Smart or stupid Marketing move by Hyatt giving out Diamond status?

Introduction

I’m sure all of you have heard by now how Hyatt was “matching” status to Diamond last Thursday.  I first heard about it when people linked me to Gary’s post.  I first DM’ed them on Twitter at about 8PM PST on Thursday night.  It took them about 2 hours to respond, and they said to email them proof of competitor’s status and 1 night stay at the competitor.  I then found out someone got matched over DM, so I DM’ed them proof.  It was to no avail, and they said to email the documents instead.  Then it was a waiting game…

 

Waiting Game

I think one of the worst feelings in the world is not knowing.  Like not knowing if you got accepted to your college of choice.  Or not knowing if Discover will actually double our cashback.  The worse part about this deal was the randomness of outcomes.  Some people who contacted them after me were matched an entire day before me.  Then on Friday, some people were told over DM that they were only going to match to Platinum.  This would be like waiting for a Black Friday deal and not knowing how many items the store had in stock, and worse, they were calling up people behind you to get the goodie.  You just know they will eventually run out, and you have no idea if you’ll get it or if they’ll run out by the time they get to you.  All day Friday I was anxious and every hour that passed, I felt the odds of getting matched were diminishing.

 

Finally matched

I was finally matched on Saturday around noon PST; nearly 36 hours since I had sent the email.  Even as I type this on Sunday night, people who had emailed around Thursday 11PM PST were finally getting matched over email.   I haven’t heard of anyone who got denied over email, so if you haven’t emailed them yet [or got denied over DM], email them anyway.  It’s because the team who is matching over email seems to be different than the Twitter DM people.

 

Were you already Diamond?

Since I didn’t earn Diamond the hard way, I couldn’t really relate to the ones who did.  I could understand their frustration.  To translate this to reseller speak – if Sears gave out VIP Platinum status to match lowly Best Buy Reward Zone status, I’d be pissed too (since now I have competition for the quarterly Platinum benefit.)  But you know what, I’d get over it…or so I think I would.  You as a consumer can choose whether to give a company your future business or not.  If you were Diamond and upset with them, YOU have the decision to give them future business or switch to Hilton or SPG.  It’s really that easy.

 

So was this a genius marketing move or a bad one?

I think it was genius.  Yes, Hyatt knew they would be pissing off their Diamond members, but they were willing to do that for the greater good.  I’m sure they created a business case that modeled out the cost difference between a Diamond and a Platinum member.  I’m sure they know a Diamond member costs them let’s say $200 a year (I’m making up that number) due to the cost of free breakfast.  I actually wouldn’t put too much cost to the suite upgrades since those suites would have gone unoccupied.  I’m sure there’s some opportunity cost of the DSU’s since those couldn’t be sold for cash anymore.  The point is, they knew how much this would cost.

On the revenue side though, for my trips in 2016, I’m going to lean towards Hyatt now instead of SPG or Hilton.  Since I can only use the DSU’s on cash or cash+points bookings, I’m now going to actually shell out cash for my stays instead of using all points so I can experience their suites.  This is the incremental revenue that they will see from this promo.

I think they were smart to do this over Twitter instead of making it more widely available.  First of all, they don’t have their competitors’ customer list, so this was really the only marketing method.  By doing it over Twitter, they get the added benefit of guerrila marketing.  If someone who has say 500 followers and got this Diamond offer and tweets of how awesome their suite upgrade was at the Park Hyatt, that’s “free” marketing down the road.  If they had done this over email or snail mail, the marketing reach wouldn’t be as great.  And what if these pseudo-Diamond members really love Hyatt and actually requalify for 2017 – that’s even more incremental revenue.

Remember, the miles and points community is probably the top 1% of people out there.  It’s like how Emirates has a commercial about the A380 shower.  They are showing you their best product and want you to think how awesome they are, but in actuality, only 1% of people could ever experience it (be it paid with cash or points.)  They aren’t going to show you a video of the crammed coach class.  So by giving this promo to the top 1%, they are hoping that some % will stick around and publicize  how awesome Hyatt suites and breakfast are.  They realize 90% (made that up) of those who got matched probably won’t requalify, but if the other 10% do stick around, that’s 10% more business than they would have gotten.  Every business case has multiple variables; this one had many – # of people who take offer (they clearly underestimated this), # of people who will requalify (they won’t know this until next year), # of angry Diamond defectors (won’t know until next year), etc.  Or maybe they just don’t care since a Club Carlson / Hyatt merger could happen now.

 

Conclusion

Whether you hated or loved them for doing this promo, you have to give them credit for trying to capture new customers.  The major lesson learned here – follow all loyalty programs on Twitter.  That means Hyatt Concierge, SPG Assist, Hilton Assist, etc.  I won’t link you to the others; you should know who they are.  Don’t forget the Airlines too.  Who knows when another promo like this pops up, and you don’t want to be at the back of the line.