The UK’s hospitality sector has an interesting relationship with customer loyalty. Whilst bars, restaurants, cafes and hotels depend on loyal customers for as a steady revenue stream, the majority fail to effectively identify, retain and reward repeat customers.
Tellingly, consumer demand for rewarding loyalty is continuing to increase. Indeed, a recent YouGov poll has revealed that 47% of UK consumers preferred to spend with a brand of whose loyalty scheme they are a part of.
Despite their efforts, hospitality businesses fall short of developing and implementing an efficient and effective system. Consequently, we see many organisations relying on outdated methods of rewarding customer loyalty; receptionists or waiting staff identifying “regulars”, or generic and impersonal marketing campaigns to attract repeat customers.
Given the financial strain placed on the sector in the wake of COVID-19, it is clear that the industry can no longer afford to be complacent in this regard. Hotels, bars and restaurants must urgently review and update their existing schemes if they are to survive.
However, before they wholeheartedly commit to a new customer loyalty scheme, there are key considerations to bear in mind.
Simplicity is key
The first course of action for any hospitality business will be to choose the right loyalty program that suits the business. Whilst this may seem simple enough, many organisations vastly overcomplicate loyalty schemes; instead they should choose the simplest system for customers and employees alike to get to grips with.
A scheme with complex rules will only deter consumers from repeat custom, as they may not think visiting a certain venue is worth the effort. Similarly, employees will likely struggle to understand complicated systems, and therefore won’t be able to effectively persuade customers to sign up.
Luckily, there are plenty of simple schemes for hotels, bars and restaurants to choose from. Points-based systems, for example, are extremely popular. They enable customers to collect points with every venue visit; once a certain number have been collected, the customer is able to claim their reward. Rewards can be anything from a free cocktail at the hotel bar, to a complimentary meal served to the room.
Alternatively, membership schemes have proven to be an effective method of encouraging customer loyalty. By signing up as a member to an establishment, customers are able to enjoy a superior experience to non-members, with access to exclusive discounts, dishes and events.
Of course, this is not an exhaustive list, and these schemes will be a better fit for certain types of hospitality business over others. The deciding factor will be how they positively impact the overall customer experience.
Demand for convenience
Naturally, venue atmosphere, the diligence of staff, and the quality of produce and bedrooms (in the case of hotels) all play an important role in enticing repeat customers. That said, recent research has suggested that the digitisation of loyalty schemes has firmly established itself as a top priority amongst consumers; 59% of 25 to 34 year olds agree that digital loyalty schemes improve their customer experiences with brands.
The reason for this is convenience. Modern consumers are increasingly rejecting loyalty schemes which involve using physical loyalty cards, which are easily damaged, or signing up to a generic mailing list, which results in a saturated email inbox. In contrast, digital schemes are easy to access by logging into a website or, better yet, via a mobile phone app, making rewards far easier to track and redeem. Furthermore, in the current COVID-19 crisis their contactless functionality makes them significantly safer for both customers and members of staff.
So, rather than having to fumble around in a wallet or purse to find a loyalty card to track progress towards a reward, digital loyalty schemes, such as apps, automatically provide pop-up reminders to users when they are almost due a reward for their loyalty. Thus, they are gently persuaded to re-visit certain venues, without causing inconvenience to their day-to-day lives.
However, convenience is not the overarching factor that determines customer loyalty; more and more consumers are demanding a more personalised experience when they visit venues. Indeed, 62% of consumers are more willing to recommend a brand which offers a tailored service. Again, digital loyalty schemes play a central role in helping hospitality businesses achieve this.
Digital schemes, such as loyalty apps, enable restaurants, bars and hotels to collect valuable data, which helps them to better understand their clients and offer a more personal service. Many apps can connect with venues’ customer relationship management (CRM) system, allowing staff to track customer behaviours and consequently, produce a more personal approach to communication, rather than bombarding them with generic spam. For example, this system might recognise that a regular guest always orders a specific drink at the bar during their stay. So, they might provide the guest with this drink as complimentary when they next arrive at the venue.
Put simply, the main benefits of a loyalty scheme must be twofold. Firstly, they must deliver customers rewards that genuinely appeal to them. Secondly, they have to provide businesses with unique customer insights to enhance their marketing strategy and customer service.
The simplicity of the loyalty scheme will be the key to its success; not only will it be easier to incorporate into long-term business strategies, but it will transform the customer experience. As hotels, bars and restaurants that adopt their approach, we will likely see the hospitality sector slowly begin to recover, as businesses re-grow their pool of loyal and valuable customers.
Frederick Szydlowski is the co-founder and CMO of Embargo, a loyalty platform that allows restaurants, bars, and coffee shops to recognise and reward their customers through the use of pioneering technology.