Hotel chains have long been leaders when it comes to the development of innovative loyalty programs. In fact, according to a recent report from Accenture, 46% of consumers have joined a hotel loyalty program. And considering a recent study by Wunderman found that 79% of consumers only consider brands that show they care and understand their individual needs, it’s no wonder that hotels in particular, an industry devoted to meeting the needs of their guests, would lead the pack.
This success starts with the foundation on which hotel loyalty is built — the tier system. Loyalty tiers (silver, gold, platinum, and beyond) were built into most hotel rewards programs from the start and it’s a strategy that hotels continue to expand. Tiers allow hotels to offer rewarding, personalized, and exclusive experiences based on tenure, spend, and more.
But if you think tiered loyalty is only for hotels and airlines, think again. Brands like Starbucks, Sephora, and Uber have jumped into the game with innovative strategies to keep customers invested (financially and emotionally) through levels of loyalty.
To fully understand the best practices that make tiered loyalty soar, you need to look no further than hospitality. Hotels have practically turned tiered programs into a science — and there are plenty of takeaways for brands in other industries.
They invite everyone.
What does almost every hotel loyalty program have in common? They’re free to join. Yes, the tiers may go into double-platinum or diamond, but everyone starts at the same spot: a free, easy-to-join entry-level.
While the premium/paid format has worked wonders (and will likely continue to do so) in other industries, this democratizing move has served the hospitality industry well. Of course, calling it a level playing field would be disingenuous, but allowing easy entry to the first tier before expanding into more premium offerings is a key ingredient in attracting new customers and building loyalty that lasts.
They make tier requirements clear and consistent.
The rules of tiers and points can become complicated as quickly as customers can earn them. Hotels often have different rules based on location, holidays, blackout dates, and more. It’s enough to make your head spin. Yet, the best of the best keep their rules in order and define tiers with an efficient and flexible rules engine and clear communication with customers.
Marriott’s recent introduction of its Bonvoy program, which combined its own program with two of its recently acquired chains (Starwood and Ritz Carlton), is a stellar example of creating and maintaining a seamless experience for guests. Its member benefits page clearly outlines the rewards and requirements for each tier within the now-expanded program. This kind of transparency is absolutely critical to tiered success. Without it you risk confusing customers at best, angering and losing their business for good at worst.
They offer rewards customers actually want (and make them easy to use).
Exclusive events are nice, but rewards don’t need to be VIP to be valued. Soft perks such as free Wi-Fi and discounted redemption rates are big hits with travelers. In fact, according to the Global Business Travel Association, the top rewards consumers want are free nights, room upgrades, reward redemption flexibility, express check-in, and other simple service perks. And PWC found 79% of leisure travelers are most likely to spend points on free hotel nights.
Managing a program with complex rules and a tier system can get complicated quickly. The right technology is key to keep things running smoothly (i.e., flexible tiers, a robust rules engine, AI and machine learning capabilities, etc.). As members climb through the ranks of hotel loyalty, you’ll need a strong tiered structure (powered by the right loyalty solution) to make it simple to distribute rewards and perks to the appropriate tier. And a flexible rules engine and robust tier structure that allows for a complex network of rules, tiers (published and unpublished) will be crucial in creating a painless, transparent experience for customers.
If you’re ready to try out tiers for your loyalty program, contact Cheetah Digital today.