Hands-On Exercise Membership Reward Program Database Of A Ho

Hands On Exercise Membership Reward Programdatabase Of A Hotel Chain

Hands-On Exercise: Membership Reward Program Database of a hotel chain caters to upscale business travelers Members: 1717 members with customer information Locations: hospitality with 20 city locations (LA, NYC) Services: 6 types of services (Room, Conference Room, Suite, Banquette, Wedding, Event) Orders: 9324 orders in 2006 and 2007 Assuming you had a marketing job there in 2008 and the management is interested in these questions: Q1: Which customers bring us the largest revenue? Where and what do they purchase? Q2: Suppose the Marketing Team agree that $1 purchase earns 1 point and 100 points is worth $1. For types of reward, they would welcome your suggestion on whether to hand out: A) cash; B) credits toward future purchases; or C) free upgrade. Explain why. Q3: Which customers do you plan to target? How?

Paper For Above instruction

In analyzing the membership reward program for a hotel chain catering to upscale business travelers, it is essential to consider both customer revenue contribution and effective reward distribution strategies. This paper aims to address three key questions posed by the hotel management: identifying high-revenue customers, evaluating suitable reward options, and targeting specific customer segments for marketing efforts.

Identifying Customers Who Bring the Largest Revenue

To understand which customers generate the most revenue, a comprehensive analysis of the transaction data is necessary. Given the database comprising 1717 members with detailed customer information, along with 9324 orders across two years (2006-2007), a revenue-driven segmentation can be performed. By aggregating total spending per customer, we can pinpoint high-value clients who frequently utilize premium services such as Suites, conference room bookings, or wedding venues, which typically command higher prices.

Geographically, analyzing purchase locations reveals regional preferences and high-revenue cities such as Los Angeles (LA) and New York City (NYC). For example, customers residing or conducting business in NYC may tend to spend more on specialized services like Banquet halls for corporate events or wedding packages. Combining revenue figures with location data helps refine targeted marketing strategies, enabling personalized offers and loyalty programs to retain top-tier clients.

For example, customer A from NYC who regularly books suites and conference rooms may be responsible for a significant portion of revenue, whereas a customer B in LA with fewer but high-value bookings could also be categorized as a key client. Identifying these customers allows the hotel to prioritize personalized engagement efforts, such as custom rewards or exclusive services, to foster loyalty and increase lifetime value.

Reward Strategy Evaluation

The marketing team considers a point system where $1 equals 1 point, and 100 points convert into a $1 reward. When selecting an appropriate reward type—cash, credits toward future purchases, or free upgrades—several factors must be considered.

Option A: Cash offers immediate monetary value, providing flexibility and satisfying the direct needs of customers. However, cash rewards may reduce future engagement and do not necessarily promote continued loyalty to the hotel brand.

Option B: Credits Toward Future Purchases incentivize repeat business by encouraging members to continue booking with the hotel. This option fosters a sense of ongoing reward potential and brand loyalty, as guests are motivated to accumulate points for future stays or services. Moreover, credits can be targeted specifically towards services that generate higher revenue, like conference facilities or luxury suites, thus aligning incentives with strategic business goals.

Option C: Free Upgrades provide a high perceptual value to guests, especially in the upscale premium segment. A free room upgrade or service upgrade enhances customer satisfaction and perception of exclusivity. Upgrades are particularly compelling for business travelers seeking comfort and prestige, which can lead to increased word-of-mouth and brand loyalty.

Considering these points, a hybrid approach combining credits for repeat bookings with occasional free upgrades might be most effective. Credits promote ongoing engagement, while upgrades reinforce a premium experience that appeals to upscale clients. Cash rewards, while straightforward, might be less effective in promoting loyalty among high-value travelers who seek exclusive experiences rather than monetary compensation.

Targeting Customers Effectively

Customer segmentation plays a vital role in designing targeted marketing strategies. Based on revenue contribution, booking history, service preferences, and geographic location, certain customer segments emerge as prime candidates for targeted campaigns.

High-value customers identified through revenue analysis should be prioritized, with personalized communication emphasizing exclusive offers, customized packages, and loyalty rewards. For example, a frequent corporate client in NYC who regularly books conference rooms and suites can be targeted with tailored corporate event packages, priority upgrades, and VIP services.

Additionally, loyalty incentives can be directed towards mid-tier customers showing potential for increased engagement. These individuals may not yet be top spenders but demonstrate consistent booking patterns and positive feedback. Offering personalized promotions, such as discounted rates on upcoming events or tiered rewards, can incentivize higher spending and foster stronger brand allegiance.

Geographically, marketing efforts can be tailored to different city locations. In LA, campaigns might focus on wedding packages and event services, leveraging local high-profile events to attract affluent clients. Conversely, in NYC, corporate event packages and luxury accommodations can be emphasized, aligning marketing messages with locality-specific preferences.

Finally, leveraging digital channels like targeted email marketing, personalized offers, and mobile app notifications, aligned with customer data, maximizes engagement efficiency. These strategies ensure that marketing resources are allocated to customers most likely to yield high ROI, ultimately increasing revenue and strengthening customer loyalty.

Conclusion

Analyzing customer data enables the hotel chain to identify top revenue-generating clients, design effective reward programs, and customize marketing efforts. Combining data-driven insights with strategic reward choices—favoring credits and upgrades—can foster loyalty among upscale business travelers. Targeted marketing, personalized offers, and geographic-specific campaigns are essential to maximize revenue potential and position the hotel chain as the preferred choice for premium travelers.

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