Chapter 3-Loyalty Programme

A hotel rewards program is certainly a worthwhile activity for your brand to engage in. If your
hotel values its customers, it makes sense to thank them for choosing your property.
One way to show your gratitude for their business is by offering rewards that enhance their
current stay, or give them an even better experience on their next one. The idea ofcourse is to
reinforce to the guest that they made the right decision and that they should always return to your
brand. Hotel rewards programs can come in many different forms however, and there is more
than one way to build guest loyalty at your hotel and every guest is an individual so they will
react differently.

Types/Levels of loyalty programs:

The best brand communities in the world use the power of VIP tiers or various levels of loyalty
programme to increase customer loyalty. The various levels are a phenomenal way to get your
customers more engaged by gamifying your rewards program and making it exclusive.

The various levels of reward programs offer different rewards depending on which tier a
customer is in. In order to progress to the next level, customers must pass a pre-determined
milestone. This milestone could be anything from how many dollars they’ve spent in a year or
how many purchases they’ve made over their lifetime.

1. Point Program-The point program is the most common program around the commerce
world as it is the simplest one. It is based on one simple principle: Spend more to get
more. Every time a customer makes a purchase in-store or on your website, they get a
certain amount of points depending on the size of their purchase. These points are
translated into some type of reward. Whether it is a discount or a special customer
treatment, customers seems to work toward collecting a certain amount of points to
redeem their reward.

2. Spend Program-In spend programs, customer get loyalty credits for the amount they
spend at a business. This program is very easy to understand, create and maintain. It is
also proven to be an effective way to increase transaction amounts and reduce churn rate.
3. Tiered Program-One way to find the right balance between attainable and desirable rewards is
to implement a tiered system, which rewards initial loyalty and encourages more purchases.In a
nutshell, the tier program is based on levels of loyalty. Customers get points whenever they
purchase something. The more points they receive the higher loyalty level they will reach. And
the higher the level, the more rewards they will get.

4. Paid Program –Customers pay a monthly or annual fee to join member club with access to
special services, discounts or unique opportunities. Your paid program should include benefits
that are exclusive to members or either wise it will lose its value.eg.VIP member club

5. Value – based Program-If you structure a loyalty program that is aligned to your customers’
values, they are more likely to become brand ambassadors. They are then rewarded in some
form..First, it is very important to define your values. For example imagine that you run an
online pet store and you know that your audience values animal welfare. One thing you may do
it, is to start a loyalty program, similar to the point system, where customers’ purchases translate
into currency. Then, every time a customer makes ars.500 purchase, you would donate Rs.50 to
an animal rescue organization.The reward when choosing the value-based program is to connect
with customers on a deeper level by creating a strong and ethical relationship with them.

6. Partnered Program-Strategic partnership for customer loyalty can be super effective regarding
customer retention, as you offer them more opportunities. At the same time, it can help
the growth of your business by building new business relationships or partnership.While
providing your customers with value that is relevant to them and goes beyond what your
company can exclusively offer them, you are showing them that you truly understand and care
about their needs.

7. Game Program-A good idea is to turn your loyalty program into a game application to
encourage repeat purchases, increase customer loyalty, entertain customers and help strengthen
your brand’s image in a more entertainment way.
8. Hybrid Loyalty Programs-A hybrid loyalty program is a combination of more than one type of
loyalty systems. You may merge 2 different systems such as the tier and the game program,
where customers reach new levels of loyalty every time they complete a new level in your game.
The participation in the game should of course entail a purchase.

The most common combination is that of point-based system with a tier program as it makes the
calculation of points easy for the customers and encourages them to pursue next loyalty level and
thus, more purchases.

Benefits of various levels:

1. Tiers make your program more social-Another great benefit of adding tiers to your
program is how social it makes your entire brand community. By adding tiers, you are
allowing customers to achieve social status by having a higher rank than others. People
like to see where they stand relative to those in a similar situation or group. This adds
another layer of motivation to your program. Not only do they want the additional
rewards offered at every level, but they’re also chasing that boost in social status.
2. Exclusivity makes every customer feel valued-One of the best things about a tiered
program is how special it makes your most valuable customers feel! By giving better
rewards to customers in your upper tiers, you are showing them that you value their
business more than a regular one-time shopper’s. Leverage the exclusivity of your upper
tiers as a way to increase engagement.
3. Only offer the best rewards to those who earn them-Running a tiered program ensures
that you are only awarding the best rewards to the members who provide the most value
to your brand community in return. This value can be in the form of money spent on your
site or sharing actions that are driving new business.
4. Diversify the rewards for upper levels of your program to increase its appeal-Whatever
metric you decide to use to determine your program’s milestones, be sure you know the
value each customer in that tier is providing. That way you can reward loyal
customers with rewards that reflect the individual value they are providing to your store.
 These rewards could take any number of forms like special events, early access to sales,
exclusive products etc.

No matter how you choose to reward your elite members, your top VIPs should know they’re the
best by the rewards you give them. These perks are what will keep them engaged, happy, and
feeling luxurious as members of your tiered program.

Example:-Marriott Rewards is the loyalty program for the Marriott brand, and, like all other
loyalty programs on this list, it's free to sign up for it. For those that do, they'll receive free Wi-Fi
(at most Marriott hotels), no blackout dates, mobile check-in, low rates, and late check outs.

There are four different levels of Marriott Rewards membership: Rewards Member, and Silver,
Gold, and Platinum Elite. Higher-level members get more perks than those on lower levels and
the only way to move up levels is by gaining hotel stays and points, which is the same process
for all hotel loyalty programs..For this particular loyalty program, you can gain Silver Elite with
10 hotel stays or more and Platinum Elite with 75 nights or more. The upper level rewards
members also earn more points per stay than regular Rewards Members and gain extra perks like
room upgrades and lounge access with breakfast for two. When it comes to earning points for
free hotel nights, it depends on the Marriott hotel you’re staying at. For instance, you earn 10
points per dollar spent on stays at JW Marriott hotels and Gaylord Hotels, but you only earn 5
points per dollar at Residence Inn Marriott properties.

Example-Starbucks Rewards.

This program is by far one of the most successful and popular tiered programs out there, and is
consistently regarded as the leader of in-store loyalty programs. A huge part of this popularity
comes from how easy it is to be a member. Customers can easily enroll in the program by either
registering a Starbucks card or downloading the app, and can start collecting “Stars”
immediately. This is genius because it not only reduces the amount of transaction fees that
Starbucks pays, but also makes every transaction easier for their customers.

The most unique element of Starbucks Rewards is the number of tiers it has. Unlike most
other tiered programs, Starbucks only has two VIP levels: Green and Gold. Customers are
 automatically added to the Green level when they sign up for Starbucks Rewards and then
challenged to earn 300 Stars before moving up to Gold.

Advantages of Loyalty Programme:

• Improved guest experience – A loyalty program will mean frequent travelers who come to stay at
your hotel are never overlooked. Their preferences will be recognized and taken care of, making
their trip more seamless and enjoyable.

• Increased bookings – Often, the promise of rewards or instant perks can be enough to get
undecided travellers over the line. In this sense, a loyalty program isn’t just useful for keeping
the guests you’ve already won, but attracting them in the first place.

• Cost effectiveness – Reaching out capture repeats guests places far less strain on your marketing
and sales efforts than trying to find new guests. It’s also more likely that loyal repeat guests will
book your hotel directly rather than via an online travel agent, saving you money on commission.

• Boosted revenue – Guests who keep coming back are obviously happy with the service they’re
offered, and they’re more likely to spend money on extras and additional amenities too. If you
prove yourself time and again, guests will be happy to keep spending money.

• Valuable insights – Including guests on a loyalty program means you can build more profiles,
with more information included within them, than ever before. Knowing their preferences,
interests, and behavior is extremely valuable to you in attracting new guests that are the perfect
targets for your property.

• Corporate advantage- Many businesses, travel managers, or event planners will choose hotels
that offer loyalty programs, since these are the most likely groups to regularly return to the same
locations.

That’s not to say there aren’t any disadvantages of having a loyalty program as they can be
expensive and time-consuming, can be ineffective in some markets or if they aren’t thought
through.