Net: Hotels.com provides great consumer value, excellent web and phone customer service and has one of the most rewarding loyalty programs I have seen.  The company shows how applying the philosophy and applications of Web 2.0, good customer service and a well designed and implemented rewards program can create customer loyalty.  Why book anywhere else?

When I tell people I write about Web 2.0, customer service and loyalty, I know some (many?) find these three subjects a bit random or at least unfocused.  Through case studies and other posts, I hope it is becoming clear that they are often critically linked.  A few examples:

·         The case study Another Dell Misfire showed how focusing on Web 2.0 and posting user reviews on your web site without engaging customer service agents can both de-motivate front line sales and service employees and actually lose potential customers. 

·         The case Customer Service Disaster Non-Recovery found that Kimpton hotels invested in a loyalty program, but appear to neither provide customers with a way to comment on poor customer service nor monitor and/or respond to the most popular Web 2.0 travel sites including Trip Advisor and hotels.com.

Consumer value proposition

Hotels.com is a business that appears to be investing in and performing well in all three areas, but before providing details about their Web 2.0, customer service and loyalty initiatives, it is important to understand that they are built on top of a very good consumer value proposition.  Although some of my greatest business successes have come from customer loyalty programs, one of the most important lessons we learned in the early days of AIR MILES Canada was “a good loyalty program will not make up for a bad consumer value proposition or an inconsistent brand.”  Put another way, a great loyalty program can lead a horse to water and get him to take the first drink, but if the water tastes bad, the horse won’t come back.”  We learned this the hard way by signing Safeway – an excellent grocer – as our exclusive partner in Western Canada and another chain – whose stores were so inconsistent that the brand no longer exists – in Ontario.  With our data we saw that non-shoppers were much more responsive to Safeway acquisition offers than the weaker chain and that new shoppers who tried Safeway were about 4X more likely to return there than they were to the Ontario stores.  This lesson is amplified with Web 2.0 and the increasing use of user reviews as customers can check out a brand’s reputation before trying.  

I originally found Hotels.com when looking for a deal on a hotel room.  Although I can’t remember the first hotel I reserved, I am sure that I believed I got a good deal; otherwise I would not have come back.  The business delivers on its core brand proposition – they find great deals on good (or better) hotels.  I had an amazing experience a few months ago when looking for a suite for our family’s trip to Prague to visit my nephew who was in film school there.  Through another site – possibly American Express – I found the Pachtuv Palace, which had what looked to be amazing two bedroom efficiency apartments in a great Prague neighborhood.  Through Amex Platinum Travel, I found what seemed to be a good deal, something like $550 a night, but thought I would check hotels.com to see if they even offered the property.  They did and had a much lower price of $400 per night.

Here’s how hotels.com uses Web 2.0, customer service and a loyalty program to make their brand even stronger and their customer loyalty – and therefore profitability – even higher:

• Web 2.0 – Like many in the travel industry, Hotels.com asks for and prominently uses Guest Ratings to help customers choose hotels.  Their search filters are very good and users can set Guest Rating parameters from 1.0 to 5.0 and sort search findings based on other users’ ratings. 

• Customer Service – One of the things I find maddening about many Web based businesses is their insistence on burying, hiding under multiple layers or just not providing a customer service phone number.  Amazon does this and so does Adobe.  As someone who created and ran a business with over 400 customer service representatives that was also among the first loyalty businesses with a Web site, I understand the microeconomics of Web based vs. phone and CSR based interactions.  I also understand that millennials and other generations increasingly prefer to use the web over the phone for just about everything.  But until everyone has 24/7 Web access and reaches the Internet uber alle state of being, many companies have an opportunity to gain market share by making it easy for customers to find their phone number.  I was pleasantly surprised to find that Hotels.com prominently displays their phone number at the top of every Web page.

Last fall, I discovered how great their service was when I had started to book a room online for a trip to London but ran out of time and had to shut down to drive to a meeting.  I called Hotels.com form the call and was pleasantly surprised by the following:

-          Very short wait time

-          Customer service agent spoke excellent English

-          When I told them I needed a room in London, they asked for a budget, star rating and area and within seconds found a great deal at the May Fair for $200/night.

-          They took my credit card and did not charge extra for a phone booking, something I have come to expect from other services.

• Loyalty – Hotels.com offers consumers a free loyalty program called Welcome Rewards.  It rates high on many of our keys to success for a profitable loyalty program, including the following:

-          Aspirational reward: Free hotel rooms up to $400 in value.  Anyone who is booking on Hotels.com would find free rooms, especially at this level, rewarding.

-          Attainable reward: Members earn a free hotel room after only 10 nights – that’s nights not stays.  This is nearly off the charts attainability and value.  Considering consumers can often find three star hotels for $100-150 and four or five star hotels for $200, a free night in a $400 room (hotels.com rate, not the rack rate) translates to between 20 and 40 percent back.  Compare this to the average value of a frequent flyer point at 1 percent back and you can see how strong the Welcome Rewards value proposition is.  If this doesn’t change behavior, nothing will.

-          Simple to earn and redeem: Once you sign up online, every time you book either online or by phone, you automatically earn credits toward the ten needed for a free night. When you are ready to redeem, you can easily do so through either phone or online bookings.

-          Awareness: Hotels.com prominently features their Welcome Rewards program on their home page and recently on TV advertising as well.  Their customer service agents are in the loop as well and promote the program to sign up new members. 

Dave Nichol – the brilliant creator and promoter of President’s Choice, the powerhouse store label brand of leading Canadian grocery retailer Loblaws, once defined loyalty as “nothing more than the absence of a better alternative.”  Although I was and remain a huge admirer of Nichol’s intellect, drive and accomplishments, I respectfully disagreed with his definition.  One of the ways I define loyalty is the presence of a value driven relationship that removes any interest in looking for an alternative from the consumer’s mind.  In other words, a loyalty customer goes there first. 

For me, at least, Hotels.com consistent consumer value proposition, their use of Web 2.0 and their top notch customer service and loyalty programs keep me coming back.  Why would you book anywhere else?