Eline Foekema, 19 september 2016.
Loyalty programs are all around us nowadays. From big companies to small companies, it seems like every business has made up their own loyalty program. But what actually is a loyalty program?
Loyalty programs can be defined as structured marketing efforts, which encourage loyal buying behavior, by giving the customers rewards. Examples of these loyalty programs can be points that can be redeemed for products or services from the company or from third parties, cash back rewards, first notice of new products and other related benefits. These benefits can usually be obtained by a personal card. With these cards customer data is being collected as the cards usually indicate what the buyer has bought before, and might also like in the future (Toporek, 2012).
Many companies and businesses make use of loyalty programs by today. And yet, a big player as Booking.com refuses to create such a loyalty program. Daniel Finnegan, the CFO of the Priceline Group, says that the performance of Booking.com has already been strong without using any loyalty programs. He claims that they would rather create a wonderful user experience for site visitors (as well as app users), instead of paying them to be loyal customers. Furthermore, he adds that paying the customers to be loyal, while they were going to book directly on the website of Booking.com anyway, is costly and a waste of money. Another aspect that Daniel Finnegan adds, is the fact that the expiration of points can be very frustrating to customers and can therefore develop difficulties with Booking.com (Schaal, 2016). Furthermore, loyalty programs which remember the past purchases and bring them up again, might not be suitable to the Booking.com users. They would receive an email asking them to book again at the same accommodation, while most people stay once in a lifetime in one hotel (Raconteur, 2016).
As a conclusion it can be said that Booking.com is operating on a high enough level, that it does not need any extra “help” to maintain the existing customers (which loyalty programs can do). Furthermore, Booking.com prefers to optimize the users experience of the site, rather than buying their customers. Buying customers can be costly and loyalty programs which remember past purchases do not work well for Booking.com users. Moreover, Booking.com does not want to engage itself in any confusing loyalty programs, which can be a disadvantage for the company in the end.
Raconteur. (2016). Loyalty is not enough. First4Loyalty. Retrieved at 18 september 2016.
Schaal, D. (2016). Booking.com Sees Loyalty Programs as a Burden, Not an Opportunity. Skift. Retrieved at 16 september 2016. Retrieved from: https://skift.com/2016/03/24/booking-com-sees-loyalty-programs-as-a-burden-not-an-opportunity/
Toporek, A. (2012). What is a loyalty program (and will it work for you)? Customers That Stick. Service Solutions. Retrieved at 16 september 2016. Retrieved from: http://customersthatstick.com/blog/what-is/what-is-a-loyalty-program/