Sometimes the smallest change in a loyalty program can make the biggest difference in customer loyalty.
For mid-sized hotelier Executive Hotels and Resorts, the change was a reaction to decreased business in the wake of September 11. The Vancouver-based hotel chain already had the successful Executive Reward Club, launched in the summer of 2000 by Ernex Marketing Technologies, also based in Vancouver. The program awarded 300 points to its members each time they stayed in one of its hotels. The points were then redeemable for a variety of rewards, including free nights in hotels, airline miles or prizes ranging from electronics to earrings.
After September 11, Executive decided to increase the number of points guests could earn for each night in one of its 19 hotels or at an affiliate from 300 to 500.
The change had an immediate effect on the hotel chain's revenue.
"We found a 25% increase in the number of stays from our loyalty customers," said Executive Hotels and Resorts CFO Hanif Mawji, who said the boost translated to an 8% increase in revenue.
Overall, Mawji said, revenue was still down from before September 11, but the drop "would have been even lower had we not seen this small increase from the [loyalty] customer base."
Executive was able to put the new points value into effect quickly due to the flexibility of the Ernex system.
"We've got a host-based system," explained Ernex CEO James Christensen. He said the company switches on and off toggles for certain features, like the points increase. Within 24 hours, Ernex can convert the system.
Customers currently submit their changes on a hard copy, Christensen said, and an account manager makes the necessary alterations.
While it is technically possible for clients to manage these program changes themselves, through a Web site in real-time, the hard copy system has avoided a lot of permission problems, Christensen said.
Future enhancements to the product will most likely include real-time activation that some larger customers can use.
Guidance paid off
In fact, it was Ernex's ability to guide the process of creating the loyalty program that cinched Executive's selection of the vendor in the first place.
"Before we started this program, we didn't know how loyalty programs worked," said Mawji. "[Ernex] spent a significant amount of time in going through the mechanics of the program, helping us in all aspects, in terms of concept and design to showing us all the terms and conditions."
In terms of technology deployment, Mawji said, Executive's investment was minimal. The only hardware purchase necessary was the front-end terminals that processed the loyalty card transactions at the point of sale. Reward Club members run their cards through the same swipers as they would credit or debit cards, and are immediately informed of their current and lifetime points totals on their receipt.
It's possible to further personalize the messages on the receipts, Christensen said. For example, "if you have someone who stays for five nights or something, as soon as he hits five nights you can send out a message that says 'thanks very much, you're one of our top people, you'll get so many percent off your sixth night or something like that.'"
Executive isn't at this level just yet. It ultimately hopes to begin using the software to segregate customer preferences and use that for targeting.
Executive saw ROI on the initial program within nine months of inception, Mawji said. Although neither he nor Christensen will say exactly how much the implementation cost, Christensen said that Ernex's fees are structured in such a way that basic, occasional changes like Executive's post-September 11 points increase cost nothing -- although Ernex would add additional fees if customers started making frequent changes.
Executive plans to repeat the program during the fourth quarter of this year in the "low season" of October to December.
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