This is a follow-up piece on my recent posting “Catching the Priority Club’s & HHonors’ “whales” while Marriott retains its own and all because of program devaluations” (URL: http://www.rewards-insiders.marriott.com/message/76181#76181).
The premise in my first posting is that the Marriott program can capture its competitors’ whales when its competitors undertake devaluations of their programs and it can keep its own whales even when it is devaluing its own program. But, to do so, it has to think carefully through a marketing plan to do so.
While I made some recommendations in that posting on how Marriott could capture its competitors whales, and keep its own too, I know that the bright people at Marriott can find that balancing act that allows them to capture whales, keep its own, but also “benefit” from its devaluations that it thinks it gets.
Regarding the Hilton, in a blog posting today by the owner of Loyaltylobby.com, titled “Last call for Hilton Awards at Old Rates: Use them now or regret rest of your life” (URL: http://loyaltylobby.com/2013/03/25/last-call-for-hilton-awards-at-old-rates-use-them-now-or-regret-rest-of-your-life/), the author said, “If you have been accustomed to use your Hilton points for aspirational awards . . . you are really getting ‘screwed’ by . . . (the change in Hilton’s redemptions program) . . . . There is really no polite way of saying this. The number of points required for awards often doubles . . . (with program changes taking effect March 28 . . . . .”
Whales don’t like being “screwed”, don’t like being beat up, by their “loyalty programs.”
Are there marketing managers at such programs who think they can tell their “whales”, “Your screwings and beatings will continue until your loyalty improves?”
In my opinion, the SINGLE most destructive devaluation to its business made by a “loyalty” program is one that “screws” its whales of the ASPIRATIONAL awards they’d hoped to have had. And the best time a competitor, such as the Marriott program, can capture someone else’s whales is when that competitor has screwed its whales out of their aspirational awards, as the Hhonors program is reported by Loyaltylobby.com as doing.
It’s simple for me.
Raise the hotel rates I have to pay in cash for my rooms, and I’ll not sweat it. That is a pass through cost for me and many others, a reimbursed expense.
But, raise the points redemption costs to me for aspirational awards in such a manner I feel “screwed”? That’s another matter. I’ll figuratively follow a scorched earth policy afterwards with that loyalty program. And, I’m not alone in that, I know.
While loyalty programs view devaluing their programs as a means to reduce their balance sheet contingent liability and/or as a means, for example, of theoretically making more nights available in aspirational properties for their cash paying customers by the act of reducing the nights available to program members through points redemptions, the programs cannot accurately measure the opportunity cost to their hotel loyalty programs of the whales that say, “OK. I’ll take whatever I can get with what's left of the reduced value of my points, but, you’ll not be getting any of my paid nights’ stays in the future if there is any way I can avoid patronizing your properties.”
It would have been for more profitable for the Priority Club to have found a way to appease me by its treatment of me with its devaluations. For the benefit of its reducing its balance sheet liability, for the benefit of its theoretically freeing up some nights for cash paying customers at some aspirational property, was it worth the hundreds of paid nights I’ve denied it in my own paid business over the last year, the multiples of hundreds of paid nights my colleagues have denied it over the past year? And, this isn’t just one year. It’s forever! Scorched earth!
And, so, to the Marriott program, the point is as well: Be careful. Be careful of the kind of marketing mistakes the Priority Club has made and the Hilton too. Protect your whales. Capture your competitors’. And, If you don’t protect the little fish, that’s a calculation easier to make.