At Your Service: The Rise of Contextual Loyalty
Over my last twenty years of frequent travel, I’ve seen the elite travel experience change considerably—in ways that have both enhanced and commoditized it. Gone are the glory days of the hot fudge sundae cart in the aisle of business class. Today’s perks center more around offering tailored and convenient services to better every trip. For example, technology has made available a myriad of web sites and mobile apps that allow travelers to design and manage their own individualized travel experience. Whether it’s booking a trip, hailing a rideshare, choosing your plane seat or hotel room, booking a restaurant, or even checking in 24 hours early with your phone, travelers can now self-create a travel experience both personalized and largely devoid of friction.
The advent of digital technology has been a boon to travelers and resulted in a renaissance in the travel industry. Many travelers appreciate these streamlined interactions; a recent Egencia Business Travel and Technology Survey, for example, revealed that half of business travelers prefer to avoid human interaction when traveling for business.
On the other hand, many travelers still crave high-touch service. Travel agents, customer service representatives, concierges, and front desk representatives are still essential to a great experience, be it through a special, personal touch or through resolving a problem along the journey. A recent Google survey, for example, found that 61 percent of mobile users call a business when they’re in the purchase phase of the buying cycle—especially when making an auto, finance, or travel purchase.
These competing trends reveal that, on the spectrum from “high touch” to “no humans allowed,” not every traveler wants or expects the same type or level of service. What’s more, an individual’s desired service level may change based on the purpose or location of the travel. For example, when I’m on a business trip to a city and hotel I revisit frequently, I’m happy to speed my way through digital service delivery. When I’m traveling to a new vacation destination, on the other hand, I appreciate some high-touch support.
The ever-evolving needs of modern travelers mean that providing the same service interactions to every guest all the time can actually lead to frustration and disloyalty. Rather than provide a “one-size-fits-all” approach to guest service, hoteliers should instead leverage loyalty program data, and the program benefits matrix, to provide guests with what they most desire: an experience uniquely tailored to the moment. Such contextual loyalty will become a key differentiator in building sustainable relationships with today’s elite travelers.
Rise of the Robots
Given the pace of adoption of digitized customer service in the broader consumer economy, we may be forgiven for thinking that digitized service is winning a zero-sum game against service centered on human interactions. For example, a recent McKinsey report on the pace of automation predicts that between 400 and 800 million jobs worldwide will be lost to automation by 2030.
However, history shows us that the adoption of automated customer service systems doesn’t always result in the elimination of human interactions. The classic example of customer service automation may be the automated teller machine, or ATM, the adoption of which many financial industry observers predicted would lead to the elimination of bank teller jobs. What happened, in fact, was the opposite: Bank teller jobs haveincreased since the first ATMs were installed in the 1970s—and at a faster rate than the overall labor market.
Today’s consumer economy tells a similar story. From retail self-checkouts to Amazon Go to Kroger’s new Scan and Go shopping app, the retail industry is now replete with examples of automation enabling consumers to shop brick-and-mortar stores with minimal human interaction. The travel industry is beginning to follow suit; shadowing the success of Airbnb’s self-service model, new hotel concepts are emerging that limit human interaction in a bid to attract value-conscious millennials.
On the other hand, some retailers are counter-programming against Amazon-style automation by piloting new store concepts that showcase high-touch customer service, such as Nordstrom’s new inventory-free storestaffed with personal stylists and Samsung’s new experiential showroom in New York’s Times Square. For virtually every case in which human-focused service is replaced by automated service, a countervailing case reinforces the notion that consumers still crave high-touch service.
The Human Touch
In the case of ATMs and bank tellers, it isn’t just that bank teller positions increased in number; as ATMs replaced traditional cash withdrawal and check depositing interactions, the bank teller role has evolved to take on a diverse set of high-touch customer interactions. Tellers increasingly will shift to hybrid roles, says Dong Hong, vice president and senior counsel of the trade group Consumer Bankers Association. Tellers will be able to help customers with specialized bank products like loans, in addition to routine services such as cashing checks and dispensing money. Likewise, as digital customer service takes over many of the traditional duties of booking agents and front desk personnel, we may expect live customer service in the travel industry to evolve in ways that provide differentiated customer service based on the needs of the elite traveler in that moment.
A traveler’s needs for customer service might change based on multiple factors, including the type of trip (business versus leisure), the destination (familiar or new), or the purpose (important conference, or quick visit). For some visits, travelers may prefer to check in via mobile phone and receive standard profile-based amenities; for other visits, they might prefer live interactions to facilitate questions and to swap out amenities. The ability to anticipate and to deliver on these needs, in real time, will increasingly become a requirement for successful hoteliers.
Fortunately, hoteliers have access to a powerful set of tools that both facilitate the required insight on traveler preferences and enable delivery based on customer value and potential: The hotel loyalty program. Loyalty programs are by design drivers of guest service, providing benefits to enhance the experience for higher-value guests. Loyalty programs facilitate early check-ins and late check-outs, offer dedicated phone lines, provide elite front desk service, and even furnish dedicated floors and guest lounges.
Fortunately, a new era of differentiated service enablement is at hand for hotels, driven by digital technology enablement and sophisticated loyalty strategies that together will transform the end-to-end travel experience.
Loyalty Service Drivers Enable the Travel and Digital Experience
Merkle Loyalty Solutions recently conducted a survey of 1,000 loyalty program members across North America, Europe, and Asia, asking a range of questions about their motivation for joining and engaging with loyalty programs, as well as the factors inside and outside the program that drive their loyalty. Among the top factors members cite as driving their brand loyalty are:
1. Personalization: The brand offers relevant rewards and offers
2. Empathy: The brand understands me
3. Memory: The brand creates great memories for me
Customer-centric data analysis and insight gained through the loyalty program can fulfill these needs for members through delivering personalization, demonstrating empathy, and creating memorable moments. These three factors are the cornerstones of the guest experience—and the ultimate value of customer data lies in its ability to anticipate delivering on these cornerstones based on the customer’s needs in the moment.
Delivering on Contextual Loyalty
To deliver on the promise of contextual loyalty, brands should focus their efforts most specifically on delivering empathy and memory—the two elements of the guest experience that can vary most based on the specific needs of the traveler on any given trip.
To demonstrate empathy, hotels should leverage customer-centric data to anticipate guest needs and demonstrate a commitment to meeting them through service – in many cases, even before the customer asks for service. Starwood’s Your24 benefit, for example, enables Platinum members to choose their “day” at the hotel with a personalized check-in and check-out time. Denihan Hospitality, meanwhile, analyzes customer feedback and transactional data to change hotel room composition based on guests’ trip purpose and party size. The chain also uses data to help frontline hotel staff anticipate what amenities guests prefer, including restaurant meals, concierge services, or local excursions.
Creating memories, meanwhile, doesn’t always rely on sophisticated data use. A single piece of past stay history, for example, can create a simple but memorable check-in experience. One example: a simple “yes” or “no” in a guest history screen on the property management system (PMS), indicating a past stay at the hotel. If “no,” then I get the standard welcome and an opportunity to complete a profile on my stay preferences with an incentive like free wi-fi. If “yes,” then I get a “Welcome back” greeting, and perhaps a surprise-and-delight treatment that includes a free drink with dinner at the hotel. The result: a small but memorable moment, and a revenue opportunity for the hotel.
Via their loyalty programs, hotel brands can do more to serve travelers as they imagine, plan, book, and share their hotel stay experience. Loyalty programs generate a wealth of data, offering a unique memory of member preferences, spend, and habits that many hotel brands have yet to leverage to create memorable moments for guests. By failing to leverage this capability, hoteliers risk ceding that opportunity to online travel agencies (OTAs), which also hold a wealth of data generated outside the core hotel stay. Hotels must win the battle for contextual loyalty, or many will lose their best customers.
Optimizing Service Options
For frequent guests who prefer a streamlined experience, the intersection of loyalty programs with digital platforms will continue to drive innovative service offerings. In many cases, travelers completely self-manage their stay from end to end.
This reality has changed the role of the branded loyalty program from servicing customers directly to providing self-service tools and content. For example, Hilton’s Digital Key allows members to choose their room and check in without the “interference” of the hotel team. Marriott, meanwhile, is making significant efforts to revamp its member app and bring localized and personalized offers driven by beacons and machine learning.
Ultimately, however, hotel loyalty is centered on the experience on property—which creates opportunity for hotel companies to serve franchisees with a shared digital services platform that delivers local marketing and content, as well as dynamic profiles of loyalty program members. With the recent launch of its Concierge app, for example, Hotels.com can serve travelers more locally by offering fast access to services such as ride-hailing, on-demand food delivery, restaurant reservations, and leisure activities.
Today’s technology makes the delivery of empathy and memories, long the purview of high-touch luxury hotels, accessible for hotels of any scale and size. Imagine the pleasure created by a wider adoption of these policies—perfectly achievable with present advances in technology and hotel operations management. The key to success: evolve your service delivery beyond one-size-fits-all to custom service that provides the right fit to each guest every time they book with you. By providing the right mix of frictionless and high-touch service, you can build customer relationships that last a lifetime.