Hilton (formerly Hilton Worldwide) is announcing a major restructuring of its signature Hilton HHonors loyalty program – and from dropping the extra "H" in the program name to providing a variety of new ways to redeem Hilton points, the program is a dramatic and welcome step forward into the frictionless future. It's also a vivid reminder that, far from wearing out their welcome, loyalty programs remain among the most valuable assets in the CMO's arsenal.
By Rick Ferguson
As reported in multiple outlets, Hilton this week is announcing major changes to its loyalty program: Farewell, Hilton HHonors; hello, Hilton Honors. The new Hilton Honors program is less a reinvention of hotel loyalty as it is a refocus on providing maximum program value not only for business road warriors, but also for leisure travelers who might never reach Diamond status, but nevertheless now have more reasons to choose Hilton when booking their family vacation travel. The changes fall into four main buckets:
Pay with points: Honors members who book direct with Hilton can now pay for their rooms with a sliding combination of cash and points. The option has been common in airline programs for a while, but Hilton is the first hotel brand to offer this feature.
Points sharing: Hilton will allow up to 10 family members and friends to pool their points to redeem for travel, with only minor restrictions on their use. Again, a few airlines offer this feature, but its a first for the hotel industry.
Amazon partnership: In another industry first, Hilton will allow members to redeem Honors points for purchases on Amazon.com.
Diamond status extention: As a one-time benefit, Hilton Diamond tier members who lose don't book enough stays to maintain their Diamond status can extend that status for one year.
According to Mark Weinstein, senior VP of loyalty and partnerships at Hilton, the changes represent both a commitment to the Honors program as Hilton's first line of defense against the competition, and a concsious effort to reduce friction in the program experience. Money quote from Weinstein courtesy of Skyft:
"Each of the new features, said Mark Weinstein, Hilton’s senior vice president and global head of loyalty and partnerships, was designed to satisfy the needs of both 'frequent travelers who want more ways to use their points' as well as 'less frequent travelers who want to engage more with fewer points. Now, more than ever, loyalty is at the core of our customer strategy. We're removing the friction out of travel and making it more fun and joyful along the way.'"
How will members react to these changes? According to the folks at the Boarding Area, quite well. Here's the money quote courtesy of contributor Ben Schlappig:
"My initial impression is that I'm quite excited and optimistic about these changes. We'll have to wait to fully judge [pay with points], but on the surface I can see this being a positive thing… [Points pooling] is a fantastic new opportunity that I'm very excited about… Overall color me excited and optimistic!"
Hilton couldn't buy that kind of positive reaction. And why shouldn't both Hilton and their best customers be excited about these changes? For Hilton, providing members with a variety of new ways to use their points represents both a commitment to providing value for their best customers and a way to get millions of dollars in liability off their books.
For members, they can now self-select ways to redeem their points that best reflect they type of relationship they want to have with Hilton. Want to save up points for a lavish vacation? Done. Want to mix points and cash to pay for that weekend shopping excursion to New York? Done. Want to borrow some points from Grandma to visit her for Christmas? Done. Want to burn those extra points on a forklift skid full of toilet paper from Amazon? Done. Whatever your emotional point of connection to the Hilton brand, Hilton now has a way to reinforce that connection through their loyalty program.
From a best practice perspective, Hilton is firing on all cylinders. In the drive toward the frictionless future, Hilton is executing on all three "frictionless imperatives" as we identify them at the Wise Marketer (full disclosure: These imperatives come courtesy of my wife Allison, a loyalty consultant who first developed this IP):
Liquidity: When programs provide frictionless methods for consumers to increase the utility of their points, both sides benefit: brands get liability off their books, and consumers have more choice and variety. Hilton's pay-with-points option removes friction by increasing points liquidity.
Fungability: The "fungability" of currency refers to the ease with which it can be exchanged for value without penalty. By providing the new points-pooling option, Hilton is making its currency more fungible to reduce friction in the member experience.
Accessability: Programs reduce friction when they increase redemption options and allow consumers to self-select into groups by redemption choices. While hotel points will always have the most value when redeemed for room nights, Hilton's Amazon partnership allows members to extract additional value from the relationship whenever they like.
We suspect that this relaunch will pay dividends for Hilton in its battle for customer loyalty. With most of the major hotel brands relaunching or refocusing their on their loyalty programs over the past few years, it's an exciting time for the industry. Kudos to Hilton for showing the way forward.
Rick Ferguson is CEO and Editor in Chief of the Wise Marketer Group.