Why loyalty management leads to growth

Frank Cuypers

21 March 2017

Imagine that for every one hundred arrivals to your destination, one hundred and ten returned next year. Ideally, how many of those would be repeat visits and referrals?

Visitor retention is one of three growth engines for destinations (along with visitor acquisition and referral). A higher retention rate can reduce the risk of declining visitation. Travellers that know and love your destination are likely to want to return, but it’s important that destinations nurture that desire – it’s the itch that the passionate traveller must scratch with a return trip.

The product life cycle and endless novelty

Destinations can encourage return visits by sticking with what they do best. But in the accelerated pace of business today, there is a temptation toward inflation marketing.

Inflation marketing happens when a company adds new products, features, services, or experiences in a constantly accelerating cycle. Marketers create awareness by building up expectations before launch, then the product is released. Meanwhile, the next new feature is already being designed. The quest for the new becomes meaningless when the marketing hype outweighs the benefit that the new products bring to customers’ lives.

The frequency of the product life cycle has sped up to a tremendous pace. The startup and growth phases are becoming steeper, while the decline phase comes faster.

The cultural sector provides a great example of inflation marketing. Typical marketing for new events, new museum exhibits, the newest book from a popular writer, or the newest movie from a studio or director all point to novelty as a selling point. An analysis of U.S. movie releases points out that the average Hollywood movie now runs for four weeks, and that “at least 20 percent of all wide-release movies run for only two weeks.” The rate at which films are launched has increased significantly over the past few decades.

Lessons learned from the Bilbao Effect

When it comes to novelty, places and destinations can look to the northern Spanish city of Bilbao. In 1997, a branch of the Guggenheim Museum designed by renowned American architect Frank Gehry opened in Bilbao, as a cornerstone of a Basque Country redevelopment plan. The dazzling landmark has helped put Bilbao on the map, in terms of international travel. Attendance continues to grow, bringing tourism dollars with it.

While this project has been successful, other destinations hoping to replicate this success with by relying on their own new attraction or landmark should proceed with caution. The unique circumstances surrounding Bilbao cannot be replicated elsewhere.

Cities and destinations that market their new museums, events, landmarks, parks, public art, or soccer stadiums may all hope for their own mini “Bilbao Effect.” Some travellers will visit a place to see the next newest thing. But more often, the visitor will choose the place that best answers their specific needs. Travellers don’t visit a place for its seven newest events and buildings, they visit because the place appeals to who they are. These may be your most valuable repeat visitors.

Destinations can respond to the accelerating drive for novelty in two ways:

1) Begin a new cycle of innovation. This is inflationary thinking and is sometimes needed, but cannot be sustained time after time. One risk is that by creating a constant stream of communications about your destination’s newest offerings, the unique identity of that place may become blurred.

2) Slowing down the decline of your destination’s products and experiences. We might call this deflation marketing. In tourism industry terms, this is loyalty management.

Loyalty management can sustain visitation

Loyalty management aims to retain existing clients. This means building customer relationships with methods like good old-fashioned database marketing, follow-up communications, thank-you messages, all in an effort to maintain trust and loyalty. Over time, your destination can build up a community of place lovers.

Many will say that this is extremely difficult to do in tourism. Why? One argument says that there is a growing number of bucket list tourists who follow the current travel hype (this year’s hype is Iceland; next year it might be Cuba; the next year, another destination that has not been overrun by the mass tourism industry). The general assumption is that it is very difficult to elicit return or repeat visitors unless you are New York City (where there is always something new to do) or Berlin (the last unfinished city of Europe).

That assumption is not true. It’s rooted in old thinking about a marketing world where messaging leads to a straightforward conversion. It’s true that if your destination is not world-famous, it is likely that many visitors do not intend to visit again immediately. But where there are lower expectations, you can overdeliver. When people find that they weren’t able to explore it all, they will feel a desire to return. The compact cities of Europe’s often elicit this effect.

Sometimes those visitors will book a return trip. But more importantly, when there is a desire to return, visitors will begin to recommend your destination by word of mouth. Destinations that work hard on loyalty management could discover a potential goldmine.

These destinations have done it

In Southern Norway, CEO Heidi Sørvig of USUS AS (formerly Visit Sørlandet) agrees: “If you like a place so much that you want to come back, you won’t keep it a secret.” USUS AS and its local tourism industry set themselves a goal to be number one at repeat visitation.

Wonderful Copenhagen’s bold new four-year destination strategy (The End of Tourism as We Know It) also emphasizes repeat visitation. Under its “Once Attracted, Twice Valued” concept, Copenhagen will study and remove barriers to the visitors’ path to purchase, and find ways to boost loyalty. In part, this destination defines success as increasing both the average length of stay and repeat visits.

To paraphrase a famous quote from a U.S. president: “Ask not how visitors can help your destination but ask what your destination can do to help its visitors.” Your visitors will reward you with a plethora of recommendations.

Related reading: Destinations are shifting to digital-first marketing to improve word-of-mouth promotion

Featured image credit: Nicola, Flickr

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