Marketing Challenge: At What Price Loyalty?

Haven Hotel Group’s customer loyalty program had become expensive and unwieldy. Worse, it lacked much differentiation from competitors’ programs. Ramona Daly, the company’s newly hired director of loyalty marketing, was charged with overhauling the outdated program.

Daly and her team conducted extensive research on what the hotelier’s customers liked and didn’t like about the program. They created a plan that eliminated some perks but added others, changed how many points customers would accrue for points-earning actions, and updated the required number of points per redemption. Then they ran the numbers to ensure that the program would be cost effective and, well, effective in general at attracting and retaining customers.

After hosting several customer focus groups, Daly and her team made a few minor tweaks to the program and then were set to roll it out. After all, feedback on the program updates was generally positive.

Then the unexpected happened: A few vocal customers who hadn’t been involved in the surveys or focus groups took to social media to voice loudly and broadly their extreme displeasure with the new program. The press was all over the kerfuffle.

Daly’s boss expected her to be the voice of the company to these disgruntled customers and to the press. She needed to take swift action. Switching back to the old program wasn’t an option—and besides, she refused to be bullied by customers who don’t know Haven’s business or the inner workings of a loyalty program.

What should Daly do? Tell those customers to buzz off—they’re probably unprofitable deal hunters anyway? Ignore the fuss in the hopes that it’ll fade away? Or perhaps invite the disgruntled customers in for a meeting to explain the changes and try to win them over?

What would you do?

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