Loyalty programmes too complex

The survey, done by Razor's Edge Business Intelligence, found that mature programmes had been adding benefits, features and partners for years, to the point where many programmes were as complex as typical frequent-flyer programmes.

“When it gets to that point, programme operators need to treat carefully, and not make their programmes unbearably complex,” says Bruce Conradie, MD of Razor's Edge. “Complexity saps the consumer's time and energy, undermining the value of the programme. The more complex programmes become, the harder it is for consumers to compare them.”

The survey examined in detail 12 programmes operated by the world's largest hotel groups. They included Choice Hotels Choice Privileges, Hilton HHonors, Hyatt Gold Passport, InterContinental Priority Club Rewards, Marriott Rewards and Wyndham Rewards.

“Given their size and complexity, this is probably the most homogeneous set of loyalty programmes examined in a Razor's Edge study. Although we did not formally measure it, it is clear that the surveyed programmes are highly similar,” continues Conradie.

The plethora of promotions seen during the current recession may be seen as an effort to differentiate by providing hard benefits (clear monetary value). Such promotional activity is here for the near future, although we can expect a return to other forms of differentiation, once the recession is over.

Differentiation

An aspect of this is experience rewards. Hotel accommodation is an experience product and experience rewards fit well with hotel rewards programmes. Thus, the surveyed programmes allow members to redeem points for holiday packages, cruises, theatre tickets, entrance to theme parks, and spa treatments, to name a few.

A form of this that is expected to gain popularity is one-off or exclusive rewards. A typical example is an opportunity to meet a celebrity. Such rewards are often offered to members via an auction (whereby they burn points, rather than cash).

The researchers expect hotel rewards programmes to move on from simply adding more partners and benefits and develop in new directions. These could include further development of the experience reward theme, the creation of sub-clubs that appeal to special interest groups (such as, sportsmen, sports fans, or bikers), and addressing environmental concerns.

Small hoteliers, especially those without multi-brand rewards programmes, will seek to enhance the stay experience through superior personalised service. Large hotel groups will grow more sophisticated in using CRM technology to provide personalised services to high-value customers.

More information can be found on www.razorsedgebi.com.