February 10, 2009
Case Study

6 Steps: Grow Customer Loyalty, Get 93% Recommendation Rate

SUMMARY: Creating loyal customers any time, but especially during a recession, can help to guarantee your survival. But how do you create loyalty? Measure loyalty? Maintain or improve loyalty?

Find out how a marketer and a quality-assurance officer at a luxury hotel chain teamed up to create loyal customers, measure their loyalty, and take steps to improve loyalty. How does a 93% recommendation rate grab you?

Veteran hotelier Horst Schulze founded The West Paces Hotel Group in 2005 to create a luxury hotel company that offers the highest-quality service to their guests.

“We have said, as a company, we want to be a world-leading service provider,” says Ryan Magnon, VP Quality, West Paces. “That’s the vision. That’s what we want to be.”

To create loyal customers, it was crucial for Magnon and his team to come up with a way to assure high-quality stays, measure customer loyalty, and keep loyalty front and center for hotel operators and employees.

Here are the steps Magnon, and John Drake, VP Marketing, West Paces, and their teams followed to set up a customer-loyalty program for the hotel chain.


Step #1. Find out what guests want from their experience

Drake and his marketing team created a service called “Our Personal Assistant.” It identified the types of experiences guests planning to stay at the hotel wanted before they checked in.

Each personal assistant was given a list of future guests’ names and their booking information. They personally contacted those guests weeks before their arrival to gather more information. The assistants asked each guest what they wanted to do during their stay, so that the hotel could deliver the most individualized service possible.

“Personal assistants gather all that information,” Magnon says. “They’re trained to speak to the guest in a very conversational but professional way.”

“Our Personal Assistant” was useful to both the marketing and quality teams. For marketing, it was a research tool. For quality, it was a starting point to set up processes and systems necessary for delivering quality service.

Step #2. Set up processes and systems to deliver the services guests want

Knowing beforehand what guests expected helped Magnon and his team set up systems, processes, training, staffing, etc., to prepare for those expectations.

“Not everyone on every call is going to give you a laundry list of 10 things they want to do, but even if you get 20% of the hotel population telling you one or two things they’d like to do during their stay, that’s a whole lot of processes and activity that’s going on that can be planned for,” he says. “So it helps us provide greater predictability for that.”

Step #3. Survey all guests after a hotel stay

Hotel guests receive a thank-you email the day after they check out. “We try not to say, ‘Please click this link for a survey,’” says Magnon. “We reiterate we were there to fill their needs and hope we did.”

The email asks: “In order to ensure your next experience is even more memorable, would you share your feedback with us?” The survey poses three loyalty-related questions:
o Overall satisfaction during the stay?
o Intention to return?
o How likely is it that they would recommend the hotel to a friend?

Respondents are asked to provide a ranking on a scale of one to 10. “All our surveys are sent via email,” Magnon says. “We find that today’s travelers prefer that method.”

Step #4. Calculate loyalty score

The team measured two kinds of loyalty metrics. One was the average score. The other identified “top box” guests (i.e. the percentage of guests that rated the hotel a 9 or 10 on the 10-point scale).

“It’s important to measure that because those are your loyal customers, which is our primary goal, the whole reason we’re here,” Magnon says.

Step #5. Meet with staff to review the score

Magnon and his team regularly traveled to each hotel to review the loyalty scores with the hotel operators and staff. They met and discussed where each hotel ranked and what could be done to improve the score if it wasn’t up to par.

“We are very intense about it,” Magnon says.

Step #6. Hire, train staff committed to improving loyalty

The hotel management company also hired a firm to help select the best employees for each hotel. That step reduced the risk of bringing in people who didn’t fit and, therefore, wouldn’t provide quality service.

The company also created a “Learning Lab” where everything, including training programs for employees and functional operations, are tested before being implemented.

The learning lab is housed at one of the company’s hotels so that things, such as new call centers, can be tested in a live environment before being rolled out everywhere. This allows for better control, reduced costs, fewer mistakes, and greater efficiency in general, Magnon says.

The post-stay email surveys got an average response rate of 20% to 35%.

Of survey respondents for the Capella Schloss Velden Hotel and Resort in 2008, for example:
o 84% of “top box” guests had a likeliness to recommend the hotel to friends
o 93% of all guests were likely to recommend the hotel
o 97% of all guests ranked the hotel from 7 to 10 for overall satisfaction
o 3% of survey respondents were considered detractors (i.e. those who rated the hotel a 6 or lower on the 10-point scale)

Drake chose that hotel because it has 12 months of data, he says. Many of the relatively new company’s properties have less than a year’s worth of data to date.

“The most powerful influence on a person’s hotel stay is a recommendation,” Drake says.

Useful links related to this article

New Chart: Service Tops Price for Customer Loyalty:

How to Assess Your Loyalty Program - 6 Steps:

Business-to-Business Loyalty Marketing –- How to Stop Your Most Profitable Accounts from Deserting:

Coca-Cola's Top 5 Strategies to Build a Successful Rewards Program:

How to Score Customer Loyalty: 7 Steps to Double Satisfaction Rating:

How to Rev Value for Loyalty Program - 4 Strategies From NASCAR:

Net Promoter – loyalty measurement software and best practice expertise used by West Paces Hotel Group:

Talent Plus – company West Paces Hotel Group uses to help select the best employees for each hotel:

The West Paces Hotel Group:

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