Consumer Brand Loyalty for Destinations

by Kenneth Wardrop

Recent Harvard Business Review research in to consumer loyalty to brands identified two key research findings: firstly that delighting customers does not build loyalty, however reducing the consumers effort, the work they must do to get their problem solved, does. Secondly, companies acting deliberately on this insight can help improve customer service costs, and decrease customer churn (Stop Trying to Delight Your Customers Matthew Dixon, Karen Freeman, and Nicholas Toman, Harvard Business Review July 2010). The Customer Effort Score (CES) is a measure of the ‘willing’ effort of consumers in purchasing goods or services.

The pursuit of brand loyalty by customers is of course a key business goal as it generates a propensity to both increased levels of product purchase and higher levels of repeat spend by consumers. It is also a well documented fact that retaining existing customers is a far more cost effective than the cost of acquiring new customers.

This Harvard Business Review research links to previous consumer research on the measurement of customer satisfaction, and the ‘value add’ for businesses (and brands) from meeting or exceeding consumer expectations. Traditional metrics in this area include for example ‘Customer Satisfaction Indeces’ and ‘Net Promoter Scores’. The concept of customer experience peaks and troughs, and how these can influence consumer brand perceptions also falls within this framework of understanding of consumer behaviour in relation to loyalty to brands.

Reviewing and reflecting on this research in to consumer brand loyalty, primarily with regard to mainstream fast moving consumer goods and services, led me to think about what the implications of this area of research might mean for the promotion of city brands and issues of brand loyalty from consumers.

One of the striking aspects of tourism in relation to city promotion is the holistic nature of the visitor experience and the multitude of ‘touch points’ on the customer journey. This characteristic and the consequent implications of the concept of ‘willing consumer effort’, and the need to ‘minimise obstacles for the customer’, potentially has far reaching implications for the customer service experience for destinations.

‘I Love New York’ - one of the world’s leading destination brands

Many visitor destinations have been totally focused on improving the quality of the visitor experience on the assumption that this will build brand loyalty, while this new research suggests that a greater focus on addressing the obstacles in the customer journey has the potential to offer greater benefit in securing brand loyalty and a destinations competitive position. Personally I believe that the two aspects are not mutually exclusive, and destinations need to continue to ensure the quality of the visitor experience while at the same time addressing the ease of access by customers to our city product and brand. The Harvard Research should however cause destinations to reflect on what the barriers to a smooth visitor experiences might be?

Looking at the visitor experience and the customer journey from the perspective of a visitor to your destination is an ideal starting place, creating a customer focussed perspective on what the obstacles are that might potentially create “a hassle factor”. Barriers that immediately spring to mind might include: issues around securing visitor visas to a country; ease of transport access and connectivity; the functionality of and ‘user friendly’ nature of web portals and booking engines; and language and cultural barriers and the lack of provision in relation to a visitor’s native tongue and cultural norms.

Working as I do in Scotland, the cost and bureaucracy around securing a UK visa by visitors, for example those coming from emerging inbound markets such as Russia, India, and China, represents a real barrier. What is more the fact that the UK is not part of the Schengen Agreement, means that for example Chinese visitors planning a tour of European cities are potentially by passing the UK due to this extra ‘hassle factor’. This might explain why in recent research on preferred destinations by Chinese tourist the UK did not feature in their global top ten.

Accessibility and connectivity – direct, reliable, easily purchased and affordable transport links are also essential to making it easy for our customers. Again in the UK we have challenges around the congestion of the major international hub airport Heathrow, the competitive disadvantage of excessive Air Passenger Duty (especially for international passengers then making a connection on a domestic flight to Scotland for example), and a rail system with a complex and inconsistent fare pricing structure.

So what does this mean for those involved in Destination Management? There are two levels that those involved in city promotion have to tackle: the activities over which they have influence over at a local level; and the influence that they need to assert on agencies at a higher level. What strikes me as crucial given the economic value of tourism, its continued projected growth (especially in emerging markets such as the BRIC nations), and the highly competitive market environment that destinations operate in, is that the tourism sector and destination management organisations need to adopt a strong voice, to be sure in their advocacy, and to educate policy makers and planners in government so that they recognise the importance of minimising barriers for our customers. It suggests also the need for joined up Government where there is a full understanding of the implications of an action in one area of policy on another; in the UK, Visa policy and Air Passenger Duty are a good example of conflicting policy objectives.

With regard to the factors at a local level that destination promotion and management professionals have the ability to influence and control, the focus has to be on smoothing out the troughs in the visitors experience and barriers on the customer journey. I would suggest that one of the best ways to tackle this is to ensure that ‘tourism is considered as everyone’s business’. The holistic nature of the visitor experience and the many component parts that make up the visitor product from say the taxi ride from the airport, to the quality of service received in a restaurant or at a visitor attraction, means that for destinations to address the issues of minimising the ‘willing effort’ and maximising the quality of the visitor experience there has to be an equal sense of responsibility for a positive experience along the various touch points of every part of the customer journey.

On the part of DMO’s I believe this requires active management to create a customer experience culture based on the need to ‘make it easy’ for customers. An example of local based action that might be adopted could be addressing the provision of visitor information in foreign languages and educating those in the front line of customer service in foreign languages and the cultural norms of different group of international visitors. DMO’s also have the ability to ensure that the city web portal is as user friendly as possible, with functionality that easily facilitates access to information and the purchase of product, be it tickets for attractions or accommodation booking. The nature and quality of the visitor experience should of course reflect the values of the destination brand.

While the importance of consistent and high quality service and a customer experience that is as ‘hassle free’ as possible is undoubtedly a key driver of customer and brand loyalty, I believe that it is also important to recognise that other factors also influence consumer perceptions of and loyalty to a destination. These other factors might include for example: the destination product (uniqueness, distinctiveness, facilities, environmental quality, cultural offer, attractions, institutions, and the attitude of and welcome from local residents); comparative price and affordability in relation to alternate destinations; consumer’s emotional connection to the brand; prior “goodwill” established through previous interactions with the destination; hygiene and macro factors such as the economic and political environment and perceptions of public safety.

An understanding of the influencing factors to creating brand loyalty is vitally important for those responsible for destination promotion and management. This recent Harvard research in my view raises awareness of a further aspect to achieving and maintaining brand loyalty which requires destination management and promotion professionals’ attention – namely understanding and addressing the level of ‘consumer effort’ required in enjoying our destinations.

About Ares

Ares Kalandides holds a PhD in Urban and Regional Studies from the National Technical University of Athens. He is the founder and CEO of Inpolis, an international consultancy based in Berlin, Germany and has implement several projects around the world. Ares teaches Urban Economics at the Technical University in Berlin and Metropolitan Studies at NYU Berlin.
This entry was posted in opinions and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s