Good to see Jennifer Rice is back blogging with some interesting thoughts on Loyalty programs and how deeply unconvincing they can be.
Jen quotes a McKinsey article Better Rewards for Hotel Loyalty. (Free registration required but I prefer bugmenot.) It’s a guide to making loyalty cards work better. Like so many of these pieces it reveals slabs of data interepreted with little imagination and a fair amount of implicit cynicism.
I think McKinsey are stuck in a very limiting paradigm the one that sees loyalty as something to be bought; their fixation is only with buying it cheaper eg
Chains should limit the number of their reward partnerships in order to control costs and retain as much money as possible.
Fair enough I suppose, but what about the worldview implied by
In fact, a hotel can learn a good deal by conducting a better dialogue with its guests and by giving frontline staff members an incentive to note their observations. Someone who uses a credit card affiliated with a frequent-flier program or another hotel chain, for example, is clearly worth courting.
Talk about scarcity thinking. What a miserable view of humanity that assumes receptionists would only want to create engagement with guests if they are incentivised? And nothing makes me hate hotels more than my sense that I am not a person to be welcomed, just a wallet to be “courted”.
Consider the mindset that comes up with the idea that it’s about offering
tangible, easily attained incentives to lock them into the hotel’s program
Incentives and status levels should be recalibrated to keep the interest of these sought-after guests, to reduce their proclivity to play the field.
Why bother with a loyalty card, McKinsey? Why not just buy some padlocks and lock us in the rooms! That’ll deal with our nasty, emotional “proclivities” to “play the field”. In fact, let’s go the whole hog and bring in the Childcatcher from Chitty Chitty Bang Bang.
Then there’s this:
Free meals aren’t much of an incentive to anyone on an expense account. Instead, these customers want their rewards to be personalized with things that matter to them: benefits such as upgrades to concierge floors or offerings (including free movies or minibar items) not covered by their expense policies
Still stuck in the desperate effort to “buy” loyalty, we find the cyncism inherent in some of these programs. Basically, let’s bribe our guests to spend their employers’ money with us. I expect that a good few of the corporates being bilked in this way are McKinsey clients.
Incentives are often counter productive as Jennifer points out. That’s an insight that appears lost on the author of this less-than-wonderful McKinsey article.