Last Friday IHG Rewards Club hosted a ‘loyalty summit’ in New York at the Kimpton Eventi that I attended.
It was a small group, in an intimate space, although super cool — directly outside the window they control a bright screen where their program logo was displayed.
There was a great conversation around loyalty with some very thoughtful people — although I’m not sure why they held the event (and indeed it was their second, after an earlier one in London).
They certainly looked to be trying to position themselves at the forefront of loyalty although with such a small group I’m not sure they made much progress there and more fundamentally while they seemed to have the ideas right IHG Rewards Club itself seems to suffer a cognitive dissonance – a belief that they’re executing on these ideas when they do so less than most of their competitors.
IHG produced a booklet given out to participants: Meaningful Membership: Transforming Membership in “The Age of I”. Here’s what I thought was the real money quote:
Meaningful membership makes money because members who are truly loyal buy more often, become more committed to the brand, become less price sensitive while becoming more resistant to competitive offers, are more willing to recommend, and are more profitable… Enthusiasm is an individual choosing your brand even if their second choice brand costs less. Brand enthusiasts perceive the brand as having trustworthy brand value. The higher the trustworthy brand value, the greater the brand contribution to the organization’s Trust Capital.
Back in March Marriott CEO Arne Sorenson was quoted as saying that loyalty comes down to quality and value. I told him why I disagree, and I basically heard my arguments being repeated back to me here.
Some of my takeaways from the conversation:
- IHG Rewards Club says they have 98 million members. That’s a lot more than I expected, so I’m a bit skeptical of the number. It would place them as the second largest program behind American AAdvantage.
- Readers of the Wall Street Journal are about ambition or success so that’s how they position ancillary products.
- There are ‘attitudinally loyal’ customers who do not buy frequently. The Porsche Owners Club has members who do not own and will not ever own a Porsche. But they are tremendously brand loyal. Communities offer meaningful membership. I wonder what this says about the 25 stay Hyatt Diamonds who are being discarded next year.
- It was interesting that American Express was on the panel — but not Chase or MasterCard, who are IHG’s current credit card partners in the U.S. American Express reports 10 million members in the U.S., which I took to mean Membership Rewards customers.
- There was certainly discussion of customers that are ‘margin negative’ — about anticipating those customers, and narrowing offerings to appeal to target customers.
- David Sanabria from Ford emphasized that they view themselves have having “responsibility to be relevant and loyal to those who we talk about being loyal to us.”
- Delta was noted for thanking customers not only for being loyal SkyMiles members — but offering onboard thank you’s for corporate customers (“thank you for being a Coca-Cola employee with Delta.”)
- When a customer complains, recognize their issue and address it. Loyal customers usually aren’t looking for ‘distributive justice’ compensation. They want to be heard and to make sure the issue doesn’t repeat. So address the issue and fix it. At a hotel, if they had an air conditioning issue on their last stay, welcome them on their next stay noting the problem they had and assuring that their room has been checked and the air conditioning works. When a customer is dealing with a problem over the phone, keep the first person who answers on the phone with them so they don’t have to explain their issue over and over when getting transferred.
Ultimately I think the basics of loyalty are the same today (and in the future) as they have been in the past, no matter how many consultants tell brands they need to change to be relevant to millennials. Loyalty marketing is about recognition (elite program) and reward (earn and burn).
Customers are increasingly cynical of institutions and brands, and that is the fault of brands – devaluations without notice, enhancements that are really devaluations. Too many consultants are telling programs they need to offer low value rewards that are easy to claim. That’s a cop out. It’s important to demonstrate value from the program quickly to earn credibility with customers. But low value rewards demonstrate low value. The key is to offer real value and do so authentically.
It’s very interesting that they chose to hold this at a Kimpton rather than, say, an Intercontinental. It seems that Kimpton and IHG have been at complete opposite sides of the spectrum when it comes to loyalty. IHG has often been a very rewarding program (as far as earning and burning points), but has done little to recognize loyal customers. Meanwhile, Kimpton has been the complete opposite– they excel at recognizing frequent guests and have created a customer base that is passionate about the brand, but haven’t been very rewarding on the points/rebate side. It’ll be interesting to see if IHG is serious about changing the direction of IHG Rewards going forward or if they’ll continue to be a disconnect between what they seem to believe and what the program actually looks like.
So I guess my question is…At a loyalty summit do they actually invite and listen to any customers loyal to those brands or do they just meet and throw around insider jargon. If there are few or no loyal customers or outsiders invited then this seems like a waste of time. It’s like getting all your news from one source that you agree with. You never see other opinions, etc.
I read recently that IHG targeted card holders as to what they thought /preferred in the way of changes to the program: increase the CC annual fee, for example. Gary or anyone have anything new about this?
Inviting Gary Leff to a Loyalty Summit guarantees that the loyalty program sponsors will NOT preaching to someone who will automatically agree with anything or everything they say, and also guarantees that what they do say will reach a very wide loyalty program user audience!
I know photos can be misleading, but it appears to be lightly attended.
@Michael this photo was from before the event started, idea was to show nearly all the seats, it was a small event
@ Gary – I am glad you noted the irony of IHG holding this event given the benefits (or lack thereof) of their loyalty program. Did they ever try to explain some baffling misses like lack of recognition on award stays or lack of breakfast/lounge for elites?
Looks like they were preaching to a very small choir.
I’m not familiar with IHG’s rewards program but did stay (many years ago) at a Kimpton in Alexandria, VA, which was nice and even pet friendly. From what I gather, each Kimpton is truly unique and not a cookie-cutter property cloned all over the country.
@DaninMCI – +1
I think regardless of whom and where this was held the fact that it was held and the discussions surprising in tone with the real traveling public or the ones that travel a considerably. I also liked your little side bar on Hyatt. I currently traveling abroad so don’t want to say anything about where I am staying other than it includes multiple Park Hyatt’s and Westin along with two Regency’s.
I have noticed a small but never the less change in the Park’s amenities, less. Service is still Hyatt International but there are some changes. Some in need of refresh, one getting ready for one.
In the end it’s my belief that Hyatt will lose a portion of it’s loyal travelers to other programs and after this I may revisit IHG. I use to a Six Continents member ! thats old
Good Post Gary
This is the kind of insightful content that keeps me coming back to your blog.