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Customer-facing apps, analytics, and other digital tools are delivering detailed customer insights that can help hotels enhance their loyalty programs.



Many hotel organizations have long-established loyalty programs with strong track records of brand enhancement and customer engagement. A 2013 survey of 4,000 travelers and others conducted by Deloitte’s Travel, Hospitality, and Leisure practice found that roughly 80 percent of high frequency travelers—those who spend 16 or more nights each month in a hotel—belong to two or more loyalty programs.

While this and other survey findings point to the overall success of loyalty programs in engaging customers, it also spotlights a significant opportunity to turn occasional guests with multiple loyalty program memberships into repeat customers loyal to a single preferred brand.

Given the proliferation of successful loyalty programs—and the similarity of many hotel properties—the challenge many hotels currently face is creating a personalized, differentiated customer experience that will inspire occasional guests to become repeat customers who are loyal to a single preferred brand, says Christine Cutten, a principal with Deloitte Consulting LLP.

“Creating this experience requires, among other things, data mining, analytics, and other technologies that make it possible to track and understand consumer behaviors,” says Cutten. “Once hotels develop insight into what various customer segments want, and how they prefer to engage with the hotel—e.g. apps, social media, websites—they can tailor the customer experience in ways that will truly differentiate the brand from its competitors.”

Start Your Analytic Engines…

Cutten says that, due in part to the rapid pace of technological innovation, no single hotel brand has perfected its approach to cobbling together customer data from disparate sources and turning this information into a well-defined complement of differentiating experiences—at least not yet. However given the potential value—not to mention the competitive advantage—this opportunity presents, efforts are underway. “For example, after analyzing customer transaction data to identify trends and opportunities, one leading hotel brand is now experimenting with a ‘concierge’ app that guests can use on property to book a table at the hotel restaurant, have luggage picked up, or call a taxi, among other services."

She says CIOs can help lay the groundwork for pursuing opportunities like these by identifying existing customer-related data sets from marketing, sales, finance, and loyalty programs, among others, and deploying basic analytics technologies to perform behavioral analysis. “The findings can provide some insight into the services, amenities, and loyalty program rewards that customers have been drawn to in the past,” explains Cutten.

The next step—predictive modeling—or trying to determine what customers will want in the future based on past behavior—can be a bit more involved. “You are looking for patterns of predictive behaviors that will help you create more personalized experiences,” Cutten says. “If, for example, a mature leisure traveler enjoyed spa services during her stay, you will look for patterns in the data that identify similar customer behaviors. Such insight suggests that by including a spa package discount as a loyalty program reward, travelers in this customer segment will likely feel a greater affinity for the property or the brand.”

Mind the Complexity

The work required to manage data strategically across disparate stakeholder groups and systems should not be underestimated, says Cutten. As hotel organizations take their loyalty programs to the next level by deploying digital capabilities like social media, apps, or personalized online travel planning tools to engage customers, they generate more data, which must be aggregated, cleaned, and integrated with other data sets. “Because there is no ERP suite for marketing, it falls primarily to the CIO and IT to build the complex plumbing these efforts require,” she says.

With the pace of innovation in this sector, creating this “complex plumbing” may remain on the CIO’s to-do list for the foreseeable future. “There may not be an end point at which a single hotel brand can declare that it is ‘the best’ at leveraging technology to better understand customers,” says Cutten. “But there will be numerous opportunities for CIOs, CMOs, and other innovation leaders to continually enhance loyalty programs in ways that create a competitive advantage.”