Starwood Raises The Bar: Let The Loyalty Wars Begin

That scurrying you hear is no doubt the sound of other brands looking for ways to respond to Starwood’s bold enhancements to its Starwood Preferred Guest program.

Indeed, I expect the Starwood announcement to trigger a volley of upgrades that we’ll likely see other major brands bring to their programs in the weeks and months ahead.

When Starwood began to experiment with its very covert “Ambassadors” program, it was a clear attempt to find ways to wrap the brand around its top customers in ever more personal and meaningful ways. It was also an approach that let the company innovate out of the spotlight, smartly using a control group to measure the impact of various components.

Three years may seem like a long time to incubate an idea, but it appears from the enhancements that it was time well spent listening to and working with its top customers.

While Starwood said it found that 2% of its customers are generating 30% of its business, the reality is that even its most “loyal” customers are still spending considerable time and dollars with other brands. Capturing a greater share of wallet becomes the ultimate end game and Starwood, with its multiple brands and broad geographic footprint, sees this as an opportunity to shift share. By offering up innovative benefits and a high level of personalized customer care, it has now made it significantly more worthwhile for travelers to seek out Starwood brands and work towards the elite levels where the value of program perks sets a new standard for hotel loyalty programs.

The centerpiece of the changes revolves around added recognition, which I’ve found today’s travelers consistently value far more than points or flashy redemption opportunities. By acknowledging that these customers are important and then investing in that relationship, Starwood is delivering against the one thing that every frequent traveler craves -- to know that you care about their business and will do everything you can to keep it.

Obviously, Starwood has embraced this reality, while also addressing the continued shift in a consumer’s desire for more choices, personalized services and customized experiences.

All you need to do is look at the array of enhancements to appreciate the degree of recognition Starwood is now willing to bestow on its best customers. Lifetime status -- it’s the ultimate recognition and a nod to the reality that the lifetime value of a customer is just as important as the “what have you done for me lately.” Getting a personal ambassador to assist you -- recognition doesn’t get more personal than that. Free upgrades. Free continental breakfasts. A choice of welcome gifts. It’s a rich set of benefits and services that are all designed to recognize the value of the customer and make their lives and travels easier, more enjoyable and unique.

Being loyal to a hotel brand has never delivered so much.

Perhaps the most groundbreaking of all the enhancements is the Your24 benefit that lets guests control their own check-in and check-out time. I can’t imagine a more valuable way to recognize your top customers than to give them access to your product when they need it – rather than when you want to make it available. It’s the ultimate perk for anyone who travels internationally and has to deal with that dreaded early-morning arrival or late-night departure.

No doubt a benefit like this is filled with operational challenges, but kudos to Starwood for finding a way to overcome them and make this happen. It’s a great example of how brands need to rethink the current service paradigm and look to address customer needs. In this case, whatever the additional resources or cost required, it should lead to incremental business from those worldly customers who fully appreciate the advantages of this level of service.

The reality is that the Your24 privilege is reserved for those staying 75 nights or more, so the percentage of impacted rooms is probably manageable on a nightly basis. Nonetheless, the halo of the benefit is sure to attract much buzz and create added focus among those with the potential to achieve that room night hurdle.

It will also be interesting to see how the ambassador concept plays out, and how it will be embraced by those frequent travelers who already have a strong relationship with a travel professional who is often playing a similar role. The potential is certainly there for the ambassador to take the lead in booking the entire trip and ultimately begin to extend Starwood’s reach into a consumer’s life in ways that could open up myriad opportunities to add value that extend far beyond travel.

The loyalty bar has definitely been raised and it should be forcing every travel brand to give more thought and innovation to how customer loyalty can be recognized and rewarded.

If this is, in fact, the start of a new wave of the loyalty wars, I can already declare a winner – the traveler.

1 comment about "Starwood Raises The Bar: Let The Loyalty Wars Begin".
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  1. Stacy Graiko from Firefly Millward Brown, February 6, 2012 at 10:13 a.m.

    Gary, thanks for this excellent article. Your point about travelers valuing recognition above all is right on: I have to admit I divide my travel loyalty between SPG and Hilton, but these new perks may push me toward SPG - unless as you point out, Hilton (& others) respond by enriching their offerings as well.

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