Hotel Online  Special Report

Creating Customer Loyalty: Beyond Food and Bed, 
A Good Relationship Is Your Best Marketing


by Richard K. Hendrie, March 2005
"... Surely there is not a more congenial spot for 'happy-ever-aftering' than here in Camelot"
- King Arthur from Camelot

‘Happy-ever-aftering’ is a dream for most of us. Establishments who play to that yearning with a personal touch and a distinctive experience win the competition for guest patronage every time. In the counter-intuitive world of relationship marketing, these feelings can be leveraged into profit and life-long guest loyalty. Here, ‘the being’ part or ‘form’ and ‘the doing’ part or ‘function work in tandem.

What are you "Being" when you use relationship marketing as your primary tool to build sales?

Personal: - You know your guests; their names, their jobs and their families, for three. You acknowledge them for their patronage and reward their loyalty.

Value Driven: - You decide on the single driving value you’re prepared to walk every time in support of your walk.

Authentic: - You’re entirely consistent with your primary value. Everything in your branded experience is ‘of a piece’ and reflects who you are.

Consistent: - Your brand story runs throughout every aspect of your business, like blood flow from head to toe. Any part that is left out of that story eventually dies and can threaten the health of the entire enterprise.

What are you ‘Doing’ when you use relationship marketing?
Measuring: -You know how often guests come and how much they spend. You benchmark what they like and dislike and dig deep to understand what their hopes are that lie behind their expectations. 

Segmenting: -You segment your activities and rewards accordingly to the value of the guest and research with that skew in mind.

Bar Setting: -You are not interested in guest satisfaction, but rather intention to return and guest defection to the competition. 

Rewarding: -You reward with praise or other meaningful incentives whenever the behaviors you want your cast to model are demonstrated.

Farming: -You recognize that the process is a longer term investment with a much greater ROI once ‘the crop comes in’. 

Why does it matter? Because the old measures and tactics in the Service Economy do not work anymore. Measuring Guest satisfaction, for starters, does not prevent guests from defecting to the competition. According to Fredrick Reichheld in The Loyalty Effect, between 60 & 80% of all customers who indicated satisfaction, in fact, defected to a competitor. When a company put huge dollars and emphasis against improving guest satisfaction, the numbers dropped to only 40% who defected. 40%!! That’s no number I’m interested in achieving. 

What about advertising? The numbers are as disturbing. According to Sam Hill in 60 Trends in 60 Minutes only 9% of the people who were shown a brand’s commercial were able to recall the brand’s name right after seeing it. Direct mail redemptions are down to where 1-2% is considered a homerun. Makes you all warm, right?

We’re now in the Experience Era. While we are here to feed and nourish our guests with superb food or offer the solace of true hospitality, our job is deeper, more difficult and more rewarding. The most successful brands offer a unique and customized experience based on an ongoing conversation with their guest. The customization works off of one of several templates, for sure, but it feels like a personalized "third place" for happy-ever-aftering each guest craves.

So what does this look like? The Guest Relationship Marketing Matrix outlines six inter-related areas of focus, some which directly generate increased traffic and sales and some which foster deeper, more personal, more competitively pre-emptive relationships. These produce increased sales and traffic, as well as, raving fans that cannot be stolen away by price, clever promotion or gimmicks. 

They are broken into two groups:

1. Sales Generating:

  • Marketing to your current guest through e-mail, recognition and gift card redemption in a customized fashion based on your knowledge of their use behavior.
  • Offering convenient access to your product, via takeout, delivery or other customized methods. In effect, you give the guest what he wants, in the way he wants it and when he wants it. 
  • Offering incentives for your best guests to refer others.
2. Future-Sales Generating/Wisdom Gathering:
  • Offering an organized, rapid response feedback system, that assumes ongoing conversations. No closed loop, single conversation where a problem is solved, case closed. Every time a guest communicates to you should open a discussion. Those discussions with the best customers get the most attention, but everyone gets a conversation. The meat of those conversations generates a data base for future discussion within the company. It’s where innovation begins and testing occurs without costing a fortune
  • Committing to regular research that is statistically rigorous and 'guest-centric', where guest loyalty is measured and treasured.
  • Measuring key numeric indices that allow for segmenting by use behavior and dollars spent. 
  • Establishing a quality assurance system that is driven by what the guest hopes for, rather than expects. 

The power of this program is not accretive, but exponential. When you apply it fully, you’ll see the results and they will ‘astound’. Take my word for it. Better yet, call and start a conversation.


 Rick Hendrie
Chief Experience Officer

Also See: Ask What Makes You Great; Questions for Hospitality to Ask Itself / Richard K. Hendrie / February 2005
Great Service Grows From Great Praise / Richard K. Hendrie / February 2005
Is it ROI, Return On Investment or ROL, Return on Loyalty / Richard K. Hendrie / January 2005
Brand Enhancement: Invite Surprise and Delight Into Your Operation / Rick Hendrie / November 2004
Your Experience Is The Brand; Good Hospitality, Food and Service Are Merely Entry Points into Being Competitive / Rick Hendrie / November 2004

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