Use of Loyalty Programs to Attract and Maintain Customers in Hotel Industry - Assignment Example

Use of Loyalty Programs to Attract and Maintain Customers in Hotel Industry For maintenance of good relationships with customers, loyalty programs are used as a tool. Because of the loyalty programs, the customers are appreciated for their long term relationship with the company and their assistance in company’s success. Hotel industry is a business that cannot be operated successfully without customer involvement. There are many kinds of loyalty programs that are initiated in industries for the betterment of customer relations such as buying level discounts, membership programs, upgrades, use of cards, pay back points, priority privilege programs and smart point programs. The suitability of appropriate loyalty programs for the hotel industry needs to be researched. Membership programs are the most adopted loyalty programs by hotel industry but proper management is required to access the suitability of membership programs as well as other loyalty programs for the industry. INTRODUCTION Background Study Several business organizations have grown as a result of well-implemented strategies including marketing of their goods and services, offering of services and goods of high quality and establishing some good relationship with their clients. Creation of good environment for their customers can be achieved through employment of several efficient loyalty programs for provision of satisfaction to all of the business clients. These include strategic methods used in attracting and maintaining business customers for sustainable development. Factors such as product quality, price and the quality of the service provided by the business are vital in creation of a good relationship with a customer. In addition to these, however the customer would like to have the feeling and sense of being appreciated in the particular business. Loyalty programs are specifically referred to as tool for motivating loyal customer’s behaviors through provision of rewards for the ultimate benefit of the business. They are commonly employed in retail shops, chain supplies and service industry such as hotel, tourism, airlines travel and even in super markets. Some of the commonly used programs include loyalty cards, reward cards, point cards as well as club cards. Design web sites for membership registration are also used loyalty programs. Although the programs have been employed in attracting fresh clients to the business organization, maintaining the old ones is important as attracting the new ones. It would be worthless fishing out for new customers to the business while failing to maintain the old ones (Gaebler, 2009). Use of loyalty programs by several businesses has not always been successful. This is because some organization has not been in a position to understand the right programs to use for the business or due to poor maintenance of these programs. Other reasons include the fact that loyalty programs can not thrive on their own without the creation of good business environment for the customer such as generally having good relationship with the customers. Understanding of such issues enables the researcher or the organization to understand the loyalty programs, which have been successful when employed for attracting and maintaining customers to the business organization as well as the approach the organization should use in implementing these programs. There is need to study the nature of the loyalty program employed as well as the way the program is used. This enables the researcher to evaluate the loyalty programs and find out the most reliable one (BDL Media 2006). Types of Loyalty Programs Used in Hotel Industry Some of the most commonly used programs include the following: 1. Buying level Discounts They appear just like the prepaid discounts in spite being rewarded to customers for making purchases to a particular level of buying of products and services of the business but in advance. They usually purchase the goods and services as they need and get points which moves them to the next level. This program however has shortcoming such as being so common in such a way that the several customers do cease to appreciate them. But this has been challenges by enticing the clients in trial to have them back (Gaebler, 2009). 2. Membership Programs This is an approach that has been used by several businesses to attract and maintain them to the business. This is achieved by registering the customers to become members of the program, after which the customer is offered some operations benefits, which are membership based. They usually leverage the purchasing power of the customers. This program has been successful to some organizations but failed to others (Sharp and Sharp 2009). 3. Upgrades In this approach, the cost of upgrading is seen as negligible when put into comparison with the feelings of the customers. It is commonly used by airlines. This is because it does not cost the business organizations any kind of expenses since the number of customers available will never fill all vacant seats. 4. Use of Cards These are commonly used in supermarkets, hotel groups as well as in chain supplies. They are also common among service industry organizations. They are used within the business environment as well as in attracting the customers on several other stores that operates in line with the business. 5. Pay Back Points These include driver payback points for giving rewards to particular drivers who fuel in the stations occasionally. The points are provided for buying goods from their stores. 6. Priority Privilege programs This is done through making pacts with other business firms, which are partners with that particular organization. They include programs that offer registered members with extra benefits. Such programs have commonly been employed in hotel industry. 7. Smart Point programs These are used in some travel businesses for giving customers when they board a bus, car, tax or a sub way. They are usually rewarded with smart points which are usually combined together with several other points from other organizations offering services such as cinemas, bookstores and chain supplies as well as super markets (Sharp and Sharp 2009). Problem Statement Although these programs have been successful to some extent in particular business, several other businesses employing them have found it hard to use the programs as an approach to thrive in the business environment. In several times, the programs have been providing some discounts to their clients without getting returns from such programs. The programs have also not been successful in some cases simply because the business organizations have been using them to manipulate customers to buy particular products and services from particular business organizations (Sharp and Sharp 2009). The programs have also been found to fail to improve the image of the organization in cases where marketing and advertising of the company’s products have not been successful. Several organizations using such programs not usually have the right tools for operating and managing these programs. This has led to improper use of the right programs. Others have no idea of the right programs to use in their business; they end up employing the wrong ones hence result to failed mission. This therefore calls for more research work on the most appropriate loyalty programs to employ in particular businesses to improve the image of the organization, create sustainable development and make customers to be more loyal to the organization. There is still need for more research in order to quantify and evaluate the effectiveness and efficiency of these programs as far as attracting and maintaining is concerned. Objectives of the Research This research aims at finding whether several loyalty programs offered by several business organizations in the hotel industry have been properly used, managed and if they have successfully attained repeated business customers. It also seeks to find the most appropriate programs to use as well as how to use them to attract and maintain customers. Justification Conducting research on various loyalty programs used in hotel industry in attracting and maintaining customers to the business would help in understanding the effectiveness of such programs and the way they are managed. This would subsequently assist in finding the most appropriate ones for the hotel industry businesses. It would also device means and approaches of managing these programs in the most appropriate manners for sustainable development in the business (Grant 2009). LITERATURE REVIEW Several research papers have been done on this topic to find ways of attracting and maintaining customers to the business organization. One such research work was done by market and global demand for loyalty and reward program in 2000. It was meant for awarding customers who became loyal to the 24/7 Media Asia. This offered Award Points in major areas of Asia and its environment. More research is needed to find methods of applying these programs into the business in a better way. RESEARCH METHODOLOGY This includes the methods and approaches employed to find the most appropriate loyalty programs to attract customers to the business. It also includes the analysis, which puts down the procedures and ways of the research and further defines and describes the purpose for employing the kind of research method used. Methods of Data Collection Used Primary Data Collection This would include carrying out of direct survey and interviews of several customers making use of the several hotel services as well as certain managers and workers of those particular hotels. This enabled the person conducting the research to gain a purposeful data and information crucial for evaluation of the research topic. The research was conducted by selecting a sample of twenty customers from different hotels and ten officials from the respective hotels. A written questionnaire was presented to every one of them and was filled appropriately but he customers as well as the officials. Direct interviews were also done. The researcher also carried out some direct observation of the customers as they were offered with the loyalty programs and noted their respective behaviors. For collection of more appropriate data there was direct survey done on twenty customers. The survey involved filling of the questionnaires regarding their perception of the loyalty programs being administered. They were expected to give their feelings about them, the ones they preferred and if they felt that the programs were offered and managed in the right manner. The business officials were expected to elaborate the programs they offer, why they offer them and how the provide them to the customers. In addition to these they were also expected to explain how they managed them and if they added value for the sustainable development of the business (Brown 2009). They also expressed their feeling regarding whether the programs made the customers to be loyal to the business or they kept on coming back because of these. Secondary Data Collection Methods Used This included obtainment of relevant information from already published sources such as books, journals, reports, magazines and the Internet. The information regarding loyalty programs was obtained from books and the Internet. Research Findings Most of the customers who were interviewed indicated that they preferred using membership programs followed by cards with upgrading system being the leas preferred. This was because membership programs were seen to have more benefits than most of the other programs. The customers also indicated that they would like to continue using the programs in condition that they were treated well by the businesses and that the services offered were good (Elliot 2008). A good percentage of the management indicated that they preferred to offer membership programs because were more attractive to customers than the others. The programs as per the management were adding some value to the business as they had attracted some customers who had become loyal to their businesses. In some cases the programs failed because of poor management, lack of customer’s privacy and poor services. Conclusion and Recommendations Several hotel businesses that are making use of loyalty programs have succeeded in their businesses as a result of understanding the right programs to use and how to implement them. This has led to customers becoming loyal to their businesses. Memberships programs have been the commonly used programs as they have many benefits. Proper management of these programs is essential. The successes of the programs however need to be coupled with quality services and high level of hospitality. There need for the management to comprehend the most appropriate programs and how to manage them in order to attract more customers to their businesses. More research is needed on understanding how to manage these programs better for the businesses to succeed (Arsenault 2008). Work Cited Arsenault, Smile.. Love those Loyalty Programs: But Who Reaps the Real Rewards? 2008. Accessed on March 21, 2010 BDL Media. Ibis Opens Qinghai Hotel. 2006. Accessed on March 21, 2010. < http://www.chinahospitalitynews.com/en/2006/04/27/1374-ibis-opens-qingdao-hotel/> Brown, Lionel. Observational Field Research. 2009. Accessed on March 21, 2010. Gaebler Ventures. Customer Loyalty Programs. 2009. Accessed on March 21, 2010. < http://www.gaebler.com/Customer-Loyalty-Programs.htm > Grant, Michael. 5 Keys to Successful Loyalty Program Management. 2008. Accessed on March 21, 2010. < http://blogs.aquent.com/aquentblog/2008/04/5_keys_to_successful_loyalty_p.html > Sharp, B. and Sharp, A. 1997. Loyalty Programs and Their Impact on Repeat-Purchase. Loyalty Patterns: International Journal of Research in Marketing, 14 (5), 473-86. Business Wire. 2000. Chinadotcom Corporation and 24/7 Media Establish Loyalty Incentive . Accessed on March 21, 2010. Read More