In sickness and in health: when memberships really matter

When you marry, nobody asks whether you will love your partner in the good years. That part is easy. The vow deliberately covers sickness, poverty and worse — because a promise only means something at the moment it becomes inconvenient to keep.

Customer promises work the same way. And most companies, like most couples, discover the real quality of their promise only when honouring it costs them something.

I was reminded of this recently while checking into a hotel belonging to a luxury chain whose loyalty club I have been a member of for years. My company had negotiated a corporate rate with the chain because we use it heavily.

I arrived at reception, gave my booking number and my membership code, and expected the usual small courtesies that come with membership — sometimes an upgrade, sometimes breakfast, sometimes just a quieter floor.

The answer was polite and immediate: “I’m sorry, sir. On a corporate rate you are not entitled to member benefits. Those apply only if you book at the published price.”

In a single sentence, a loyal customer became a stranger — penalised, in effect, for the sin of working at a company that buys a lot of rooms.

The most valuable guest in the building

Every serious study of customer economics says the same thing about loyal customers. They buy more. They buy more often. They are cheaper to serve, because they already know how the system works and ask less of it. They buy across the portfolio rather than a single product. And they recommend the brand to people who look like them, which is the only marketing channel nobody has to pay for.

Now hold the corporate-rate guest up against that list. High frequency. High annual value. Almost no acquisition cost. And a second layer of value invisible at the front desk: the guest is also a node inside a contract, with influence over where dozens of colleagues sleep next quarter.

Here is the uncomfortable arithmetic. The guest turned away that morning was worth more to that chain over ten years than a full-rate guest they will never see again.

The exclusion rule was written to protect the margin on one room, on one night, in one channel — and it was applied to the single relationship the brand had the least reason to put at risk.

The rule was not stupid. It was perfectly rational at the level it was written, and quietly destructive at the level of the enterprise. That gap is where most customer strategies actually fail: not in the intent, but in the layer of the organisation where someone optimises a number without owning the relationship it belongs to.

A liability, not a marketing asset

There is a second confusion worth naming. Companies talk about loyalty programmes as marketing assets. Financially, they are closer to a liability — a promise already made, in exchange for data and behaviour the customer has already handed over. The member paid in advance, in preferences, in switching costs, in referrals.

Excluding that member on a technicality is not a saving. It is a company defaulting on its own debt, and telling the creditor to read the small print.

We are all tired of hearing “the customer at the centre”. The phrase has survived a decade of strategy decks largely because it commits no one to anything. What it usually means in practice is that the customer is at the centre of the moments where they are most profitable, and somewhere near the edge at every other time.

The test is not whether the sentence appears in your strategy. The test is whether it holds at the touchpoint where the incentives point the other way.

Three tests, from a frequent guest

I offer three, in the humble opinion of an observant user rather than a hotelier.

Coherence. A good customer must be recognised everywhere, not selectively. If a benefit disappears the moment the customer becomes commercially efficient for you, it was never a benefit. It was a promotion.

Consistency. The standard of treatment cannot depend on the channel, the rate code, the shift or the branch. Customers do not experience your organisational chart; they experience a sequence of moments, and they remember the worst one.

Recognition of loyalty. In sickness and in health. What a loyal customer values is rarely the upgrade itself — it is the evidence of being known. Recognition is cheap to give and expensive to withhold, which is the opposite of how most companies budget it.

None of this is a hospitality problem. Ask any bank whose longest-standing customers get the worst mortgage rate, any telecom operator whose best offer is reserved for people who have never bought anything, any airline whose most frequent flyers hit the tightest availability.

Ask any professional services firm whose largest, most reliable client receives the most junior team, because the difficult new logo needs the partners. The pattern is identical: value migrates towards whomever is being pursued, and away from whomever has already been won.

For leaders, that makes this a design question rather than a service question. Someone has to own the whole relationship, not the individual transaction. Someone has to be accountable when a rule that looks correct on a channel P&L is wrong on the customer’s lifetime value.

And someone senior has to answer the only question that matters at the counter: when our promise and our margin disagree in front of a customer, which one does the person in the uniform have permission to choose?

Get that wrong and you have not lost a night’s revenue. You have taught your best customer that your loyalty is conditional — and loyalty, once it learns that, tends to reciprocate.

The promise was never about the good years. It was about the morning at reception when keeping it costs you something.

Dr Philios Andreou Sphika is the Deputy CEO and President of the Other Markets Unit, including Thailand and Asia, at BTS Group, a leading global strategy execution consulting firm specialising in the people side of strategy. For executives who are interested in connecting, Dr Philios can be reached at philios.andreou@bts.com or visit his LinkedIn profile.