As explained in a previous blog (The Road to Loyalty) it is essential for businesses to have loyal customers. One of the tricks used to gain these customers is to offer loyalty programmes where the hotel offers the customer all sorts of benefits in order to gain their loyalty in return. With many different visitors staying at a hotel the question remains: who is worth targeting?
When it comes to hotels business travellers can be seen as the target group that is most interested in a loyalty programme. This is because they are returning visitors and are most likely to stick to a certain hotel chain as they are familiar with its products and services. 65% of business travellers are already part of a hotel loyalty programme (Hoang, 2014).
While not all business travellers are worth targeting and not all the customers that are part of a loyalty programme are as loyal as you would want them to be, one should find a way to find out which customers are of most value to the company. To market to your most loyal customers in an effective way, the RFM model can be used. It helps to analyse purchase behaviour by recency, frequency and monetary value to determine what kind of offers work for what type of customers (Statical Concepts, n.d.). This way one can ensure to target the right set of customers who are most likely to respond to your marketing campaign. It makes sense that based on RFM the set of customers that are worth targeting will mostly be business travellers.
RFM can be a helpful tool if you wish to keep your customers in or to move them up on the customer pyramid. This approach makes sense for a hotel group as it’s much more beneficial for them to try to keep the customers than to constantly try to gain new ones. Once customers are part of a loyalty programme, hotels will have an insight into who their guests are, what they like, and where they are from (McEvilly, 2015). In terms of marketing this saves a lot of money. The customers are in and their wishes, needs and behaviour are known.
While RFM shows you which customers are of most value to your company, one should keep in mind not to overflow them with information and offers as this can put even a loyal customer off. Of course, the RFM model will also show you a set of customers that have the potential to become one of your most loyal guests, but aren’t quite there yet. Personalised marketing campaigns based on the information that is available can help to give these customers the final push. After all, customer retention is key in order for a hotel to be successful.
Hoang, A. (2014). Understanding the Difference Between Business and Leisure Travellers. Retrieved from E-Marketing Associates: http://www.e-marketingassociates.com/understanding-differences-business-vs-leisure-travelers/
McEvilly, B. (2015, June 9). Why Loyalty Programmes are Good for Hotels. Retrieved from HospitalityNet: http://www.hospitalitynet.org/news/4070567.html
Statical Concepts. (n.d.). Recency Frequency Monetary Modeling (RFM). Retrieved from Statical Concepts and Analytics Explained: http://statisticalconcepts.blogspot.nl/2010/03/recency-frequency-monetary-modeling-rfm.html