the same hotel chain or airline even in the face of strong discounting behavior by competitors -- all because of the fear of losing their tier status . Powerful stuff during these economic times.