Do Loyalty Programs Actually Help Your Brand?

I’ve long held the belief that too many major hospitality brands and too many big names operating in the hotel space can seriously confuse travelers. As a result, this leads to less overall awareness of your brand’s unique qualities and, ultimately, decreasing loyalty. By itself this is a very loose argument. However, a recent study spearheaded by my friend, Laurence Bernstein, managing partner at the research firm, Protean Hospitality Partners, has confirmed this sentiment.

For this study, 400 US business travelers participated in an online survey asking them to associate 36 hotel brands not containing the name of their parent chain with one of the following seven loyalty programs: Choice Privileges, Hilton Honors, Hyatt Gold Passport, Marriott Rewards, Priority Club, Starwood Preferred Guest (SPG) or Wyndham Rewards.

Results That May Surprise You

On average, only 20% of these pairings were correct. Moreover, participants had the option to tick a ‘Don’t Know’ box for each of the 36 hotel brand prompts, of which this selection was made 52% of the time. Either way, this indicates that knowledge of loyalty programs associated with various brands is drastically below where it should be.

Drilling down to the individual percentages, there are some standouts worth noting. Courtyard, when presented independent of its ‘By Marriott’ namesake, was correctly identified 65% of the time as part of the Marriott Rewards program – the best percentage of the lot. Other victories include Comfort Inn (41%) and Quality Inn (36%) for Choice Hotels; Garden Inn (37%) and Hampton Inn (30%) for Hilton Worldwide; Residence Inn (35%) for Marriott; Holiday Inn (33%) for InterContinental Hotels Group; and Sheraton (31%) for Starwood Hotels.

All other accurate match percentages were in the twenties, the teens and, in three instances, single digits. In several cases, an erroneous loyalty program was identified more frequently than the correct one, most notably for Days Inn (Choice Privileges – 27%, Wyndham Rewards – 11%) and W Hotels (Wyndham Rewards – 25%, SPG – 12%).

Two other participant characteristics measured were annual household income (above or below $100,000 US) as well as preexisting membership in one of these seven loyalty programs. For the former, greater income resulted in better brand knowledge with correct associations increasing by as much as 14.8% for Hilton Honors (41% overall) and as low as 2.4% for Wyndham Rewards (13.6% overall).

Affiliation also helped awareness. For instance, when asking SPG members in the study which of Aloft, Four Points, Le Meridien, Sheraton, St. Regis, W Hotels and Westin were associated with the SPG rewards program, 39.9% of answers were correct as opposed to 17% when including all participants. This upward trend was present for all seven loyalty programs; SPG showed the largest increase though. Awareness for most affiliated brands also increased with membership in multiple programs.

Consumers Need Education to Increase Loyalty Program Awareness

These low percentages indicate that the majority of business travelers have limited awareness of loyalty programs and, by extension, their corresponding brands. As awareness is a key towards long-term loyalty, and ultimately bookings, this is a grave problem.

Loyalty programs aren’t sufficiently educating consumers about their brand families and partner benefits. True, a part of some strategies may be to wholly distinguish a brand from the parent chain – my thoughts here lean towards luxury like Conrad, St. Regis, W Hotels and Westin – but with so many hotel names for a consumer to remember nowadays, this tactic might spell disaster in the long run.

Courtyard offers a clear example for how brands can improve. All Courtyard properties’ official logos are adjoined ‘Marriott’ or ‘By Marriott’ directly underneath. Hence, every time you encounter the Courtyard logo, it’s impossible to ignore the chain association. This tacit knowledge transfer helps explain the impressive brand-loyalty program matching score, even without factoring all the targeted marketing and brand positioning work that Marriott has performed over the decades to build this reputation.

This is hardly a revolutionary thought. It’s ‘Hilton Garden Inn’, not ‘Garden Inn’, even though the survey used the latter to better gauge actual familiarity. Likewise, the official nomenclature is ‘DoubleTree by Hilton’ instead of ‘DoubleTree’, ‘Holiday Inn Express’ versus simply ‘Express Hotel’ or ‘Four Points by Sheraton’ despite the obvious abbreviation. But what about, say, Ritz-Carlton and its vassalage to Marriott? Not very intuitive, even though in this particular case, that might be intentional.

I’m not suggesting that multinational organizations perform a company-wide logo alteration to better imitate Courtyard’s cognitive success in this study. ‘Ritz-Carlton by Marriott’ doesn’t exactly roll off the tongue. Rather, information on parent chains and sister brands should be conveyed through website copy (across multiple pages and via blog articles) in addition to well-placed hyperlinks, newsletters, brochures and even onsite awareness events. A loyalty program, and the ability to apply points to one family brand or another, can be one of a chain’s biggest strengths, but only if consumers are informed.

A corollary proposition would be that, instead of rebranding the hotel chains, we change the names of the loyalty programs. Take W Hotels, for example. Its falsely high association with Wyndham Rewards (as opposed to Starwood) may well be due to the simple fact that the hotel brand shares the same first letter as Wyndham. Rather than try to sign up W Hotel guests to SPG, give them a W Hotel rewards card and take the time to explain to them about all the other hotel brands where it might apply. This way, the W Hotel brand is emphasized as a stepping stone towards other Starwood franchises. In this case, similar branded rewards cards would be employed for Aloft, Sheraton, Le Meridien, Westin and St. Regis.

As Laurence puts it, there’s also the factor of ‘loyalty vulnerability’. That is, members of one loyalty program having roughly equal awareness for both their existing affiliation as well as that of direct competitors, making such consumers more prone to defection. An inference from this is that such programs are relying too heavily on consumers to ‘discover for their own’ each brand family rather than broadcasting details straight from the company. This might also imply that on top of the need for more direct education, loyalty programs aren’t doing enough to differentiate themselves from one other.

A Note for the Independents

Even though this study only comprised seven major hotel chains and their sub-brands, there are nonetheless a few key inferences that can be applied to independent or small chain operators.

With decreasing awareness of loyalty programs comes less consumer attachment to specific brands. Knowing this, you might find it advantageous to promote your independent or semi-independent status as part of a broader campaign to present your hotel as a ‘unique experience’ and to distinguish it from local competition.

Furthermore, if loyalty programs are in the druthers as this study indicates, do you really want to board a sinking ship? While this study did not test any of the loyalty programs that are offered for independents, I am somewhat skeptical that the results would be any better. The loyalty programs tested in this study were all ‘big names’. If the major chains with their extensive capital support are unable to generate reasonable levels of customer awareness, then how well could those with more limited resources possibly fare?

The Bottom Line

The results from this study are simple: business travelers don’t know a whole lot about the major loyalty programs or where they apply. Apathy rules the day. Without any substantial awareness precedence, how can a symbiotic relationship between a brand and its soon-to-be-loyal consumers properly develop?

Moreover, this study was exclusive for business guests – those already primed towards loyalty programs for various reasons such as corporate plans and repeat trips to the same cities. The analysis doesn’t even begin to breach discussions of the leisure market, the mixed traveler or even the loyalty-dilutive effects of the OTAs and the general attention deficit disorder nature of our internet-crazed society.

As I got my start and continue to earn a living as a hospitality marketer, I’m inclined to believe that the solution lies in advertising – in other words, supporting the brands by vastly augmenting the communication channels with the customer. Where have all the hotel television ads gone? Why not talk about your loyalty program on the radio? Some colorful yet descriptive magazine spreads can help reach a few niche markets. How about designing a custom plugin for your Facebook fan page dedicated to elaborating on the merits of your loyalty program?

Any way you put it, brands need to get the message across about their loyalty programs and they need to do it loud and clear in order to break through the noise. To view the original white paper on the topic by Protean Hospitality Partners, click here.

(Published by Larry Mogelonsky in Hotels Executive October 7, 2013)

Larry MogelonskyDo Loyalty Programs Actually Help Your Brand?