By Ellis Connolly
The exchange of goods and services is a critical cog in the wheel of how our world works. As we skim through the pages of history books, we are met with countless, comparatively archaic examples of what we know now to be retail commerce. But even just a few decades ago, many of the digitally-empowered conveniences that define our retail experiences today might have seemed, at that time, far-fetched.
Let’s take, for example, the evolution of retail shipping. At one time, consumers expected to wait weeks – maybe even months – for their orders to arrive. Today, however, express shipping has become the new norm, with consumers expecting their order to arrive on their doorstep in 1-3 days or, in some cases, within the same day. And much of the time, for free!
In a 2015 blog by PARCEL, the author described Amazon’s incredible influence on rapidly changing shipping standards. “Being the titan that it is, whatever Amazon decides to do affects all retailers,” the post read. “As a result, two-day free shipping has become the norm of e-commerce, or put another way. It is the new minimally acceptable expectation. Big box and smaller-sized retailers alike have to change and adapt to compete with Amazon. Major retailers such as Borders and RadioShack have disappeared, mainly because they couldn’t keep up with the changing environment. Today’s consumers have more knowledge, demand instant gratification, and use digital merchandise whenever available.”
Just five years ago, industry experts had moved on to highlight next-day shipping as the future of retail. For retailers, quickly getting products into customers’ hands has become one of the most crucial elements of business success. Recent studies show that 61% of shoppers want their items delivered within three hours of purchase, while 80% of buyers want Same-day shipping. 17% of online shoppers will abandon a brand due to shipping delays.
Free same-day shipping has revolutionized the retail industry and acts as a competitive differentiator between brands vying for consumer wallet share and loyalty. In the past, it may have been enough to offer customers free shipping, but today, same-day shipping has redefined the landscape and, in turn, consumer expectations. This is a widely celebrated innovation that can no longer be resisted by any business hoping to remain competitive. For hospitality, we see the emergence of instant hotel rewards transforming loyalty programs and spearheading a similar shift in the industry – with savvy hoteliers ready to adapt.
The Link Between Same-Day Shipping and Instant Loyalty Rewards
First came expedited shipping, then came two-day shipping, and, finally, we arrived at free next-day and same-day shipping. For a few decades, the retail industry has shifted to prioritize convenience and instant gratification, which, as we know, is aligned with modern consumer preferences. Comparatively, guest loyalty has long remained somewhat stagnant in the hospitality market. Much like the retail shipping options of the past, legacy loyalty programs rely on delayed gratification. These systems are built upon a point-based, volume model which allows guests to unlock reward tiers as they continue to book with the same hotel or airline. Over time, guests accumulate enough points to qualify for higher value rewards, which should help enhance their on-property experience and instill long-term loyalty.
While this concept is simple and effective on paper, it’s important to note that the landscape it exists in has changed. Travel behavior and preferences have shifted, with many guests now booking trips at different frequencies and eager to explore new destinations while also craving a more meaningful and instant connection with their selected hospitality brands. Guests who do not travel to the same hotel multiple times a year, but still represent a great value to hotels whenever they book, can no longer capitalize on a volume-based system in the way that segments, like business travelers, have in the past. More importantly, many younger travelers (Millennials and Gen X) are interested in boutique offerings championed by independent hotels and actively seeking more personalized experiences. In fact, surveys published in 2018 found that just 30% of Millennials are satisfied with the programs they are offered, compared to 56% of baby boomers. At that time, 57% of polled millennials reported that they let their hotel loyalty points disappear, significantly more than any other age group. This is especially alarming when we consider the fact that Millennials reportedly travel more than any other age group in history.
Although legacy loyalty programs exist to incentivize direct bookings and long-term guest loyalty, we have entered an era in which they may be missing the mark for a large population of travelers. Like the retail industry, hospitality is immersed in the demand for convenience and hyper-personalization. Through technology hotels can finally upgrade to our industry’s equivalent of free same-day shipping: instant, personalized rewards.
Out With the Old, In With the New
So, what exactly is new-age loyalty? Powered by AI, the instant rewards-based platform are designed to be dynamic and customizable, empowering hotels to reward guests for their actions (booking decisions, upgrades, feedback surveys, social media actions, etc.) while generating insights from every interaction. At the same time, hotels can seamlessly optimize campaign designs and messaging to maximize conversion and guest satisfaction while ensuring guests are presented with relevant, hyper-personalized rewards that mean something to them.
It’s a simple but impactful (aka profitable) concept – offer guests instantly redeemable rewards customized to their interests and values, removing the barriers that once existed within traditional loyalty system hierarchies. With access to an open marketplace of thousands of rewards partners (local, national, and global), including retail rewards, dining experiences, and exciting activities, hotels can ensure something special and, more importantly, instantly tangible to offer to every guest.
Give Guests What They Want
If a consumer has their eye on a specific item that multiple retailers sell, and only one of those retailers offers free next-day or same-day shipping, which retailer do you think will win that business? Even if that consumer doesn’t need that item immediately, the appeal of convenience and instant gratification is often undeniably effective. Similarly, suppose a traveler who wants to book an upcoming trip is deciding between two competing hotel properties. In that case, one offers a traditional loyalty program while another provides an instant rewards program (perhaps in combination with a conventional loyalty program); which property do you think they will choose?
Now, more than ever, travelers and consumers crave autonomy over their experience, enhanced personalization, and unparalleled convenience. These elements of service are now the norm of any industry and the minimally acceptable expectation. Just as the retail industry had to adapt to the demand for more expedited shipping, the hospitality industry must adapt to the demand for more personalized and tangible loyalty programs that reward travelers in meaningful ways throughout their entire guest journey.