Advertising, direct mail, marketing collateral, public relations and other acquisition efforts tend to get the bulk of a company’s branding budget. The belief being that it is easier to acquire a customer who is presumably using a competitor product than it is to hang on to a customer you’ve already acquired.
Retention branding, the efforts implemented to hold onto those customers who have been acquired at enormous cost, gets very little attention at all. Some firms don’t even know if a customer has bought before and many don’t even know when was the last time a customer bought something.
And yet a brand is not built on acquiring customers, it is built on retaining them. This is especially true in the hospitality industry. Which is why I was surprised to learn that Hilton is imposing a 25% increase on the number of reward points required to qualify for free rooms under its loyalty programme.
The global recession has hit the hospitality industry harder than many other industries. Occupancy and rack rates have tumbled. To combat this, many of Hilton’s competitors have bent over backwards to work with existing customers and are investing heavily in retention branding. Starwood Hotels recently launched a special offer for members of its loyalty programme, Starwood Preferred Guest (SPG) that offers between double and quadruple points for each stay.
Starwood, which includes the Westin and Sheraton brands offers guests who stay two nights double points, those who stay three nights triple points and quadruple points for those who stay four nights.
Last year, at the height of the economic crisis, Marriott offered members of its loyalty programme a fifth night free when four nights were booked using reward points. One of the most frustrating issues for loyalty programme members are ‘blackout dates’. These are normally busy periods when the hotel can sell rooms at rack rates. Aware of the negative impact this had on loyal customers, Marriott scrapped the unpopular policy.
Last December, in the US, InterContinental Hotels Group (IHG) ran a tactical campaign via twitter offering loyalty card holders points for staying in its hotels. IHG also has no plans to increase reward rates.
Other hotels that have not announced specific initiatives have however ended many of the restrictions related to when points can be redeemed.
So most of the Hilton’s competitors appear to be investing in retention campaigns to hold onto their existing customers. As customers leave Hilton, as they inevitably will, the competition will be happy to acquire them and but if they continue to invest in retention campaigns, will make it very hard for Hilton to win them back.
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