Customer loyalty is highly important in luxury travel. Winning business from high-net-worth individuals and building a relationship with them over time is hard. No shortcuts here, just time and effort. At the same time winning recurring business over time is crucial to growing and maintaining a successful luxury travel business. It doesn’t matter if you are an agency, solo advisor, or a members’ club, focusing time and effort on this aspect of your sales & marketing engine is highly recommended. Let’s analyze customer loyalty in luxury travel a bit further and what we can do to improve it.
The importance of customer loyalty
Customer loyalty, in a nutshell, is the ability of your company to make clients that booked luxury travel experiences with you come back over and over again for different trips, different destinations, or new offers. It also describes how positive clients will talk about you in their social circle, in online reviews, and testimonials, which in turn will make it easier for you to generate new affluent leads (warm referrals) without directly investing more marketing budget. It often goes unmeasured and is perceived as an intangible quality of your brand or a direct outcome of your reputation and service quality. A lot of owners and managers that are not well versed in luxury marketing would probably perceive customer loyalty as a factor of their business that is hard to directly influence and at best, slow to change in any meaningful way. But is that really the truth?
The obvious thing to do
Let’s clarify right at the start, the most important part of customer loyalty in your business is to deliver an above and beyond quality in terms of sales process, service, experience, and follow-up. Only travel specialists that make their clients very happy will prevail and thrive over time, so there is only so much luxury or digital marketing can do if the core processes in your business like sales, vendor management, travel planning, communication, and quality control are lackluster. One way to keep quality consistent is to sell templated experiences based on specific destinations where you have a lot of expertise and can control all the aspects for your client by hand picking the vendors and partners at every stage of the trip.
It gets more complicated though if you start selling itineraries in the high five to six-figure range. At that price point you will probably start curating custom trips with elements that are unique to each affluent client, so the ability to quality control becomes severely diminished since every engagement is unique and cost-intensive. Still, by employing due diligence, patience, surprise, and creativity you can deliver a consistent, high-level experience every time if you just put the effort in. And you absolutely have to do that if you want your affluent customers to come back and do more business with you. Due to the high price point luxury travelers tend to not forgive a lot of mistakes. The obvious thing for customer loyalty improvement of course is then to be a great service provider and a trusted, well-informed luxury travel advisor.
As an entrepreneur, business owner, or high-level executive you have conflicting priorities all the time. You need to invest funds into doing scouting trips, finding new vendors and suppliers, testing them, and designing new luxury travel experiences. Another important aspect is your team. You need to hire, train, educate, coach, and work on morale to maintain cohesion. Then, of course, you have sales and marketing that will take up a large part of your resources and time to generate enough affluent leads and close enough sales to hit your revenue and growth goals. It doesn’t matter if you are doing everything very old school and offline, through outbound sales, luxury events, direct mail, print advertising, and referrals networks, or if you are more modern and digital (which we recommend for our clients).
When doing a lot of email marketing, social media, digital advertising, and online content, you need to still invest consistently over time to get results. Purposefully spending time, energy, and money and focusing on customer loyalty through specialized sales and marketing tactics is often neglected or forgotten in light of winning new business and keeping the business operations themselves running. But what is the ideal split of time, energy, and resources? This, of course, will be individual to each business structure, but if we would have to give some general advice we would recommend to spend around 40% on your product or services, 30% on your team and organization, and another 30% on your sales and marketing. Around a third of that sales and marketing budget should go towards customer loyalty tactics to create some measurable impact.
How to use sales & marketing to enhance and amplify
Let’s look at what sales can do first:
- When dealing with your clients while taking in their requirements make sure to save as much additional personal information in your CRM as possible.
- Whenever one of your affluent clients has a special day, make sure to send a handwritten note, gift basket, or an invite for a special event to them (electronically or via mail). A personal phone call from time to time to express best wishes and thank them for their business can work well too.
- Whenever you launch a new product or add a new destination or experience, make sure (based on your notes in your CRM) to let specific, potentially interested customers know early on so they have dips on trying it out before anybody else.
- Make sure to do post-sales follow-up. After the trip is done, call your client and get some feedback on what was great, not so great, and what can be improved. This is an ideal opportunity to ask for a written or recorded testimonial if the client was very happy with what he or she booked.
- Respect the privacy of your customers and don’t overwhelm them with communication while they are on their vacation (of course) and be specific in your timing when reaching out afterwards. Having consistent follow-up is absolutely fine in the sales and proposal process though.
- Make sure that you ask your most happy customers for a referral at least once or twice a year (setting automatic reminders for this purpose can be helpful).
And now let’s see what (digital) marketing can do to support these efforts:
- Segment your email list into customers and non-customers inside your MAP or email tool.
- If possible, combine the notes, sales history, and profiling data you have in your CRM to further segment your customers into personas based on common interests or destinations.
- Use neuromarketing, consumer psychology, and the limbic map to profile these customer segments in terms of design and messaging preferences.
- Send newsletters out to your customers, but personalize them based on the data you have on them first.
- Support sales with design and technology to make their referral and testimonial requests more visually appealing.
- Don’t overdo it in terms of frequency when it comes to email communication with customers, always communicate more frequently with leads than with customers.
- Collect the emails of your customers and use them for specific, targeted remarketing campaigns on social media or other display advertising networks that support remarketing.
- Try to make the ad creatives, content, and landing pages you use for these retargeting campaigns as relevant as possible to your customers (add a frequency limit to avoid oversaturation).
- Support sales with technology to record, collect, and categorize the testimonials they collect from customers.
- Make sure to place these testimonials and positive online reviews in strategic locations on your website, landing pages, lead magnets, social media, email communication, and print collateral.
- Regularly monitor online reviews and press coverage of your company on social media, search engines, and in luxury magazines. Follow up with negative reviews to get to the bottom of the problem.
- If you are able to collect video testimonials (highly recommend) make sure to edit them properly, add music, and use them in your overall content marketing strategy on your website and beyond.
How to measure your success
Now that we have listed several tactics here that sales and marketing can use in collaboration to improve customer loyalty the question becomes how can we quantify these efforts and investments? There are two KPIs that can help with measuring customer loyalty across your whole business. Both have pros and cons. The first is the so-called net promoter score (NPS).
This score is calculated based on interviews and surveys you conduct with your customers and requires usually compensation, email communication at scale, and some external user research software to make it work. With a scoring system from 1-10, it measures how likely people will recommend your business whenever the topic of luxury travel comes up, which is what you ultimately want to foster business growth. Scores between 7-10 are what you are normally aiming for, with 9-10 being ideal. Scores below 6 mean that you might have a service quality issue at your hands.
The other more commercially oriented way of measuring your customer loyalty efforts is customer lifetime value (CLV). CLV measures how much your average client will spend with you on different services and experiences over his or her lifetime of doing business with you. Low CLV might mean that a typical deal is a one-off engagement for a low to medium price for each customer that comes through the door. A high CLV, on the other hand, can indicate that people do a lot of recurring business with you, or that every new customer who buys from you immediately buys your most luxurious and expensive product. CLV can be measured by looking at your CRM and ERP or accounting software.
If you make an effort to measure these two KPIs, you should have a good grasp of what is going on in your business in terms of overall customer loyalty. Increasing customer loyalty in your business is one of the most common use cases we help our clients with so feel free to reach out if you would like to explore what we can do for your business in that regard.