7 March 2009

In a world where tribal marketing is becoming more competitive by the minute, for the desperate land grab of customers, reward schemes and loyalty cards have become prevalent. But, are businesses thinking these through. Yes in a board meeting it makes perfect sense to group your customers together and give them a shiny piece of plastic and label them as part of the elite few who now qualify for extra benefits.

Sounds great? Yes, but what happens when the market changes, or the scheme unravels and it doesn’t financially stack up.
BA (British Airways) recently announced an expiration date on their Airmiles. A caveat put in place to protect the business, which ended up having an adverse effect, putting more strain on the airline. What was designed to delete a few points and calm the scheme down actually encouraged everyone to use them before they were taken from them. BA therefore ended up scheduling more free flights than usual at a time they were attempting to drive more revenue and save costs.
Who remembers Hoover, with their absurd flights to America promotion? A genius idea or a shocker? Personally I believe the latter. To give away something that is high value: high cost when selling a low cost product is an act of lunacy. In fact this was suicide and Hoover never recovered. Next to Dyson, Hoover is a poor relation, yet ironically you will get the Dyson out and ask your husband or wife to “give the lounge a Hoover.” What a marketing tragedy when something so great dies.

Another great brand that springs to mind, is Hilton Hotels. They have an island in the Maldives called Conrad Rangali, or previously known as Hilton Rangali where I have stayed for in excess of 20 weeks in the last 8 years. They have a loyalty scheme that I first have to question the name of. Hilton Honours. There is nothing “honourable” about this scheme, it would be better named “Hilton Honours Nothing!” In fact it actually penalises the best customers.

Last year when checking out we found they had capped the number of points you could collect in one visit, the most one could receive was 100,000 points. At 10 points per dollar, someone spending $10,000 would receive the same amount as someone spending $100,000. When you have just flown your in-laws and parents over to join you for your 3 week vacation, this is not the time you want to be told of a new technicality they have introduced. I was reassured by the reservations manager that next year they would see to it we were doubly impressed and to make amends for some pretty major hiccups he promised to upgrade us by way of an apology.

Inspite of the cap I had around 600,000 points. This year with the high dollar price, we thought it prudent to cash in some of our points. It seemed simple enough. Book 2 weeks using the points and 1 week extra using cash as there is a limit to the number of points you can cash in at one time. This I understand and I think is totally reasonable.

My wife and I were also pleased because as Diamond VIP Hilton Honours members we were being upgraded to our favourite room. Free of charge. Now at this point we do feel special. Proud to be part of the Diamond VIP tribe. Especially as the room we stay in is a beautiful water villa we first stayed in 8 years ago on our Honey Moon and anniversary of my avalanche accident.

We rang a few days later to double check everything was ready only to find they had down graded us. The new reservations manager, aptly titled “Revenue Manager” (clearly revenue is more important than honour!) told my wife to read the terms and conditions at the bottom of an email confirming our stay, written in small print. It said something along the lines of; “we do not honour the automatic upgrade you usually get when booking as a Hilton Honours member at the Conrad Rangali Maldives Hotel.”
Worse they had not even booked our special room for the week we were paying and my wife was told that all these types of rooms were now fully booked.
With a distraught wife, I attempted to contact the hotel. It took 37 times before Boris Blobel the new revenue manager finally took my call. He said “do you have anything in writing?” he put me on hold (or thought he did and I heard him slate me to his colleagues) before coming back to me saying that unless we had proof of the conversation, there was nothing he could do.

I contacted the General Manager Carsten Schieck, he refused to take my calls and eventually emailed me saying, if you can prove we were promised the upgrade they would look into it. They clearly doubted what I was saying, that we were indeed promised an upgrade. Even though their notes on their system stated please upgrade to room 345.

Now for most people that would be the end of the matter. We, on the other hand, record all conversations for training purposes, but also because people have a habit of reneging on promises.
Before I had even got into work my PA who had picked up and responded to Carsten Schieck’s email had summoned the IT director, retrieved the recording and sent it back to Carsten Schieck on my behalf. Knowing how upset my wife had been over the whole affair she was confident they would quickly see the light and apologise.

So now we had established that we were expecting room 345, a free upgrade for 2 of the 3 weeks. We had also proven it by sending a copy of the conversation where the Hilton representative had stated clearly that there would be no extra charge. They had even implied they would honour it now that we had gone to such great lengths to demonstrate just how much we had been put out!

Yet despite all that, Carsten Schieck emailed, yes, no phone call, to say “if you want to cancel you can do otherwise it is full price and either way the room you want is not available now.”

We would have at this point cancelled except now we had builders in at home and Hilton were not about to reimburse our flights if they wouldn’t honour a simple upgrade.

So here I sit, on a beautiful island blessed with beautiful weather, labelled as part of a tribe whose values are clearly not aligned with ours. In truth I have nothing in common with this brand whatsoever.

I spoke with a Conrad senior press official as reception were screening all calls to the management regarding this issue. Oshy Phillips, who I have to say was lovely, promised to help rectify the situation. She knew Carsten Schieck personally, she said she would get things sorted. She came back with her tail between her legs, obviously powerless to intervene.

So when you are designing your loyalty scheme make sure it is less a “scheme” and it stands aligned with your brand values. Don’t promise something you can’t honour. Don’t name it something that sounds too fantastic that is almost impossible to live up to. Make it uniform for all, uncomplicated and transparent. Don’t penalise great customers who have spent huge amounts of money utilising your products or services. These are the ones that need rewarding.

Most of all, if you make a mistake, stand up and take it on the chin. Don’t spit in the face the very people who have lived and breathed your brand for years, tirelessly promoting your brand values to their friends and family. It might just come back and bite you.

By the way Carsten, please can you get the door handle fixed on the toilet entrance at the Vilu Restaurant.


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