“A loyalty program allows firms to create a relationship with their customers. Through this relationship, hospitality firms can offer products and services beyond the basics to add value to the customers by continually understanding their needs and anticipating their future desires” (Connell, 1992).

Today’s more aggressive market is focusing their objectives no longer merely on gaining new customers. Instead, in many industries, the importance of marketing objective has shifted from customer acquisition to customer loyalty (Shoemaker and Lewis, 1998).

“Customers don’t want to be treated equally. They want to be treated individually”.

Loyalty marketing is often expressed in a manner of ways, such as:

1. relationship marketing
2. one to one marketing
3. customer centric marketing
4. and frequency marketing.

However the appropriate term should be “loyalty marketing” as loyalty is the business objective.
Loyalty marketing is an approach based on strategic marketing.
The fundamental aim is to define profitable behaviour and consequently manage this relationship by designing a range of Initiatives to maintain and influence profitable behaviour.
Repeat purchase is rewarded and a channel of communication with customers is facilitated to encourage further repeat purchase.

Loyalty programs and the ROI syndrome?

The costs associated with taking care of loyal customers decline over time, while at the same time, sales from loyal buyers increase as a consequence of their loyal behavior.
Loyalty programs should be an integrated system of marketing procedures that has as main objective to turn customers more loyal thus push them to spend more money and increase sales.
For some customers, flexibility and facilities are the most important.
For others, availability and fidelity programs could turn into repeat visits.

Warning: Many companies treat loyalty programs as short-term promotional tools for their customers. As a result, customers become loyal to the programs rather than to the company.

The period between when an investment is made and the time to payback has become a liability that puts an otherwise strong loyalty business case in jeopardy. The key is to shorten the break-even time horizon and get that program into the black more quickly. Here are 2ways to minimize the time to payback and maximize a loyalty program’s business case:

1. Share the cost.

Many of the efforts made for a loyalty program launch have ancillary benefits. Quantifying those benefits and lobbying to share the investment in those efforts with other groups that complement your business can spread costs and leverage economies of scale.

2. Find early payoffs.

Loyalty programs can benefit from establishing a few early “quick wins” — proving value and getting results at the beginning of a program’s life.

3. Use new technologies to enroll and engage.

Such industry sectors as quick-service and casual restaurants are aggressively launching loyalty initiatives. It is being driven in part by their ability to rely on new technologies to shrink the time to payback.
Starbucks, for instance, has created a program that takes much of the upfront cost of loyalty program enrollment away by leveraging their existing pre-loaded card platform for enrollment. Starbucks customers enroll in My Starbucks Rewards by registering their loadable card online. Once a customer reaches Gold status, Starbucks can justify the expense of issuing a new member card. Using the approach to shorten the time to payback can make that initial foray into loyalty much more pleasant for an organization.

Loyalty looks like a smarter investment when the break-even time horizon is in plain sight.

6 key loyalty program features

that will help attract new customers to your hotel and restaurant and keep current customers coming back for more:

1. Rewards
2. Reinforce loyalty through data mining
3. Utilize data as marketing tools to generate sales
4. Build Relationships
5. Produce Brand ambassadors
6. Target your deals

Attracting new customers and retaining current customers is essential to the survival and success of your hospitality business. It is not an option any more it is a must.

Creating relationships with your customers keeps them loyal to your brand and can make them advocates for your business. Loyalty programs are a great way attracts customers, keeps customers and converts them into advocates for your business.