Hotels.com Loyalty Program

You mentioned, one of the major ways to deal with that, is to drive direct traffic and build a relationship with that customer. How did you really refine and build that loyalty scheme, at Hotels.com?

I would say this is one of the biggest successes I’ve had, in my career and I certainly can’t take credit for all of it. We had a product team, in Dallas, that came up with this, in the US business. This product team that we had, we pulled a lot of folks from strategy consulting companies, to help us develop our product there, in the early days. What we did was, we felt like, you know what, there might something to this loyalty program thing. We weren’t thinking about other competitors; we were thinking about hotel chains, at the time. We thought that we were probably losing business to chains, because they had loyalty programs. We went to this exhaustive research study, focus groups and quantitative, qualitative research and what we found was, yes, that’s the case. There are loyalty programs that come with these chains that are enticing for consumers, especially for business consumers that also go into the leisure side, at some point in the year. They can accumulate points through the business side and then use them for leisure.

What that put us onto was, great, we’d like a loyalty program, so how do we compete against them? What we learned in the process was, consumers consistently said, that the hotel chain loyalty programs are complex, it takes 25 to 30 nights, before they get something for free, there are blackout dates, where I can’t use them for Christmas or Thanksgiving and, in certain cities – and I’ll use Santa Fe, New Mexico, which is a very cool, cultural city – there are not many chains there. Let’s say, Hilton had an Embassy Suites, maybe a Hampton Inn and maybe a Hilton there; three hotels. There are 20 to 30 awesome, independent hotels in Santa Fe, right downtown. So if you wanted to go to Santa Fe, you had more choice if you used a non-chain.

So we said, okay, there’s some advantages here and we can create something that will fix these gaps that we see in the marketplace. In the research process, we introduced what we called the punch card loyalty program. Something like you might see in a sandwich shop, down the street, where you say, I’m going to buy 10 sandwiches and I get the 11th one for free. We decided to make it super simple. We launched it in the US and it’s one of those things where we were a little scared, because it has an impact on your P&L. Every night that you give to a consumer, you’re accruing an expense. We waited for the longest time, even in the US, before we went wide with it, because we wanted to make sure that we understood what the P&L impact was.

It was super successful and we ended up rolling it out worldwide. It’s been a big driver of retention for Hotels.com, for many years.

What was the big lesson you learnt from that process, about building a customer facing loyalty scheme?

It’s not the first one that I’ve been involved with. I may have mentioned that, in my early days, I worked for Accenture. We developed loyalty programs for Hilton and Caesar’s Palace, and so forth. I think the big lesson learnt in this was that, again, it goes back to being a start-up. How do you think like a start-up? How do you find holes or gaps in the marketplace that are not being addressed and then you come up with something that is so good that it’s hard for a consumer to say no to? Loyalty programs are pervasive, if you do one super simple. You can make it really compelling for a consumer. It’s been my mindset in product development, ever since. Trying to find that gap and then looking for a product fit, to improve that customer experience.