Wednesday, January 30, 2008

Loyalty/affinity retention and churn...or, why am I now a Marriott guy?

Do you ever shake your head at efforts some companies use in an effort to gain and retain your loyalty? I'm shaking my head right now, and I really wish I wasn't.

You see, I've been a Hyatt guy for a whole bunch of years. I did an internship between my sophomore and junior years at Northwestern which required a bit of travel around the Midwest. For a 19 year old kid to have somebody else pay for your plane ticket and hotel room, in exchange for doing your job, which you're getting paid for? And to get to keep these miles and points to go stay for free in the future? Holy cow...jackpot!

At the consulting firm I was working for, the CEO was a big fan of Hyatt. While that didn't necessarily make me a fan of Hyatt versus anyone else (since I signed up for every program I could), I found Hyatt's mix of service and location to be fantastic in meeting my travel needs. Plus, since Hyatt was owned by Chicago's own Pritzker family, I always felt that no matter where I was traveling, I always had an extra little connection to home.

Even though I've been in Silicon Valley for more than 14 years, my affinities have stayed pretty close to my Chicago-area roots. I've flown over 100,000 miles a year on United for 10 of the last 11 years, and passed the million mile mark long ago, making me a "1K Million" in UA's vernacular. Next stop, 2 million miles and free Red Carpet Club membership for life...assuming United outlives me, which isn't a safe wager for even the riskiest of bettors.

By the way, that's a comment on the health of the airline industry, not on my own health.

I hope.

Along with being a big-time United guy over the years, I've been a big-time Hyatt guy, too. According to, I've earned 634,040 points over my nearly 20 years with Hyatt. I have no idea how many nights that translates into, but "a lot" is a fair guess. I still really dig Hyatt, and they'd be still be my preferred hotelier, save for two reasons.

First, Hyatt was late to react to the branding expansion led by Marriott and Hilton. Yes, if I'm in a major city in Asia, you bet I'll be at the Hyatt. In fact, don't bother calling anywhere else if you need to reach me. Start and end with the Hyatt. But, if I'm in a whole lot of cities in the rest of the world, I either don't have a Hyatt option, or I have the option of only a few properties, whereas Marriott and Hilton might provide me dozens of properties from which to choose.

We can talk all day about brand dilution, the fact that Hyatt has always placed themselves above Marriott and Hilton in terms of brand image, yadda, yadda, yadda. I'm sure that Kellogg and the U of C GSB have spent serious cycles on the topics of Hyatt's branding and expansion. Net-net, Marriott and Hilton have more properties than Hyatt and Starwood. Unfortunately, I spend time in cities other than just the world's majors, so I need an option with better reach, which is how Marriott came into the picture. In Hyatt's defense, while late to the party in terms of expanding the number of properties, they've done a fantastic job with their conversion of AmeriSuites into the Hyatt Place brand. The new rooms ROCK...there just aren't enough of them yet.

But, not only did Marriott come into the picture, they jumped into my wallet. With a credit card. Which Hyatt doesn't offer.

The debates on devaluing a loyalty currency (in this case, Gold Passport points) went away long ago, or at least they should've. Pretty much every hotel chain below the Ritz and Four Seasons has a credit for Hyatt. Heck, the sale of airline miles is keeping a few airlines alive; Delta comes to mind with their Amex partnership. This is no longer a question of debasing a brand; it's about what we as the most frequent of frequent travelers choose to do with our loyalty. Not having a credit card option puts a huge dent into that loyalty.

The lack of a branded credit card is a common topic among Hyatt fans. A look at FlyerTalk on the topic of Hyatt and credit cards shows a theme that seems to recur annually--the desire for Hyatt's most loyal travelers to further cement that loyalty with a credit card option.

Not only does Marriott offer a credit card, they offer a number of them, targeted at customers of different demographics. I went with the Signature Visa card for one reason and one reason only--the crediting of 15 stay nights per year, meaning that I only need 60 nights to get back to Platinum. That's a HUGE deal. You might argue that by needing to only stay 60 nights instead of 75 to make Platinum, I can go and spend those other 15 nights a year with somebody besides Marriott. And you'd be right--everybody needs a backup partner, whether that's my use of Alaska's partners (AA/NW/DL/KL/AF) backing up my United travel, or Hyatt now backing up Marriott. But, having set a lower but still challenging bar for requalification, Marriott's still going to get my business most of the time.

So, what's my point, you ask? I was hoping you'd stick with me this far.

I've been a Diamond Gold Passport guy for a bunch of years. Qualification requires 25 stays or 50 nights; most years, I've done it on stays. Admittedly, I've been able to take advantage of promotions a couple of times offering me double stay credit to get back to that 25 stay cliff; regardless, I've spent a lot of time with Hyatt over the years. We've been good for each other, in fact.

Last year, I dropped off that cliff. I had 4 one-night and 1 two-night stays in the first quarter and a one-night stay in June. That's it. Meaning, not only did I not re-qualify for Diamond membership, I didn't even make it back to Platinum (10 stays). Heck, I'm at the level of Joe-New-Guy-to-Hyatt. In fact, check that--and that's the thing that prompted me to write this. Joe-New-Guy-to-Hyatt gets automatic Platinum if he joins prior to March 31st this year.

That's annoying. Now, I'm not a quant guy. But, I know a little bit about items like customer acquisition, retention, and churn. And I know that it's a lot easier for a brand to keep me than to get me. Hyatt had me, and for all intents and purposes, they've lost me, or at least much of me. I still love Hyatt (a phrase that I'm sure Joe Brancatelli would admonish me for using), but I just can't justify staying with them much any more.

Here's the mind-boggling thing...twice last year I received an e-mail offering me a free night if I stayed once. The text of the June e-mail (note to self: clean out newsletter mailbox more frequently) reads as follows:

"It has been several months since you last stayed at Hyatt Hotels & Resorts® and enjoyed the privileges of your Hyatt Gold Passport® Diamond membership. Because we value your membership in Hyatt Gold Passport, we invite you to receive a free night when you complete an eligible stay at one of our distinctive Hyatt locations worldwide through August 24, 2007. Once you have completed your stay, the free night award will be good through October 31, 2007."

Hey, that's cool. But it misses the point. Targeted e-mail communication is really cheap. Courtesy of an embedded bug (that's HTML speak, not spy speak), Hyatt knows when I read the e-mail, whether I clicked on any of the links, you name it. But there's no call to action that they can quantify. If I made a reservation with Hyatt, did I do so because I was enticed by this offer, or just because I really like the Hyatt on Wacker? They simply have no way to quantify my actions, because they didn't do one important thing, one which is shockingly easy in this day and age.

They forgot to ask.

This isn't rocket science. Change that e-mail to include a link that takes me to a short form that asks me a couple of questions about why I haven't stayed with Hyatt in a while (new job, change in responsibilities, moved, poached by Marriott's credit card, etc.). Once I've answered those few short questions, THEN drop the free stay into my account.

Here's an example. My buddy Jacco wanted to get an idea of people's TV viewing habits in this brave new world in which we live. So, he created a questionnaire on SurveyMonkey, sent it out to 2500 of his closest friends, and waited. By the next day, more than 5% of the folks to whom he'd sent the survey had responded. The data he collected was extremely interesting and valuable, but not terribly stressful to gather. In fact, I'm guessing the process itself didn't take more than a couple of hours--figuring out how SurveyMonkey works, creating the questions and answers for the survey, dropping in the e-mail addresses of his victims (er, friends), and hitting send. 24 hours later, boom...solid data.

Why can't Hyatt do this? For that matter, why can't anybody that claims to really want to honor a customer-vendor relationship in this competitive world in which we live do this? Don't think that I'm picking solely on Hyatt here...I've taken my rental car business to Budget after Hertz gave me one-too-many 25,000 mile beater Tauruses. Again, I don't mind that if I'm my parents, who rent a car once a year, if that. But, as a guy who was a Hertz President's Circle member (meaning 40+ rentals per year) up through 2006, you'd think that they'd wonder why I've only rented with them a single time in the last six months, and fewer than a dozen times for all of 2007. I'd be happy to tell them that it's because of the number of absolutely rubbish cars they've rented me.

But they haven't asked.

I'm not sure who to indict here. This obviously isn't an issue just with's a problem with every vendor, in every industry. Some companies tuned into the power of the Internet early on; Starwood's William Sanders is legendary on FlyerTalk for his interaction with real, live, paying customers. Others are only now seeing the value of doing more one-to-one marketing. Therefore, I'd like to challenge somebody, ANYBODY, to get their stuff together and figure out a way to actually monetize all the information sitting in all those horribly expensive (and as of now, not fully utilized) CRM systems.

The data's there. As I see it, one of two things needs to happen. Actually, both do. A) the marketing and customer service folks need to go buddy up with the IT and financial planning folks to get creative about what a CRM system can and can't do, and B) the marketing and customer service folks need to go out and talk to some real, live customers. Real, and live. Alaska Airlines hosts lunches for their MVP Gold members so their execs and their most frequent fliers can interact. I've heard that Larry Kellner from Continental conducts similar events. And United hosted an *unbelievable* event at the SFO maintenance base last year--fortunate FlyerTalkers flew in from around the world (on their own dime and time) to participate. For all that can be said about ultra road warriors, we're a pretty loyal bunch; we expect that loyalty to be rewarded, but most of us recognize it's a two-way street. That loyalty is a bear to earn in the first place; once a vendor has it, letting the customer churn (particularly with no method to quantify or qualify why) is a horrendously bad idea, and a big waste of money.

So, to the Hyatts and Hertz' of the world, a piece of advice about feedback from your customers:

Ask, and you shall receive.

No comments:

Post a Comment