The Effect of Loyalty Programmes on Marketing Campaigns

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.

References

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

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3 thoughts on “The Effect of Loyalty Programmes on Marketing Campaigns”

  1. This blog leads to two questions:
    – can you somehow stimulate that loyalty programme for airlines lead to emotional bonding besides calculatory bonding
    – is the RFM method a better method to use for airlines than calculating the CLV?
    Also in answering the first question a practical example might be useful.

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  2. Dear Femke,

    your post is very well structured and worth to read. You make your points clear and underline your statements by the use of academic sources.

    A valuable addition could be to add a practical perspective as well. Are there case studies of hotels that successfully analyzed, monitored and optimized purchasing patterns of certain target groups?

    It could also be pretty interesting to look at synergies between the travel industries. Customer loyalty programs of airlines for instance, combine benefits for travel related aspects such as hotels or rental cars as well. Looking at benefits or cannibalization effects might add an interesting perspective.

    This would perhaps gain new insights and your well used academic sources and statements would be underlined by practical insights from the travel industry.

    Niklas

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    1. Dear Niklas, thank you for your comment. That would indeed be an interesting and valuable addition to this blog. To be honest I did not think of the effect of loyalty programmes of airlines before, so thank you for this new perspective. I will look into it and see if I can find more real life examples to support the theory.

      Like

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