Isn’t it all supposed to be about consumer trust and sentiment?
What are points? A reward system to encourage loyalty.
What is a loyalty program? A program designed to retain and encourage patronage.
What’s a devaluation? A move, perhaps out of necessity to scale back benefits.
What is trust? …..
Priceless.
Hilton is in the loyalty crosshairs today, but they are far from alone. Over the course of the weekend, without warning, Hilton took many of their best value hotels for redeeming points, and doubled the rates. There was no email, there was no tweet, not even an admission of culpability – just a unilateral move to make your points worth less. This flat out begs the question: why do “loyalty” programs insist on making customers feel cheated? It just doesn’t seem smart…
Devious Behavior
On the surface, one might say “it happens”. But this was devious. Hilton chose to do this less than a day after they launched an aggressive points sale, of which we and others were buyers. The sale matched the lowest rates ever offered on Hilton Points and for a second, it seemed as if someone had gotten things right, and were trying to win favor as Marriott battles IT issues in their gargantuan merger. But they didn’t, they got it really wrong, and they knew exactly what they were doing.
Inevitability Of Loyalty
Let’s be clear: no one likes a devaluation. When Starbucks, an airline, hotel or any other loyalty program moves the goal posts, it’s a crying shame. People work hard, set goals and they should never be punished for actually following through with the proposition of loyalty and becoming a super fan. But when a program like Japan Airlines, Marriott Rewards, AsiaMiles or any of the others give months of warning and lead up, trust isn’t eroded. Confidence may be, but trust, no.
Couldn’t You?
By devaluing a program overnight you only send one message: we do not truly value you the customer, or your loyalty. Anything we offer is a ploy. We value metrics, and once satisfied, you’re toast. What would it realistically have cost Hilton, in a long term versus short term thinking scenario if they had announced the 10,000 point hotels of yesterday would become 20,000 point hotels in two weeks time? People would grumble, many would book ahead and lock in the good rates, but many wouldn’t – and the light of trust would still be flickering.
Pond Scum
Resources like GodSaveThePoints.com are meant to help travelers, not hurt them, and this move doesn’t just affect your travels, it affects our inclination to cover a topic. The next time Hilton PR sends an email, will we be as likely to jump on the story? I can say emphatically: no, even if it costs us money. Fool me once, shame on you, fool me twice – shame on me. Overnight, stealth devaluations are the pond scum of the loyalty world, and any brand or person representing a brand that supports them must learn to swim in it. Devaluations are inevitable, but trust in communication is not for sale.
What’s really dumb about moves like this is that it hurts truly loyal long term customers. The ones that don’t churn cards and earn the points the hard way. They set that goal or annual vacation property. This makes them angry and much less loyal. Then it makes those of us that like to game the system, (churn,, buy points, etc. ) Upset also. Who is left to be loyal?
In this case Hilton was already highly devalued in the past few years. Why set long term goals if you will never be able to reach the new price and….why be loyal.
You and what you stand for! I applaud you, Gib! From the day I first bumped into your website up til now! Thanks for having our backs!
Hotels and Airlines have turned Loyalty Programs from a means of rewarding people for staying loyal to their brand, into a money making scheme. These companies constantly are offering obscene sign-up bonuses for new customers or sell points for incredibly low prices and then realize that they have far too much outstanding liability and so have no choice but to devalue the currency. Meanwhile people who actually are staying at their properties or are using their planes have seen reduced earnings and reduced benefits. These companies are stuck in a cat-and-mouse game with churners, and the rest of the patrons are left holding the bag. Instead of focusing on the 5% of the customers gaming the system, how about catering to the other 95%?
Folks,
There is a simple solution to stealth devaluation – no loyalty. Put most spending on cash back cards with bonus categories that fit your spending patterns and have one bank point travel card for its travel insurance and other travel related benefits. Cash back credit card options for this strategy include AMEX Blue Cash Preferred (or the legacy 5% card), Citibank Double Cash, and the Citibank Costco card if one shops at Costco. The bank point travel card could be the Chase Sapphire Reserve (or maybe the Preferred), the AMEX Platinum, or the Citibank Prestige (or maybe the Premium) depending on individual needs.
Well said. The right way to devalue is to increase the price for an award hotel/flight/car rental for points or miles *earned* after a certain date rather than redeemed after a certain date. That way, someone who’s saved up miles or points over a long time can still redeem at the old rate. Then make it so that the oldest points or miles are always used first. Perhaps include a sunset clause, so people wouldn’t hoard points or miles forever, something like a requirement to use them within 5 years or the current price would apply.