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Prof. Dr. Bodo Kluxen

Julia Eisele

Marie Gehrke

Lena Graf

Sabine Mohr

Caroline Trojan

 

 

 

 

 

 

 

Project in Asia:

 

Hotel Marketing

CRM

Customer Loyalty

Guest Recognition Program

 

 

 

                                      Dec. 2013

 

 

Tabel of Content

Tabel of Content......................................................................................................... 1

Tabel of Figures........................................................................................................... 2

1.    Introduction and Briefing.................................................................................... 3

2.    Research............................................................................................................... 4

3.    The Local loyalty guest recognition programme’s structure....................... 5

4.    Communication of the local loyalty guest recognition programme........ 7

5.    Increase feedback and awareness................................................................ 9

6.    In addition: Customer Life Cycle..................................................................... 11

6.1.    Customer Life Cycle....................................................................................... 11

6.1.1.    Accompany the guest in his whole life cycle with the hotel.............. 11

7.    Conclusion and further recommendations.................................................. 14

Sources....................................................................................................................... 16

 

Tabel of Figures

Figure 1: Local loyalty guest recognition programme's structure.................................. 4

Figure 2: Customer Life Cycle at the hotel....................................................................... 11

 

1.           Introduction and Briefing

In times of strong competition it is difficult to distinguish from competitors not only for hotels, but also within other branches. To stand out of the crowd travellers have to be addressed in a special way to increase customers’ loyalty.

The present paper deals with this fact and summarizes the results and findings of a students` project work as part of the third semester of the Master degree course Media & Design Management at Hochschule RheinMain.

The project emerged from the cooperation between Hochschule RheinMain, in particular Prof. Dr. Bodo Kluxen, and an exclusive hotel, centered in Asia.

The project task was to create a Guest Recognition Program, which is local, personalised and on top of an already existence Loyalty Program, that consolidates all brands of one hotel group.

The project’s initial point was the briefing, in which the four following defined objectives were described:

·           Enhancing guest loyalty with a more personalised approach.

·           Creating more hedonic experiences for guests.

·           Increasing positive feedback on TripAdvisor.com and the hotel group’s experience survey.

·           Customising amenities in relation to guests’ ethnic background.

The basis and necessary precondition for processing the tasks was a detailed research for gathering essential background information. Collecting and deriving information about the hotel, learning a lot about the location and its culture, defining a target group for the hotel, creating an environment analysis as well as a SWOT analysis were part of the research. Moreover a “State of the Art” analysis of the existing customer relationship management (CRM) programmes in special (of the hotel industry and also completely different branches) and the consideration of the hotel’s potential competitors provided important input for the following elaborations.

Based on that the local loyalty guest recognition programme for the hotel and further issues according the requirements of the briefing were developed. In addition to that, a Customer Life Cycle as well as different personas, that should demonstrate typical guests of the hotel were created. Concluding, further recommendations for the hotel were given.

 

2.           Research

Before it is possible to start the creative part of developing a local loyalty guest recognition programme it is necessary to make a detailed research. This research part should include variety of topics like the 4Ps of marketing (product, price, place, promotion), the target group, competitors, an environment analysis as well as a SWOT analysis.

The definition of a specific target group is of high importance in order to gear all taken marketing measures towards the defined audience with a most effective impact. Moreover, price and product politics are two significant parts of marketing mix.

A comprehensive analysis requires taking a deeper look at the company’s or organisation’s environment. The environment is an essential factor and forms the framework in which the company operates. Afterwards findings from the analysis of the environment can be used in the context of a SWOT Analysis to find more precise opportunities and threats for the company.

A SWOT analysis (S=Strengths, W=Weaknesses, O=Opportunities, T=Threats) is a useful instrument to identify and assess the positive and negative influencing factors inside and outside of an organisation or company. The strengths and weaknesses result from examining the inside factors of an organisation. Risks but also chances are harder to influence because they mostly result from external factors of a company’s environment.[1]

To get an overview over the public perception it is also important to consider the web reviews written by customers, e.g. on tripadvisor.com.

Next to the detailed study of the company, it is also important to do a comprehensive analysis about the competitors, because business is characterised by competition. A competitive analysis is the cornerstone of effective strategy formulation and execution. Valuable analysis helps decision makers to understand and predict critical market-changing actions that may be taken by competitors and other competition-impacting stakeholders.[2] This type of analysis should be a continuous process with the goals to do better than the competitors, to dominate the market and to win the business.

The research part and its findings are the basic for the further part of creating a local loyalty guest recognition programme. Due to this fact it is important to make a fundamental analysis.

 

3.           The Local loyalty guest recognition programme’s structure

Before defining detailed measures and ideas for the local loyalty guest recognition programme it is essential to determine the structure and basic principles of it. In this case, the hotel’s guest recognition programme is based on gathering loyalty points. One room night stands for one point.

Top priority is to ensure that the local programme is not getting in conflict with the existing programme of the hotel’s group and to avoid any possible cannibalisation effects between the two.

Furthermore, it has to be kept in mind that the hotel’s points can only be gathered on-site, so it is quite hard for guests to get a high number of loyalty points. It is important to assemble the programme in a way that guests have a realistic chance to profit from the local loyalty guest recognition programme.

The local loyalty guest recognition programme is classified into the following three statuses:

·           Status No. 1 (3rd room night - 24th room night)

·           Status No. 2 (25th room night - 249th room night)

·           Status No. 3 (from the 250th room night)

Every status offers different services for the guests (irrespective of the exact number of room nights inside one status). The three different statuses are sub-divided into additional steps – generally steps of 25 points (see figure Figure 1).

Figure 1: Local loyalty guest recognition programme's structure[3]

So on the one hand a new hotel customer can participate quickly in the local loyalty guest recognition programme by booking only three room nights. Being able to reach a status easily and as a consequence profiting from special services and gifts can increase motivation. That is why the programme begins with little steps (3, 7, 15 room nights and from the 15th night on with steps of 25 nights. On the other hand the 3rd status is a very exclusive one and filled with special and expensive services and awards. For this reason this area is only reserved for the hotel’s most loyal customers who have stayed at least 250 nights at the hotel.[4]

To avoid that almost every customer – even the customers who have not visited the hotel for a long time – holds the 3rd status after a number of years, an expiration system for the loyalty points must be defined. One opportunity could be that customers need to reach the next step (not the next status) within a defined period, e.g. two years. Is the defined number of room nights not accomplished the guest looses his status and gets downgraded to the status below.

Finally, it has to be mentioned that every graduation and defined period has to be verified with current customer and hotel data to ensure the success of the hotel’s local guest recognition programme.

After defining the local loyalty guest recognition programme’s structure, the detailed measures are going to be specified. Hereby, it is important to take care of the unique selling proposition element’s the hotel is famous for. The gifts and services should be associated with these elements in such a way as to enable them to differ from other competitors.

 

4.           Communication of the local loyalty guest recognition programme

The local loyalty guest recognition programme should be communicated in a specific way to the hotel’s employees as well as to the guests. Therefore, the internal communication and the external communication are of great importance.

The internal communication includes the communication towards the employees and the whole hotel staff. It is of great importance as it has been mentioned before that all employees are getting qualified in order to improve their attention referring to the guest’s needs, bias and wishes. Only then they can provide guests with individualised and customised offerings. Nowadays it is significant to offer guests unforgettable experiences so that they are always going to be reminded of those experiences. Especially individualised and customised services and gifts/gadgets are the ones that are going to be treasured by the guests. These offerings increase the chance that guests are going to come back due to their positive experiences.

Furthermore, the local loyalty guest recognition programme’s brochure should be lodged e.g. at the hotel’s welcome desk so that the employees can instantly see what kind of services or gifts/gadgets the current guest is going to be offered. Moreover, the guest recognition programme should be implemented in the hotel’s software that is run for managing rooms and guests. Every receptionist should be able to realise the guest’s status and the according loyalty programme in the moment of entering the guest’s name.

The external communication deals with the decision about communicating the programme to the guests officially or rather about hiding the programme and not communicating it to the guests in a direct way. Both ways have advantages as well as disadvantages, which are discussed in the following.

If the hotel is going to hide the local loyalty guest recognition programme so that the guests do not know about the system and its rewards, it is made sure that the guests are not going to be confused due to the other existing guest recognition programme. Moreover, the guests are going to be more surprised when receiving a gift/gadget because they do not know about the next stage or next status.

If the programme is communicated to the guests officially, there are advantages as well. Due their knowledge about the rewarding, the guests are going to be ambitious to reach the next stage or status. Therefore, the guest will probably choose rather this hotel again when they are back at this city. Finally, it is the hotel’s decision what kind of strategy they want to pick.

There are several ways how the hotel can publish the programme to the guests. They can announce it on various social networks e.g. Facebook, Twitter and on their homepage. Furthermore, the programme should be published in newsletters, brochures as well as through the help of cooperation. The local loyalty guest recognition programme must be communicated through each of the hotel’s channels. There has to be an integrated communication over various platforms but with the same tone of language. Keep it short and simple. In this context it is significant that the hotel is true to their words – practice what you preach. Ultimately, it is important to create a holistic and consistent concept with enough transparency.

If all those basics are being kept in mind, there is nothing that would hinder a successful local loyalty guest recognition programme’s implementation.

5.           Increase feedback and awareness

Besides creating more hedonic experiences increasing guests’ positive feedback is part of the mentioned task, too. Receiving constantly feedback (internal and external) is essential to improve services and facilities. An increased online survey participation rate as well as the positive feedback on online rating platforms like TripAdvisor help to get the needed guests’ feedback. A higher participation rate empowers to respond to the guests’ needs and desires in an even more customised way. Therefore guests have to be motivated to write reviews. One possible approach could be to lure the guests with small incentives. By rewarding them with little gifts, they feel a direct benefit.

Furthermore, the effects of word of mouth, recommendation and influencer marketing play an important part to achieve and profit from positive marketing effects.

WOM marketing in general is an unpaid kind of promotion that is based on recommendations. That is why word of mouth communication can have a significant impact on consumer’s purchasing behaviour in general as well as in terms of hotel consumption.[5]  WOM can be spread from person to person (oral) or can be delivered in written form, e.g. in blogs or social platforms.

Due to the intangibility of services WOM plays an important role especially for the service sector and therefore for the hotel industry. Potential guests often rely on personal or online recommendations to reduce the level of perceived risk that are often associated with service purchase decisions. Recommendations often result from high service quality itself and special guest experiences. That is why a high service quality is a necessary condition to form a good WOM.[6] Motivating others to pass information along is the most important thing in spreading the word. In the long term a creation of a community consisting of fans and followers, who spread information within the social web has to be established. Social networks are a good way to build up such a community. Fans are more willing to share information, if they benefit from sharing or consider it as useful. That means for example, if the social media team posts a video or photo and challenge their fans to post a better one or to like/share the best one, the fans have to benefit from their interaction. A little gift or special experience could be a proper reward.

According to a Nielsen study 92 % of consumers around the world state that they trust earned media, such as word of mouth or recommendations from friends and family.[7] As a recent report by social media marketing agency Zócalo Group unveils, the top four most trusted sources for recommendations are the ones that come from close friends, family members, brand advocates and product experts. Only 37% trust in search engine ads and just 24% believe in online banner ads.[8] People see Facebook likes, positive brand and video reviews on YouTube as recommendations as well as direct, personal recommendations.

To take advantage of recommendations, it is helpful to expand marketing activities into this direction by implementing a referral bonus. Hereby it is important that both – the referrer and the one who receives the recommendation – are rewarded, for example with a gadget, bonus or loyalty points. The more people the referrer recommends the better the referral bonus needs to be.

Moreover Influencer Marketing can help to get attention. People are likely to listen more carefully to persons they perceive as credible and influential. Internet and social media channels have created a world where everyone can create own content and easily can act as opinion leader and potential influencer. Influencers can range from bloggers with only a couple of hundred followers as well as professional content creators with own video channels on YouTube up to prominent media personalities who can effect a huge influence with only a single review.[9] Because of the changing basic conditions and the new form of communication (online) influencer are gaining more and more impact and often can be seen as new testimonials.

If a brand or organisation decides for using influencer marketing an adequate person with whom they “cooperate” has to be chosen. This person should have great influence on the defined target group and an authority to speak on the certain subject. To get in contact with relevant influencers the hotel could invite selected influencers and offer them a breath-taking experience to increase the chance that the influencer writes, blogs, tweets or talks (with his followers) about the hotel at best.

 

6.           In addition: Customer Life Cycle

Beyond the creation of the local loyalty guest recognition programme and the recommendations to increase positive guest feedback, one would like to go one step further and introduce the accompaniment of the customer during his whole life cycle.

6.1.       Customer Life Cycle

The customer life cycle describes the progression of steps a customer goes through when considering, purchasing, using and maintaining loyalty to a product or a service.[10] The marketing analysts Jim Sterne and Matt Cutler have developed a matrix that breaks the customer life cycle into five distinct steps from introduction to loyalty:

·           REACH: Claim someone’s attention.

·           ACQUISITION: Bring them into your sphere of influence.

·           CONVERSION: Turn them into a registered and/or paying customer.

·           RETENTION: Keep them as a customer.

·           LOYALITY: Turn them into a company advocate.“[11]

This means for the hotel to get a potential guest’s attention, teaching him what you have to offer, turning him into a paying customer and then keeping him as a loyal customer whose satisfaction with the product or service pushes other customers to join. The customer life cycle is often pictured as an ellipse, representing the fact that customer retention actually is a cycle. This is why the goal of effective CRM is to get the customer to move through the cycle again and again.[12]

6.1.1.  Accompany the guest in his whole life cycle with the hotel

After gaining a thorough insight into the hotel guest, one can use that knowledge to personalise every interaction. Here it is important remembering not only to focus on the guest, but also on the context in which he operates. By adding context to the guest focus, one can deliver relevant insightful offers, recommendations, advices and service actions when the guest is most receptive. Today the guest has more presence, power and choice than ever before. If missing to provide a personal, relevant, timely and insightful message, the guest will be alienated immediately. However focussing the context of the hotel guests operations will drive brand loyalty.

To deliver the right message to the right person, in the right format, at the right time one need to map analytics to specific stages in the customer life cycle. This enables the most value at each guests’ touch point and improves the overall customer experience. Each life cycle stage is important – from initial consideration, to active evaluation, to the moment of booking and on-site and even to the post-stay experience. Each stage is an opportunity to improve the guest’s experience. And each stage is an opportunity to gain more insight that one can feed back into the hotel marketing processes to draw from the next time.[13]

It is all about anticipating the guest’s needs and responding with that information in real-time. Communications should be driven by a marketing calendar and finally by the individual guest context: his unique position in the life cycle, his contact preferences, his likelihood to churn etc.[14]

To enhance guest loyalty for the hotel it would be advisable to focus the whole customer life cycle on marketing and CRM activities. It is about delivering a better overall guest experience before, during and after the guest’s stay. It is recommended to focus on the communication opportunities that exist once a guest has booked his hotel stay, arrived at the hotel and even after he has left the hotel. Developing a marketing program that addresses guest needs while pre-stay, arrival, on-site as well as departure and post-stay enables one to create deeper hotel guest engagement and ultimately increase return visits.

A marketing programme that focuses each stage of the hotel guest’s life cycle – beginning from the point where customer data can be determined – was developed and is explained in figure 2:

MacBook Pro:Users:Marie:Desktop:CLC.pdf

Figure 2: Customer Life Cycle at the hotel[15]

Right after the reservation and booking – based on the guests timing and status – the hotel might send a cross-sell or up-sell offer for special events or a trip extension. As the trip date approaches, the guest might receive outreach customized specifically details to his trip in the form of an electronic welcome kit that provides the latest tips and locations for the city. This creates a positive welcome feeling and image in the guests mind about the upcoming journey and therefore also about the hotel itself although he has not even been there yet. While the guest is on his way to the airport to depart for Asia the hotel should send out an SMS saying We‘re looking forward to welcome you in our hotel today.“ to be constantly present in the customers minds. When the guest arrives at the hotel, the service staff welcome him warmly and inform the guest about the guest recognition programme, the guests status and his current complimentary services and goodies. CRM activities and measures can be leveraged by a constant face-to-face and SMS communication during the stay. The hotel should consider sending a note reinforcing its desire to make the guests stay as pleasant as possible and encouraging them to allow the hotel staff to assist them during their stay. On-site is the life cycle stage where text messaging (SMS) is the most appropriate. Think stay-enhancing, just-in-time communication is important regarding topics that might otherwise not be top of mind. The guest preference centre should be a smart customer data base system that all hotel staff from housekeeper, to the cook and general manager can access, enter and recall data. All service staff should be committed to constantly collecting relevant guest information to strengthen guest loyalty. Doing so allows the hotel to establish the foundation for future communications. It is essential to monitor the guest’s behaviour to create a robust customer profile of the hotel’s guests. The Post-Stay stage is when the hotel should start turning satisfied guests into repeat guests and build up loyalty. In addition this can also be an opportunity to prevent a less than ideal stay from endangering a loyal guest relationship. Understanding the guests and tailoring messages to their known likes and desires, makes the most impact in post-stay communication. Not only right after the departure but also constantly during the year the hotel should maintain its presence in the guest’s minds. At this stage the customer demonstrates low activity and the phase should not be underestimated in taking the chance to win the customer back into the cycle.

7.           Conclusion and further recommendations

Considering all the mentioned information, ideas, measures and concepts, that have been developed for the hotel an implementation of a local guest recognition programme can be recommended for the hotel. A local programme, fitted for the hotel, helps to differ from competitors and can strengthen the customer loyalty.

Hence, it is possible to bind customers to the hotel and to stand out of the crowd from all the existing CRM programmes. The local loyalty guest recognition programme enables the creation of more individualised experiences, which guests can experience at the hotel and make their stay unforgettable. For this reason, guests are going to be ambitious about visiting the hotel again due to their former unique stay/experience.

In summary the following issues can be concluded.

CRM PROGRAMME: Before implementing a sustainable local loyalty guest recognition programme, it is of importance that two attributes have to be paid attention of: Firstly, a suitable customer relationship management provides a basis for implementing a well working local guest recognition programme. Therefore, tools like an excel sheet are not sufficient, a well-performing software tool is advisable. Each customer data has to be integrated accurately and has continuously to be kept up to date – also information about their bias etc. has to be added in order to provide customised services. The whole staff needs access to this data system; on the one hand to add date continuously and on the other hand to have access to relevant data at the right time. Therefore, the software needs to have an intuitional user interface, so that the hotel staff is able to use it easily. Thus, the software must be able to handle complex customer data.

SOFTWARE TOOL FOR IMPLEMENTING CRM: The whole staff has to be qualified in order to improve their attention referring to the guest’s needs, bias and wishes. Sensitiveness and mindfulness are needed to complete guest’s satisfaction. The hotel staff have to examine the guest’s matters carefully. Through an extensive staff instruction, the hotel is able to provide guests with customised offerings and memorable experiences. Especially individualised services and gifts/gadgets are the ones that are going to be treasured by the guests and help to differentiate from competition. All this supports a long term customer loyalty and increases the chance of returning. Hence, the two mentioned attributes are of great importance before establishing a local loyalty guest recognition programme.

STAFF TRAINING : The guests’ feedback respectively the return rate of the hotel group’s experience survey and a guest rating on review platforms can be improved by incentivizing guests with little incentives. It is significant, that the hotel accept the feedback, draws conclusions from it and if necessary initialises counteractions. All this helps to suit to the hotel guest’s needs and ensures positive feedback.

FEEDBACK: Regarding the local loyalty guest recognition programme’s publication, the use of social media platforms is recommendable. With less costs a high distribution of information is possible, especially if followers share or retweet posts continuously. Besides the positive impacts created by the local loyalty guest recognition programme, huge effects can be generated by recommendations as mentioned before.

COMMUNICATION OF THE CRM PROGRAMME: As a further recommendation the hotel could communicate the extraordinary experiences more obviously – in the best case on the frontpage of its website. If a visitor reads such extraordinary stories, he feels excited and surprised and wants to be part of the moments as well. By touching the emotions of potential guests, it is more likely that they will decide to book.

FREE WI-FI: Another recommendation for the hotel is the offering of free Wi-Fi. To increase the convenient factor Wi-Fi should be offered freely not only within the lobby area but also in all guest rooms and suites.  Especially because cheaper hotels or hostels already provide this kind of service. With the increasing distribution of smartphones and tablets this is an important factor that is seen as a standard amenity, especially for business travellers.

CUSTOMER LIFE CYCLE: The hotel should try to accompany its guests during the whole customer life cycle, including welcome and goodbye SMS. Moreover, the approach to guests not only on-site but also during the year is necessary to stay in the customer’s shortlist. Whenever something very special has to be announced e.g. the customer’s birthday or an upcoming VIP event on site, the hotel could contact its guests.

CUSTOMER EQUITY: Implementing the concept for the local loyalty guest recognition programme will cause greater expenses for the hotel especially for the highest status. To ensure that these costs will be spend on valuable customers who let their money flow back into the hotel and not on those who will only be a cost factor in the long term, it is important to focus the topic Customer Equity. Even though it is preferable to treat each guest the same, it is advisable to communicate it this way but when it comes to focus the most precious guests.

Finally the implementation of the local loyalty guest recognition programme is absolutely recommendable and enables the strengthening of the hotel’s unique selling proposition.

 

Sources

Fleisher, C./Bensoussan,B. (2007): Business and Competitive Analysis – Effective Application of New and Classic Methods, New York.

Goldsmith, R.E./Horowitz,D. (2006): Measuring motivations for online opinion seeking, in: Journal of Interactive Advertising, 2006, p.1-16.

King, R. (2013): Leveraging Interactive Relationship Marketing to Move Customers Through the Lifecycle, Hotel Business Review (Ed.), URL: http://hotelexecutive.com/business_review/2084/leveraging-interactive-relationship-marketing-to-move-customers-through-the-lifecycle, access on 31st October 2013.

Mintzberg, H./Ahlstrand,B./Lampel,J. (1998): Strategy Safari, a guided tourthrough the wilds of strategic management, New York.

Nielsen (2009): Global advertising consumers trust real friends and virtual strangers the most, in: Nielsen, URL: http://www.nielsen.com/us/en/newswire/2009/global-advertising-consumers-trust-real-friends-and-virtual-strangers-the-most.html, last updated 07th July 2009, access on 06th November 2013.

Nielsen (2012): Global trust in advertising and brand message, in: Nielsen, URL: http://www.nielsen.com/us/en/reports/2012/global-trust-in-advertising-and-brand-messages.html, last updated 04th October 2012, access on 06th November 2013.

Rouse, M. (2007): Customer Life Cycle, TechTarget (Ed.), URL: [http://searchcrm.techtarget.com/definition/customer-life-cycle], last update on March 2007, access on 31st October 2013.

SAS Software (Ed.) (2013): Customer Experience Management, URL: http://www.sas.com/offices/europe/germany/software/customer-intelligence/customer-experience-management.html, access on 30th October 2013

Sterne, J./Cutler, M. (2000): The Customer Life Cycle from introduction to loyalty in E-Metrics – Business Metrics For The New Economy, URL: http://www.targeting.com/wp-content/uploads/2010/12/emetrics-business-metrics-new-economy.pdf, access on 31st  October 2013.

Vered, A. (2007): Tell a friend – Word of Mouth Marketing: How Small Businesses Can Achieve Big Results.

Ye, L./ Yushe,L. (2009): Online Word-of-Mouth Marketing Strategy in Hotel Management, Tianjin.

Zócola Group (2013): Recommendations Study, in Zócalo Group, URL: http://zocalogroup.com/knowledgehub/recommendations-study, access on 06th  November 2013.



[1] Cf. Mintzberg et al. 1998, S. 31; U.S. Department of Agriculture (Ed.) 2008, p. 1-2.

[2] Cf. Fleisher 2007, p. 20.

[3] Own figure

[4] As an example: A guest who has stayed 25 nights at W Hong Kong the same service is offered as to a guest, who has his 200th night at the hotel. However the guest with more room nights (respectively with more points) is rewarded by getting a higher rated “hotel gift”.

[5] Cf. Goldsmith and Horowitz 2006, p.6.

[6] Cf. Ye 2009, p.4-6.

[7] Cf. Nielsen (Ed.) 2012, n.p.

[8] Cf. Nielsen (Ed.) 2009, n.p.; Zócola Group (Ed.), 2013, n.p.

[9] Cf. Vered 2007, p.11.

[10] Cf. Rouse 2007, n.p.

[11] Sterne/Cutler 2000, p. 26.

[12] Cf. Rouse 2007, n.p

[13] Cf. SAS Software (Ed.) n.d., n.p.

[14] Cf. King n.d., n.p.

[15] Own chart.