Brand Loyalty in General and for the hospitality industry – A Study of trends

A brand is a name, term, sign, symbol, or design that is intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors. But a brand is much more than this. Brand is an intangible element of business that can make a guest fall in love with it. Brand is an extremely expensive intangible asset that purely symbolic and emotional. This intangible preciousness makes branding an extremely complex beast to rear and control.

To successfully build a brand, the firm’s perspective of the brand should be efficiently and exactly communicated to the end customers, to ensure that the firm’s perspective of the brand is a close match to the customer’s perspective of the brand.

The process of building a brand identity is as shown:

image001The entire effort invested into Branding yields Brand equity (Brand equity is defined in terms of marketing effects uniquely attributable to the brand and relates to the fact that different outcomes result in the marketing of a product or service because of its brand name, as compared to if the same product or service did not have that name) .

The benefits of Brand Equity are:

  • Facilitates a more predictable income stream
  • Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing
  • Brand equity is an asset that can be sold or leased.
  • Good Brand Equity generates Brand Loyalty
  • Building a strong brand involves a series of steps as part of a “branding ladder”.

 

image002The foundation of the brand ladder is created through the creation of deep and broad brand awareness- the ability for your product/company/project/any ‘brandable’ item to stand out and be identified.

Brand awareness consists of both brand recognition, which is the ability of consumers to confirm that they have previously been exposed to your brand, and brand recall, which reflects the ability  of consumers to name your brand when given the product category, category need or some other some other similar cue.

Brand awareness should allow for:

  •  the ease of recognition and recall
  • Strength and clarity of category membership
  • Purchase and consumption consideration

Once brand awareness is established, the key focus is laid on the product quality and characteristics, durability and reliability, style, design and price.

Beyond brand awareness and the core product characteristics, the emotional, rational and finally the irrational responses to the established brand, need to come together to create brand equity that can be used to increase brand loyalty.

The importance of Brand Loyalty for Hotels:

Once brand awareness is established, the endeavour to grapple of brand loyalty begins. Brand Loyalty is a commodity that all establishments should vie for because, it ensures that Guests blindly pick the brand that they are loyal to. This blind choice is because the constant evaluation of the risk of the ‘right choice of hotel’ is a cumbersome and worrying prospect for your customers. Once trust is established between the hotel and its guests, the consumer’s decision making process shifts from:

image003To:

image004Every time your consumer takes this direct path to your hotel, you save on marketing and sales spend required to capture new customers and induce them to select you over competition. In an era there are few differences between the offerings made by your competitor and you, brand differentiation are vital for regular travellers who do not invest/involve immensely into the resources spent for booking a hotel.

In the highly competitive hotel industry, where products and services have reached“commodity” status , hoteliers are required to find ways to set their products and services apart from others .This need has given rise to the use of branding strategies as a source of differentiation and competitive advantage , making branding one of the most dominant trends in the global hotel industry .

Customer brand identification (CBI) can lead to a range of consumer outcomes, including brand loyalty. To begin the brand association process, the hotel needs to start by controlling the first point of contact with its customers- the hotel’s online presence- it’s website. The hotel needs to start building a relationship with its guests, from the time they go online looking for a hotel to book. The longer the brand journey with the hotel, the longer lasting is the customer relationship with the hotel. Longer customer relationships help in etching the brand in a guest’s mind and help along the journey of building a relationship where the guests begin to identify themselves with the hotel’s brand.

Brand equity is becoming an increasingly important asset for economy hotels, and not just luxury hotels because brand loyalty is important for the following reasons:

  • Cost- It costs 5 times more get to new customers than it does to keep existing ones. The acquisition cost of attracting new customers greatly outnumbers the retention cost put into keeping your existing customers from leaving.
  • Turnover rate- According to the book ‘Leading On The Edge Of Chaos’, reducing the customer turnover by 5% leads to an increase of 25%-125% profit.
  • Revenue- 80% of revenue for most companies comes from 20% of their customers – the loyal customers. Remember, a large customer base will deem nothing if none of them are loyal customers because most of the revenue comes from avid brand users.
  • Likeability to sell-  It is much harder to sell a new product to prospective customers than it is to sell to your existing consumer base. The probability of selling to a prospect is 5%-20%, whereas the probability for existing ones is60%-70%.
  • Retention- 91% of unsatisfied customers who switch over to another service provider will never come back. It is imperative to keep existing customers because if they leave, a good majority will certainly never return

While customer relationship management (CRM) has been promoted in the hospitality literature as an interactive relationship between the customer and firm , the hotel industry’s operationalization of CRM practices seems to entail mainly loyalty programs that offer incentives, which are considered more transactional than relationship-based. These pricing incentives are arguably the lowest level of relationship marketing practices and are vulnerable to competitor promotions . They do not fully deliver on the CRM proposition, and hotel firms should consider adopting a higher level of relationship marketing practices that foster social bonding, such as regular communications with customers and socially oriented programs .

image005Finally, even though it is hard to wade through all the research and information available on the topic of ways to achieve brand loyalty, there is no shirking of the fact that brand loyalty is an imperative for the hospitality industries- an imperative that is currently becoming increasing insignificant under the domination and commoditization of hotels by Online travel agents.

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