Hilton Honors Case

Problem:

The main problem that Hilton is facing in this case is increasing their loyal customer base in an increasingly competitive market. Hilton is faced with the dilemma of whether they should increase their spending towards their customer loyalty policy to keep up with what Competitors are doing or to continue offering their own differentiated customer loyalty policy that is already producing positive results.

Solution:

The solution Hilton should choose to increase their loyal customer base should be one that involves keeping their most effective reward policies and improving some of the others to meet the demands of the customer and to be equal to their competitors. For customers that are already loyal to Hilton, I believe Hilton should definitely offer something to them that competes with Starwood’s updated policy. If Hilton rewards members began converting to Starwood hotels, the loss of revenue could be significant. So I say for new customers or non-loyal customers, Hilton should keep their established reward policy in place. But, for customers who are extremely loyal and spend thousands of dollars with them each year, Hilton should reward them with the same treatment that they could receive from a competitor such as Starwood.

Implementation:

In order to implement this solution, Hilton would first have to define all of its most loyal customers and strategically categorize them in a tiered system based on their loyalty or how much money they spent with Hilton each year. After this refined tier system has been established, Hilton would need to define which customers would be most beneficial to retain by matching the rewards programs that the competition is offering. I would think the mid to upper tier customers should receive this treatment. While completely changing their reward policy to keep up with what the competition