IN-DEPTH: Jill Goldworn, president and co-founder of the first club gives an insight into 2011 hotel and travel loyalty trends

Published: 10 Feb 2011

IN-DEPTH: Jill Goldworn, president and co-founder of the first club gives an insight into 2011 hotel and travel loyalty trends

By Ritesh Gupta

While most hotels have them, hotel loyalty programmes are definitely not living up to their potential.

According to Jill Goldworn, president and co-founder of the first club, on average, only 20-40% of loyalty programme members are active members, meaning they actually collect points and work towards redemption. That means hotels are losing out on significant opportunities to encourage at least 60% of their customers to become repeat and loyal customers – and as repeat customers can be the most profitable ones, hotels are leaving a lot of money on the table, says Goldworn.

Goldworn points out that in many cases, consumers lose motivation to remain loyal to a particular brand’s programme as they feel the rewards are simply not attainable.

“the first club solution removes this barrier by giving consumers the opportunity to redeem meaningful rewards in all areas of their life and when redeeming for something that requires less points, people are able to redeem faster. In the case of the first club, they can so instantly,” explained Goldworn in an interview with EyeforTravel’s Gupta.

“Consumers can become more excited and loyal to a provider after their first redemption, therefore they are likely to the most profitable loyalty programme members. As well, it offers consumers the ability to use their points for something other than hotel stays (which can have restrictions and blackout dates), making the overall redemption process a more positive one for consumers, further increasing their brand loyalty,” Goldworn added.

Goldworn spoke about unused loyalty card points, recognition and rewards, and lot more. Excerpts:

If hotels are losing out on significant opportunities to encourage at least 60% of their customers to become repeat and loyal customers, where do you think hotels are faltering most?

In the U.S., there are over $700 billion worth of unused loyalty card points that remain unredeemed, according to The Economist. The largest group in the industry is made up of programmes belonging to the airlines, which have amassed 8.5 trillion unredeemed frequent flyer miles.

Hotels guest programmes generally offer their members the opportunity to redeem points for free nights in their hotels, with additional perks such as upgrades related to hotel stays however many members often don't accrue enough points to redeem for these rewards leaving them without a meaningful connection to the Brand or Programme. Some hotels have expanded rewards redemption options and expiration dates, but no real innovation has come with ability to redeem after a single stay. This is where the first club can offer serious uplift both as a reward for members who don't have enough points to qualify for a "free night" and to those still shopping for a chain that understands the way they live their lives now, one that will reward them while they travel with books to read, music to listen and allow them to redeem points and stay connected to the hotel's site in every aspect of their mobile lives.

Generally, there are two aspects to loyalty programmes – recognition and rewards. What should hotels consider when it comes to effectively recognising and rewarding its customers according to their preferences, and ultimately keep their loyalty while reaching them out via real-time location-enabled web or via an offering like the first club?

Consumers like to be recognised, that is very clear, but also in a way that speaks to the way they live their lives. So they want to redeem their points in the same way they've elected to receive communication either via email, text or snail mail. Brands can and should employ social networking tactics and enrollment data to meet their member's individual needs and speak to those. For example, send texts with offers for instant rewards when they book a new resort or route. Offer Club Members free points to download an eBook for a long haul trip when they check into Club Lounge – something they will find useful and relevant to their situation.

Why have you opted for an offering like the first club which gives consumers the ability to use their points for something other than hotel stays? How do you expect this concept to gain traction?

I think that is the key to what the first club offers. Merchandise that speaks to people in the way they live their lives every day outside of the brand activity. In a mobile environment, instantly accessing the content they want on the device they want to watch, listen or play it on. It allows people to engage with a brand in a whole new way, for example while waiting for a flight, they can go to a Brand's site and download mp3 music to listen to while they fly. You can see how the brand connection can deepen.

Which areas have you focused upon while developing an offering like the first club? What sort of partnerships are you forming with hotels, airlines and other travel companies?

the first club allows hotel, airline, grocery, retail or any consumer brand company with a points-based programme to plug in a branded version of the site into their own program, have their currency appear as the download currency on the site and add a level of engagement with the consumer in a way that previously hasn't existed. Once they determine the content that drives their audience, we can create experiential programmes to drive further brand love and programme engagement – and burn more points. And for companies without existing loyalty/points based programmes, the first club can be used as a promotional tool to drive some activity, such as a one-time gift with purchase or registration incentive, negating the need for physical inventory and fulfillment, and allowing for collection of critical consumer data, i.e., email address, mobile phone and transactional data to benefit future marketing efforts.

There are lot of mobile application that are all about digital loyalty. What is the core idea behind rewarding consumers for sharing their travels virtually and how can travel companies assess RoI from such initiatives?

We offer two key benefits, the first club as a reward redemption tool or a promotional vehicle driving ancillary revenue, both contribute directly to ROI, we can track unique promotions that drive enrollment or sales promotions to measure lift and traction. Second, we have transactional data from every download in real time, should a company determine that eBooks are the driver, an experiential offer to purchase a flight on a new route, visit a new resort, or try a new brand of lipstick might yield the winner a "Meet and Greet" with a famous author at a reading or book signing. Same is true for concerts or movie premieres.

The first club is being termed as the only digital platform that is culturally relevant, offering international and local content based on the user’s location and in 12 languages. Can you elaborate on content?

We offer a wide variety of content for every taste, including local French content that is available based on geo-tracking. The site determines location based on a user's email address and then offers a minimum of two million licensed choices based on location. We see that as connecting the brand more deeply to a consumer, because it reinforces that the Brand understands who they are and what they want, and that the member can redeem the content they might be purchasing elsewhere immediately and for a low number of points.

A company like Topguest allows its partners to link their existing CRM system seamlessly to Facebook, and the major LBS services Foursquare and Gowalla. This allows geolocation and social data to be tied to an existing guest profile and utilised to strengthen loyalty over time. How do you assess the utility of digital loyalty-related applications going forward?

We think it is key and the future. Speaking to customers in the way they want to be communicated with: promotional offers can be targeted to a user in a core demographic actual location. For instance, the targeted user is in a mall with a Gap store, Gap uses a push promotion to offer five free music downloads from a Gap-Branded version of the first club with a purchase of X dollars or more, good for today only. It will drive immediate traffic, a potential new customer, and increased ROI, with a low cost.

What do you make of 2011 hotel and travel loyalty trends – what type of rewards are most appealing to customers? Also, are redemption rates increasing or decreasing overall?

According to webflyer.com, global loyalty programme membership is increasing at a rate of around 11% per year, and there are some 92 sizeable frequent flyer/guest programmes worldwide with the largest being the airlines Delta, American, United, Continental, and the hotel chains InterContinental, Marriott, Starwood and Hyatt. Here are some numbers:

• Travel industry loyalty rewards programmes have seen a 31.2% decline in active participation since 2007 because of a decrease in business and leisure travel and corporate mandates to cut discretionary budgets. (Colloquy)

• The average number of travel rewards programmes to which consumers belong dropped 27.8% to 2.0 in 2009, from 2.77 in 2007. (Colloquy)

• 32.3% of consumers said the recession has made their participation in retail rewards

• Participation in loyalty programmes is up to 19% since 2007 (Colloquy)

You can see that interest in Loyalty Programmes is rising but travel programmes are experiencing a decline. At the same time, inventory and availability for redemption is decreasing. Although hotels are removing obstacles such as expiring points and expanding where they can be redeemed, such as InterContental's Hotel's Anywhere programme, the breadth of the redemption offers need to be expanded to include the infrequent traveler and give them a reason to be loyal. Sometimes people never redeem points, known as "orphan points", because there is no content of value to them redeemable at low volume levels. The airline industry traditionally offers these members magazine subscriptions when points are due to expire, in those cases, members aren't loyal, they haven't been active with the brand for anywhere from 18 months to three years.

Brands simply need to work harder to offer compelling programmes to keep existing members and attract new ones.

People want to be loyal, but they want to feel their loyalty programme speaks to them in the way they live their lives today, in a mobile environment with instant gratification to any device, PC, laptop, eReaders, or cell phone. An average U.S. household has a membership in 14 loyalty programmes, but is active in very few. Companies need to ask themselves why?

What’s on your agenda for 2011?

We will continue to add additional local content (i.e. Spanish artists, German artists etc.) for a variety of markets in the categories we offer currently: music, mobile apps, games, eBooks, audio books and software and we will also be adding 1,700 key newspapers worldwide, and feature films and TV series to the service in the first quarter of 2011.