BERMUDA'S HOTEL INDUSTRY

The Impact Of Loyalty Programs And Advocacy In Bermuda's Hotel Industry

The Impact Of Loyalty Programs And Advocacy In Bermuda's Hotel Industry

Aims of the Dissertation

The topic under study in this paper is, “The impact of customer loyalty programs and advocacy in Bermuda's hotel industry”.

Background of the Study

The real mission of any business is to create value. While making a profit is critical, it is a consequence of creating value for its stakeholders. Customer relationship management (CRM) identified as a vital component in the delivery and maintenance of value propositions for customers.

Loyalty programs may have many participants many are only members in order to rack up points for a desired end without ever ascending to the highest rung on the loyalty ladder - advocacy.

Evidence suggests that, despite the proliferation of loyalty programs, its effectiveness is questionable, i.e. Twenty-five percent of marketers readily admit they have not capitalized on brand loyalists to become zealous advocacy agents, because they doubt the effectiveness of their loyalty programs. In fact, a recent Forrester study found that only 25% of consumers felt more connected to their provider because of their loyalty program.

The hospitality industry in Bermuda has seen a year-over-year decline for the past decade, most notably since the onset of the recent recession with its closest geographical neighbor, the United States.

Research Objectives

Objective 1

Examine the conditions under which customers enrolled in multiple loyalty programs progress to become advocates.

Is advocacy a natural progression of sustained customer loyalty?

Is there a customer psychogenic that predisposed to become an advocate?

Objective 2

Assess whether a free or fee- based customer loyalty program has an impact on customer loyalty and advocacy.

Is there a difference in the frequency of advocacy for a fee or free-based loyalty program members?

If there is a difference, using the Gaps model, examine where the gap is e.g. is there a gap in the expectations and perceptions of customers enrolled in fee vs. free based programs?

If there is a difference, identify the factors for the gap(s), i.e. under what circumstances?

Objective 3

Address whether the level of customer participation in a customer loyalty program positively affects their evaluation of the loyalty program and ultimately advocacy rates.

Does active participation in customer loyalty programs result in increased evaluations of the loyalty program and increased instances of advocacy.

Objective 4

Evaluate the extent to which benefit (monetary vs. nonmonetary) received increases instances of advocacy and further, whether advocates can become immune to loyalty reward program benefits.

If the reward element removed from loyalty programs, would the advocacy levels remain the same.

Literature Review

Broadly speaking, if attracting and communicating with a broad pool of guests fits your concept, then a free membership program might be a good choice. However, if your restaurants aspire to differentiate their most valuable guests, a fee-based loyalty program may be a better way to identify and engage them (Paytronix Systems, 2009). Before you determine the best course for your restaurants, take a closer look at the advantages and disadvantages of each alternative.

Pros and Cons of Free Loyalty Programs

Pros

Cons

Can attract more customers through free ...