What if Loyalty Doesn’t Pay Anymore…Ignoring Customers’ Values

February 22, 2017 at 11:11 pm | Blog

As a frequent business traveler, I can’t help notice the moves made by large companies in meeting the needs of their customers, or not.  I have been an elite member of the Marriott Hotel chain for years.  It affords small benefits but ones that their elite members have come to value.  Besides speedier (sometimes) check-in, the use of the business concierge lounge is often coveted.

 

In recent years Marriott hotels began moving their lounges from the upper concierge room floors to lobby level.  Every time I check into a Marriott and I am told “it’s now off the lobby.”   I always share my dismay, “But most of us want it where we have early morning access without coming all the way downstairs”.  At least 90% of the reception staff groan in response and say “yes, we hear that all the time.”  Yet the lounges are being relocated nationally.  I don’t know the rationale for the move.  Best guess is that it frees up space to plug in 2 to 3 more rooms hence bed nights on the upper floors.  I am sure the economics play out well for the hotel.  Of course, that assumes full occupancy most of the time.  In the major urban cities, that may make sense.  But at what cost?   If there is no tangible value for staying Elite at Marriott, options for any chain are now open.

 

The same goes for the airlines.  Delta, for one, began selling open First Class seats at a discount weeks before a flight.  Hence, fewer seats are available for upgrade.  Even the highest-level flyers, Diamonds, tell me they haven’t had an upgrade in months, so there is little hope for the next level, Platinum flyers.  For Delta, as with Marriott, the revenue goal wins out over their own loyalty programs.

 

Many frequent travelers will often take a longer trip, one stop vs. nonstop, to build miles in hopes of the upgrade potential.  But if upgrades are few and far between, why not choose the nonstop?   If there is no reward for the inconvenience of loyalty, then game on…Here we come, Jet Blue, Southwest and whoever has the shortest flight time between two points.

 

As a business person, the added revenue goal may be easy to understand.  Or is it?  We all know business trends are cyclical.  Will companies who diminish the value of loyalty programs need those travelers at some point in the future?  Or, in the present, on soft travel periods?  Will the loyal travelers find another home?  These programs were the bedrock of competitive advantage for them.  What happens next will be interesting to observe in the next couple of years.  Ignoring customers wishes often doesn’t end well.

 

When companies reduce loyalty benefits, they risk commoditizing their loyalty programs.  If, at the end of the day, the only benefit from a loyalty program is free flights/nights, then Marriott risks reducing its brand to the same level as Holiday Inn, and Delta looks no better than Southwest.   This trend seems to be happening in an environment where there are fewer airlines, and hotel brands are consolidating.  But what about when competition increases?

 

Why should I put in extra effort to bring my business to you?