Customer Loyalty Stronger Online According To Smeal Professor's Study

Customer Loyalty Stronger Online According To Smeal Professor's Study

UNIVERSITY PARK, PA -- In a difficult economic environment for the travel industry, hotel operators seeking ways to leverage customer loyalty into future vacation seasons have a better chance of doing so through the Internet, and not through offline methods, according to a study coauthored by Arvind Rangaswamy of Penn State University’s Smeal College of Business.

“Customer Satisfaction and Loyalty in Online and Offline Environments,” which recently appeared in the International Journal of Research in Marketing (Vol. 20, No, 2, June 2003), evaluated matched samples of data of online and offline customers in the lodging industry. The study found that the online medium increases loyalty to specific hotel providers (i.e. the likelihood that customers will use the same provider for future lodging needs). The research also concluded that loyalty and overall satisfaction positively reinforce each other, and such reinforcement is stronger online than offline.

“The Web makes it easier for satisfied and loyal customers to express their loyalty. For example, it is easier for them to find a hotel from their favorite chain even in an unfamiliar location,” said Rangaswamy, the Jonas H. Anchel Professor of Marketing and research director of the Smeal College’s eBusiness Research Center. “For hotel operators desperately seeking new ways to succeed in the current environment, one answer to increasing repeat business would be to provide more detailed and easy-to-find information at their web sites and direct as many customers as possible to their sites.”

The research team of Rangaswamy, Venkatesh Shankar of the Robert H. Smith School of Business at the University of Maryland, and Amy K. Smith of George Washington University’s School of Business and Public Management, recommended several strategies and tactics for hotel operators to leverage the findings of the study. Among the recommendations:

• Develop initiatives such as reward points for booking online. Prominently feature the rewards program on the Web site, enable customers to easily track their reward positions, and proactively remind or encourage customers to act when they are close to reward milestones.
  
  
• Provide rich but layered content on the Web site with information such as local weather, nearby attractions, hotels along a travel route that accept pets, detailed lists of amenities, and partnerships with other service providers, such as car rental agencies or restaurants.
  
  
• Add incentives such as more hotel stays or free hotel stays in exchange for increased use of Internet-based services.

About The Coauthor
Arvind Rangaswamy’s recent research has covered such topics as online marketing modeling, customer behavior, negotiations, and Internet business models. He currently teaches graduate courses in e-Marketing and Marketing Engineering at the Smeal College of Business. Rangaswamy is also co-founder of DecisionPro, Inc., a spin-off company from Smeal that provides marketing engineering solutions to professional marketers.

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