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Loyalty Programs in Travel and Hospitality Sector and Key Role of E-CRM

PART ONE: TRAVEL LOYALTY

INTRODUCTION

The travel sector offers quite a number of loyalty programs – some of which are quite well known, and successful too. In this sector, the sub-verticals that are definitively leading in the adoption of loyalty and innovation programs are the Airlines sector.

The airline is one of the first businesses to introduce loyalty programs to their customers. The frequent flyer program began in the early 1980s when American Airlines began the American Advantage program (AAdvantage) which is now an icon. Through the Saber computer ordering system, American Airlines has collected a database of around 150,000 of its best customers.

SOME OF THE INDUSTRY’S BEST CONTEMPORARY LOYALTY PROGRAMS

The Star Alliance Network is a partnership where flyers can often collect and redeem miles on the following airlines: United Airlines; Lufthansa; Air Canada; SAS; Midland England; Varig; ANA; Singapore flights; Austrian Airlines; Thai Airways; Air New Zealand; and Mexicana.

The VARIG Smile Program is the most popular leaflet loyalty program in Latin America. With Smiles, passengers can earn miles on each VARIG flight, as well as regional, domestic and international flights in Rio Sul, Nordeste, Pluna, South African Airways, Spanair, Alitalia, and participating airlines from Star Alliance. Miles earned can be exchanged for free tickets, upgrades and other benefits.

US Airways offers its members greater privileges through additional offers by the Miles Dividend program on trips on US Airways and its partners. Different features for all three types of membership – Silver Preferred, Gold Preferred and Chairman’s Preferred.

PART TWO: LOYALITY HOSPITALITY
INTRODUCTION

In the early days, the hospitality industry offered a loyalty program along with the travel industry. Over time, because airlines declared their own Frequent Flier Program, the hospitality industry also launched an independent guest program. Holiday Inn was one of the first to launch its own loyalty program, followed by Marriott in January 1983 with the Honorable Guest program in the same year.

SOME OF THE INDUSTRY’S BEST CONTEMPORARY LOYALTY PROGRAMS

The latest launch of “Any hotel, Any where” card by InterContinental Hotels Group (IHG), the largest and most global hotel company in the world, is one of the best initiatives in the context of a new age loyalty program in the hospitality industry. IHG has recently added new features to its customer loyalty program: Priority Club Awards.

Starwood Preferred Guest is one of the best loyalty programs in the Industry. This program made headlines when it was launched in 1999 with a breakthrough policy with no expiration date and no capacity control, which means members can exchange free nights anytime, anywhere.

Park Hospitality, part of Carlson Hospitality Worldwide headquartered in Minneapolis, consists of Park Plaza and Park Inn Hotels in North America. The hospitality group mainly offers services to various guests in suburban areas and recreational destinations. Park Rewards, part of the Gold Points Rewards guest loyalty program, is based on a points system that gives 10 points for each US dollar spent on accommodation at Park Plaza and Park Inn hotels in North America.

The Loyalty Building Loyalty Program from Radisson Hotels and Resorts called ‘Look For Books’, was also very successful. Radisson is the only hotel company that offers a patented on-line loyalty program for travel agents, which allows them to automatically earn points towards valuables and incentive awards in return for ordering Radisson hotels.

Hyatt offers a global loyalty program – Hyatt Gold Passport. The Hyatt Gold passport offers features such as getting points for a free night without a blackout date, choosing services within the hotel and special offers, starting with the first visit. Benefits offered are based on the type of membership that guests have. The three memberships offered by Hyatt Gold Passport are Gold, Platinum and Silver, based on the frequency / number of visits.

The hospitality industry in developing countries such as India is not lagging behind in the Award Program Welcom recognizes the needs of business travelers and through strategic alliances with travel partners, efforts to build beneficial relationships.

PART THREE: GENERAL PROBLEMS WITH LOYALTY PROGRAMS, AND BEST MITIGATION PRACTICES

While consumer awareness of loyalty programs and business priorities given to them grow together, the effectiveness of these programs, and the consequent ROI generated by businesses from them continues to be significant challenges. Here below are some key areas that deserve focused attention from companies that implement or run such programs:

“7 out of 10 loyalty card owners have more than one loyalty card,” according to a recent Frost & Sullivan study. The problem with this rampant loyalty card and the proliferation of loyalty programs, according to the researchers, is that surprisingly some consumers know which hotels are covered by cards that they use frequently, thus losing income of hundreds, even thousands, of points. Blame the bad communication by the company or the number of brands, experts say.

Traditionally, the focus of customer relationship management in hospitality always starts and ends in one phrase: “customer satisfaction.” The assumption is very simple: Customers will appreciate good service so they won’t go to your competitors. In other words: Customer satisfaction plus service quality is the same as customer loyalty.

The truth is that customer satisfaction is not always the same as customer loyalty.

Research shows:
• 40% of satisfied customers switch hotels without hesitation (Forum Corp)
• 65% to 85% of customers who choose new hotel claims must be satisfied and very satisfied with
ex one (Harvard Business Review)
• 85% of customers claimed to be satisfied, but wanted to move to another hotel (University of Texas).

These are interesting figures, clearly showing that even for the best hotel service providers there is an urgent need to build relationships and train to strengthen focused and sustainable relationships with their main clients.

Electronic customer relationship management (e-CRM), in the context of exploding Internet distribution and marketing in hospitality, is a business strategy that is supported by Web technology that enables hoteliers to engage customers in strong, personalized and mutually beneficial interactive relationships, improving conversion and selling more efficiently.

This means that almost every time an internet user lands on a hotel website, brand image interaction takes place, creating opportunities, or threats to the hotel. This branding interaction can be positive (brand building) or negative (brand-eroding).

A. Customer Knowledge

Knowing your website visitors is a very important consideration when drafting and designing your hotel website and e-CRM strategy.

The 2004 RUSH report shows:

• 56% of all visitors on a hotel branded website are recreational travelers and 32% are business travelers. About 3% of visitors to hotel websites are involved in meetings or event planning.
• 34% of all visitors on the hotel-branded website searched for information about the hotel, while 30% of visitors came to make or change reservations.
• Business travelers seek directions and high-speed internet.
• Meeting planners look for floor plans for function rooms and capacity charts.

Benefits:
• Identify your most valuable customers with the best age value perspective (principle 20:80)
• Allows mining of guest-centric data: guest history, guest profiles, previous reservations, preferences, etc.
• Activate decisions based on information in real time
• Allows fast response time
• Offers real-time guest time value
• Provide business insights to executives, marketers, sales

B. Personalization
Personalizing the customer experience on the hotel website is a powerful conversion and retention tool. Adjusting your interactions with your most valuable customers (20% who generate 80% of your business) will provide significant long-term benefits.
Personalization at the property level must begin with:
• Identify all “electronic touch points” with your customers (hotel guests, meeting planners, travel professionals, etc.) and make action plans.
• Personalize all electronic communications with your customers. Adoption of policies on how to handle your guests via e-mail (only first name, father / mother, and last name, etc.).

C. Customer Support

It is important to understand that customer service is only one aspect of e-CRM and especially reactive functions that aim to improve performance and efficiency, while e-CRM as a whole is a proactive long-term strategy.

Customer support in the Internet era depends on various tools and techniques. Here are some things to consider:
• Mandiri Web Service Tool: Management of intelligent service channels and natural language search engines; direct customer requests to the most appropriate information and support services; Question and answer; “Ask experts” self-service chat rooms; interactive maps, directions and business seekers.
• Direct Service Tools: Push-to-talk function and real-time interaction with direct agents; instant messaging and help type chat rooms; Voice-over-Internet Protocols application; and automation to support direct pre-screen (selective approach).
• E-Mail Service Tools: Management of incoming e-mails; and an automated e-mail response system that can automate 80% -90% of e-mail volume with 98% accuracy, dramatically improving service and reducing support staff by 40%.