Cornell Study Says to Use Marketing Analysis for Effective Loyalty Programs

Contact:  Jane Henion, 607.255.9780, jmh222@cornell.edu

FOR IMMEDIATE RELEASE:
Cornell Study Says to Use Marketing Analysis for Effective Loyalty Programs

Ithaca, NY, May 31, 2011 – As lodging industry leaders continue to reevaluate their guest loyalty programs, an analysis published by the Cornell Center for Hospitality Research (CHR) demonstrates the value of marketing research to make loyalty programs more effective. The report "Customer Loyalty: A New Look at the Benefits of Improving Segmentation Efforts with Rewards Programs," by Clay Voorhees, Michael McCall, and Roger Calantone, is available from the CHR at no charge at http://www.hotelschool.cornell.edu/research/chr/pubs/reports/2011.html. Voorhees and Calantone are on the faculty at the Eli Broad College of Business at Michigan State University. McCall is in the School of Business at Ithaca College and is a Research Fellow with the Cornell Center for Hospitality Research.

To demonstrate a data-driven customer segmentation strategy for a loyalty program, the researchers collected customer spending data from a major international hotel chain. Using marketing research techniques, their analysis found seven distinct customer groups, each with a distinct spending pattern. This segmentation did not match the chain's existing three-tier system, which lumped together customers in market segments that had vastly different spending and stay frequencies.

"We have found that this is typical of lodging loyalty programs," said McCall. "Too often they don't focus on guests' actual spending and stay patterns." The researchers explained that by using the customer data, the chain could create or augment loyalty program tiers that more closely match customers' travel habits. However, Voorhees, McCall, and Calantone caution that creative, flexible rewards should reflect guests' desires, but should not involve price concessions.

Thanks to the support of the CHR partners listed below, all publications posted on the center's website are available free of charge, at www.chr.cornell.edu.

About The Center for Hospitality Research
A unit of the Cornell School of Hotel Administration, The Center for Hospitality Research (CHR) sponsors research designed to improve practices in the hospitality industry. Under the lead of the center's 82 corporate affiliates, experienced scholars work closely with business executives to discover new insights into strategic, managerial and operating practices. The center also publishes the award-winning hospitality journal, the Cornell Hospitality Quarterly. To learn more about the center and its projects, visit www.chr.cornell.edu.

Center Senior Partners: ASAE Foundation, Hilton Worldwide, McDonald's USA, Philips Hospitality, SAS, STR, Taj Hotels Resorts and Palaces, and TIG Global

Center Partners: Davis & Gilbert LLP, Deloitte & Touche USA LLP, Denihan Hospitality Group, eCornell & Executive Education, Expedia, Inc., Forbes Travel Guide, Four Seasons Hotels and Resorts, Fox Rothschild LLP, French Quarter Holdings, Inc., HVS, Hyatt, InterContinental Hotels Group, Jumeirah Group, LRP Publications, Maritz, Marriott International, Inc., Marsh's Hospitality Practice, priceline.com, PricewaterhouseCoopers, Proskauer, Sabre Hospitality Solutions, Schneider Electric, Thayer Lodging Group, Thompson Hotels, Travelport, and WATG

Center Friends: 4Hoteliers.com • American Tescor, LLC • Argyle Executive Forum • Berkshire Healthcare • Center for Advanced Retail Technology • Cody Kramer Imports • Cruise Industry News • DK Shifflet & Associates • ehotelier.com • EyeforTravel • Gerencia de Hoteles & Restaurantes • Global Hospitality Resources • Hospitality Financial and Technology Professionals (HFTP) • hospitalityInside.com • hospitalitynet.org • Hospitality Technology Magazine • Hotel Asia Pacific • Hotel China • HotelExecutive.com • Hotel Interactive • Hotel Resource • International CHRIE • International Hotel Conference • International Society of Hospitality Consultants (ISHC) • iPerceptions • JDA Software Group, Inc. • J.D. Power and Associates • Lodging Hospitality • Lodging Magazine • LRA Worldwide, Inc. • Milestone Internet Marketing • MindFolio • Mindshare Technologies • PhoCusWright • PKF Hospitality Research • The Resort Trades • Resort and Recreation Magazine • RestaurantEdge.com • Shibata Publishing Co. • Synovate • The Lodging Conference • The Wall Street Journal • The TravelCom Network • Travel + Hospitality Group • UniFocus • USA Today • WageWatch, Inc. • WIWIH.COM • Wyndham Green