Focus on Customer Loyalty
For many years hospitality firms practiced conquest marketing. The goal of conquest marketing is to create as many new customers as possible. While marketing executives understood that it was important to satisfy the guests while they were on the property, they believed that guests’ satisfaction was the overall responsibility of the operations people. Marketing’s sole responsibility, they reasoned, was to continue to find new customers.
Marketing has changed and marketing executives now realize that their sole responsibility does not end when the customer walks in the door. Instead, they need to be concerned with the whole experience of their guests ...view middle of the document...
The big question, of course, is how to create this loyalty.
A way to think about creating customer loyalty is The Loyalty Circle, © as shown in Figure 1. The three main functions on the circle are Process, Value, and Communication. The reader will notice that at different points along the circle, there are places were the customer might exit the circle and hence the relationship. The goal of hoteliers is to keep the customer in the circle by executing equally well the three functions of the circle. Equality is the key to the loyalty circle. If hoteliers are great on creating value for instance, but do not effectively communicate with the customer, then that customer may leave the relationship.
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On one side of The Loyalty Circle© is the Process, which is “how the service works.” It involves all activities from both the guest’s perspective and the hotelier’s perspective. Ideally, there should be no gaps in this process. For the guest, the process includes everything that happens from the time s/he begins buying the service (e.g., calling to make a reservation) to the time that they leave the property (e.g., picking up their car from a valet.) All interactions with employees are part of this process.
For the hotel, the process includes all interactions between the employees and the guests, the design of the service operations, the hiring and training of service personnel, and the collection of information to understand customers’ needs, wants, and expectations. One way to monitor the process is to use mystery shoppers. These mystery shoppers can range from professional firms to hotel students at local area colleges. Another way is to conduct focus groups with customers. A third way is to undertake large-scale survey research with current customers as well as past customers.
A second component of The Loyalty Circle© is value creation. Value creation is subdivided into two parts: value added and value recovery. Valued-added strategies increase loyalty by providing guests more than just the core product; that is, for hotels, offering more than just a place to sleep. Valued-added strategies increase the long-term value of the relationship with the service firm by offering greater benefits to customers than can be found at competing firms who charge a comparable price. Features that pertain to value added are of six types: financial (e.g., saving money); temporal (e.g., saving time); functional (e.g., making the process easier); experiential (e.g., enhancing the experience such as by getting an upgrade); emotional (e.g., more recognition and/or more pleasurable service experience); and/or social (e.g., interpersonal link with a service provider). Temporal value is important business travellers have stated that they value their time at $100 per hour and anything that saves them time, saves them money.
Consider for instance, the check-in process of a hotel. Research reveals...