News for the Hospitality Executive
Is my customer loyalty program doing all it could?
Are daily deals such as Groupon discounts helping or hurting my restaurant?
Is our organization’s IT infrastructure where it should be?
November 21, 2012 - These questions have been nagging at hospitality and gaming management professionals for years. As new technologies and business models gain hold in the industry, there is natural uncertainty about where those forces play in, or in some cases, whether they even should at all.
More than just pondering these questions, experts and researchers from Cornell’s Center for Hospitality Research investigated them – and presented their findings on issues that could spell the difference between an organization thriving or simply surviving.
Is my loyalty program doing all it could?
Key findings from the report, Customer Loyalty: A New Look at the Benefits of Improving Segmentation Efforts with Rewards Programs, Michael McCall, PhD, of Cornell University, Clay Voorhees PhD, and Roger Calantone PhD.
Across the hospitality field, most organizations have a loyalty program of some sort or another, designed to stimulate frequent and repeat purchases from its customers. Fly a certain number of miles to get a free ticket or an upgrade. Stay at a brand’s properties a certain number of nights to earn a promotional rate or free night’s stay. Get your meal card punched 12 times and get the 13th meal free. All variations on a theme: You frequent us, we’ll give you something back.
But is your loyalty program doing what it should? Is it bringing in more new revenue than it is giving back in rewards? Could it be delivering even better results?
“The concern we hear most frequently from managers is that they have this program, and they’re not really sure what it’s doing for them, but it seems to cost them a lot of money,” said Michael McCall, a visiting scholar and research fellow at the Cornell University Center for Hospitality Research. One problem with the state of many loyalty programs is their sameness, McCall said. They tend to segment customers into precious metal categories based on their level of spending: a silver tier, gold tier and platinum tier.
“We looked at these tier programs and wondered if there’s a better way of segmenting your customers,” said McCall. The first step McCall took was to revisit early literature on segmentation for marketing purposes, to clearly understand the six basic characteristics that enable meaningful and useful segmentation.
To read more go to http://www.hospitalityupgrade.com/White-Papers/default.asp (registration required).
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