Creating Boom-Time Loyalty for the Long Term

Stash Founder and CEO, Jeff Low, explains investing in loyalty is an insurance policy. If you ignore it until the economic bubble or your appendix bursts, you’ve waited too long. Originally published in Hotel News Now.

It’s a wild ride
You’re feeling it today: The highs are high for most hotels. Right now, hoteliers are sitting on top of the world. Month after month, the United States hospitality industry is setting records in average daily rate and revenue per available room.

Keep in mind, however, times will be tough again. It’s a given. In a six-year study, PKF Hospitality Research found boutique hotels were hit much harder in downturns. Because of this cyclicality, long-term strategies are critical for independent hoteliers.

Right now, you’re in great shape; you have a hotel full of people paying top rate. Your challenge is to make it last. You can’t control the economy, but you can minimize the damage of a future recession. To do that, you have to lock in today’s guest for the long term. pavement_ends2

Everyone is buzzing about how personalization is the secret to loyalty. I agree, but you don’t need new software, Google Glass or sub-dermal microchips in your guests to deliver a personal experience worthy of their loyalty. With a little encouragement, your team can get stated today. Here are a few ideas:

Empower your team
Behind Virgin America, Apple and Nordstrom is a “whatever-it-takes” customer-service approach. Employees at these companies go out of their way—sometimes at substantial costs—to make sure customers have top-notch experiences. From ordering pizza for an entire delayed flight, to helping a customer set up her online dating profile, to hand-delivering replacement shoes ruined when the delivery man left them in the rain, employees at these companies regularly exceed expectations.

When employees are empowered to take care of customers, it shows in the short term, (happy guests, instant evangelists, great reviews) and pays in the long term (loyal guests who keep coming back). When you look at the review sites for these companies, you see common trends:
• The employees were genuinely happy to help.
• Customers don’t mind paying more for this service or experience.
• They’ll be back for more.

Generosity 101
Online retailer Zappos has a storied reputation for customer care. But it’s most famous for its free shipping and free returns policy. The company encourages shoppers to buy multiple sizes and styles until they are satisfied. It knows one of the biggest barriers to online shoe shopping is the anxiety and uncertainty about sizing and comfort.

Take away anxiety, earn instantly loyalty, and you don’t have to discount your product. With sites like Zappos, customers know the price they see is the price they pay; no last-minute shopping-cart surprises with extra fees.

What’s the travel equivalent? Surprise fees. Travelers hate feeling like they are being nickeled and dimed. Wi-Fi is not an amenity, it’s a necessity. To travelers, a Wi-Fi charge feels not only like an unexpected fee, but also like a sneak attack. In retail, they can abandon their shopping carts. In a hotel, they’re forced to pay up. Instead of their cart, they abandon loyalty. If you’re still charging for it, use this time of prosperity to make the (inevitable) transition to free Wi-Fi.

Once you’ve earned it, reward it.
Tomorrow’s best guest is in your hotel today. These guests are the ones who are willing and able to pay your high rates. Reward their patronage with rewards. Loyalty (both the quality and the program) is a two-way street; travelers know their repeat business is valuable, and they want it to be acknowledged. They know they’re special, so let them know you agree by giving them something measurable: points, perks or rewards.

Business travelers are even more determined to have something tangible to show for their loyalty. While they might not be paying for a room on their own dime, they’re paying with something more valuable: their time away from their families. When business is booming, they’re away from home a lot. In their case, soft benefits like an upgrade or a bottle of wine might be less valuable. The coin of their realm is points because they want something they can take home to their families to make up for all the time on the road. (And that free breakfast doesn’t travel well.)

Let me close with an analogy: Ignoring loyalty in a boom time is akin to saying, “I don’t need health insurance because I’m feeling quite well today.” Loyalty is an insurance policy. If you ignore it until the economic bubble or your appendix bursts, you’ve waited too long. By investing in loyalty and service today, you can protect yourself for the long term.

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