This month, the Executive Rewards Club, a loyalty effort run by the Executive Inn Group Corp., will designate the top 10% of its members as the Inner Circle. This is the first time the hotel chain has segmented the club's participants.
While points earned through the club can be redeemed for free stays or merchandise with a number of affiliate partners, they alone won't determine whether a guest belongs to the Inner Circle. Instead, individuals who have stayed with the chain a minimum of 10 times, or in at least three different locations, are considered the most valuable customers. (As it happens, these guests have likely racked up a fair number of points.)
Inner Circle members receive perks such as guaranteed room availability if the hotel is contacted 72 hours before arrival and $10 coupons good for use in each property's restaurants. And that's in addition to the benefits all members enjoy, such as late checkout, priority seating at numerous restaurants, free use of health facilities among locations that have them, and even, at a few locations, a free 15-minute massage.
While Inner Circle skims only the top 10% of everyone in the program, spending among these customers accounts for 50% of all club members. Club manager Tamara Tam estimates that a customer falling into this category — usually a business traveler — will stay with the chain 25 times, spending around $6,500 during the two-year time frame the chain considers a customer's lifetime.
Often, business customers' situations change to a point where they are no longer traveling with the same frequency, Tam says. If a customer doesn't visit a property within a year, Tam considers the account inactive for marketing purposes, although points accumulated remain valid. The program currently has 10,000 active customers.
The elementary segmenting of the best customers isn't the only change being explored. When Executive Hotels and Resorts, the hospitality arm of Executive Inn Group, brings its program online (also this month), all members will be invited to fill out a 50-question amenities-and-service survey and will be able to check their points balance.
The survey will feed into the soft benefits, which, when customized to an individual guest's taste, are among the most attractive perks, according to Tam.
“We find the most important thing now is recognizing them when they make a reservation, knowing what pillow they like,” Tam says.
The Executive Rewards Club started in July 2001, when the Vancouver, British Columbia-based Executive Inn Group realized it needed some sort of loyalty program. At the time, however, the handful of properties it managed was too small to merge most external rewards structures, such as airline frequent flyer clubs. Furthermore, management felt that participating in a points-based airline scheme wouldn't give the chain the differentiation it desired.
So the management company brought in Ernex Marketing Technologies. Ernex provided the firm with the technology and point-of-service systems for around $100,000 (the main application is housed at Ernex's Vancouver headquarters). Had Executive Inn built or purchased a system from scratch, Tam estimates it would have cost millions.
The changes will build on the program's already proven success. During the fourth quarter of 2003, a promotion offering members a 200 points-per-stay bonus contributed to a 10.7% revenue increase over the last-three months of 2002 — and that was on top of the 50.6% jump from fourth quarter 2001, during the admittedly depressed post-Sept. 11 period.
The club hasn't been without growing pains. It was originally designed to award points per stay rather than per night. This meant that an overnight stay and a weeklong stretch would earn the same reward of 300 to 500 points, depending on the property in question.
“It had a lot to do with how the costs of the program were modeled internally, as well as trying to keep it simple for the customer,” says Malcolm Fowler, executive vice president at Ernex.
“Some are based on dollars, and some on stays. [In the Executive Inn Group's case] it was based on a look at their typical stay patterns and costs.”
The reliance on stay-based rewards likely will be changing in 2005, Tam says. She anticipates that switching to a dollars-spent platform will spur use of in-room movies, long-distance services and other amenities.
Active customers are contacted by e-mail roughly bimonthly, with messages touting new properties or deals.
The club's current promotion, the Great Escape sweepstakes, is offering a chance to win a two-night stay at one of its properties.
