Hotel Loyalty Programs,Frequency Strategies and Double Jeopardy

Last / Next  2009-01-10 00:52:17

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Domestic airlines’ reliance on frequent flier programs to improve sales is called into question
by the double jeopardy effect. Data on airline travel from D.K. Shifflet indicate that small
domestic airlines suffer from both weak penetration and a meager average purchase
frequency, while large domestic airlines enjoy an advantage in both penetration and
average purchase frequency. In addition, there is much more variance in penetration among domestic
airlines than is found in average purchase frequency. Thus, differences between airlines in sales or
market share are almost entirely due to differences in penetration rather than differences in purchase
frequency. This “double jeopardy” pattern of data, in which small brands suffer in two ways, has been
observed for many different product categories and in many different countries. The ubiquity of this
effect suggests that average purchase frequency among brand users cannot be increased substantially
without also increasing the brand’s penetration. Thus, hospitality marketers who focus on loyalty
programs for competitive advantage will be disappointed (although such programs constitute a
defensive strategy at this point). Instead of targeting current users in an attempt to increase their
frequency of purchase, hospitality and other marketers should focus on increasing the popularity of
their brands among the market as a whole. Ultimately, successful marketing comes not from loyalty
programs, but from creating value in the form. of a superior product and service offering, communicating
that value to all users of the product category, and capturing that value through pricing.

TAG: Hotel hotel HOTEL Loyalty Frequency Double-Jeopardy

 

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