Monday, June 22, 2009

Hyatt: anticipated surprises and relationship-building

In The New York Times yesterday, Rob Walker wrote about a new marketing program at Hyatt Hotels, which the hotel chain is calling “random acts of generosity.” According to Hyatt’s CEO, Mark Hoplamazian, the hotel chain will be randomly “surprising” customers with breaks on certain services – he tells potential guests not to be surprised if a Hyatt hotel “picks up your bar tab, comps your massage or treats your family to breakfast.”

The marketing objective behind this program is to encourage customer loyalty, with the underlying theory that customers who receive things for free will be more apt to come back. Walker’s article discusses a paper soon to be published in the Journal of Marketing, which examines this theory.

More interesting to me from a PR perspective, though, is Hyatt’s choice to proactively “announce” the program publicly in a USA Today business travel blog. From my perspective, this initiative could have been more effective in building customer loyalty had the company just rolled it out, without telling its customers to expect it.

I'm not an expert in the hospitality business, but I'd wager that few people would make their decision on where to stay based on the possibility of a free breakfast. To me, the true value of a random gift program like this one is in its relationship-building potential.

At some levels, people respond to relationships with companies in the same ways they do with people. When someone does something nice for you out of the blue, it makes you feel good about your relationship. But if you feel there’s an ulterior motive, you are less apt to be impressed – and may even feel manipulated, which could be worse for your relationship than not having received the favour or gift in the first place.

Of course, today’s consumer is sophisticated, and most likely understand that freebies are generally given to encourage return business. But when you come right out and announce a random giveaway program, you turn what could have been a “gee, the people at Hyatt made me feel special” experience into an “I guess I got lucky this time, maybe I should go out and buy a lotto ticket” experience. The latter doesn’t deliver the same ‘warm and fuzzy’ factor, which can help significantly in building loyalty.

And worse, because customers know about the program from having read the publicity, you also create the "I guess someone else is getting my freebie" experience for everyone who doesn't get chosen. That's (I'm assuming) the majority of customers, walking away with a disappointment they didn't need to have in your hotel.

Hyatt’s “random acts of generosity” plan could indeed be a great way to make customers feel good about doing business with the hotel chain; everyone loves a freebie, and random giveaway contests are run regularly in all kinds of businesses. But for real loyalty-building, I think it could have been even stronger had they kept it quiet and allowed the resulting customer experiences to be true surprises – with all the warm and fuzzy relationship-building feelings that would come along with them.

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