Na, Na, Na-Na Na…My Loyalty Program’s Bigger Than Yours!

DM News recently announced a dubious marketing achievement:  A first-of-its-kind escalation of hostilities between dueling loyalty programs.

In the Oscar-nominated movie Up In The Air, Ryan Bingham (George Clooney) and Alex Goran (Vera Farmiga) spend some time comparing their airline and hotel loyalty programs. Normal behavior, if you spend your life on the road.

In real life, road warriors can also visit various websites to compare airlines’ and hotels’ loyalty programs. This is also normal – the pursuit of best value.

But the new Intercontinental Hotels “Luckiest Loser” campaign is anything but normal, in the way that it appeals to members of their own Priority Club Rewards program who also belong to competitor Hilton Hotels’ HHonors program.
•    The Intercontinental member with the most HHonors points receives 2 million Priority Club points.
•    The top 20,000 “lucky losers” each get up to 20% of their current HHonors balance in Priority Club points, up to 20,000 points.
•    All members receive 1,000 points for just for responding.

The upside and the downside
In the short term, we applaud Luckiest Loser; it’s a powerful, creative customer retention and upsell campaign. But in the longer term, it aggravates The Great Loyalty Program Trap.
•    Luckiest Loser puts Intercontinental (and Hilton, and other hotel chains) in the position of competing almost solely on the basis of their loyalty programs, rather than on the tangible features and benefits they offer to guests, or on the intangible value of their brands.
•    “Earn points, get rewards” stops being the tie-breaker it was intended to be. Instead it becomes the one criterion for a hotel purchase decision, taking the place of comfortable rooms, excellent dining, business facilities, convenient location, quality of customer service and so forth.

The airlines who pioneered loyalty programs already know this. For them and for marketers in other categories, loyalty programs aren’t just another kind of promotion. They’ve become part of the product itself. These marketers find themselves damned if they do (because they have to spend significantly, just to keep running a program that isn’t part of the core value that they offer) and damned if they don’t (because customers will leave if they cut the program back). We’ve seen many of these marketers jump through creative hoops, trying to find exciting ways to get members to redeem points at lower liability.

So Intercontinental’s Luckiest Loser is an ingenious promotion.  But it may be helping to dig a hole that’s way deeper than marketers ever thought possible.

Tags: hospitality marketing, loyalty marketing, Loyalty program, luckiest loser, rewards program, travel marketing

This entry was posted on Monday, February 8th, 2010 at 10:15 am and is filed under Fred Petrick, direct marketing, promotion. You can leave a response, or trackback from your own site.