Glossary of technical terms
Introduction
The Loyalty Metric glossary is intended to provide additional insight, context, and sources for some of the technical terms used in this document. It also includes links to selected additional material for further clarification and extended reading.
Artificial Intelligence (AI)
Artificial intelligence, or AI, is technology that enables computers and machines to simulate human intelligence and problem-solving capabilities. It has powerful and proven applications to the loyalty management process: https://www.ibm.com/topics/artificial-intelligence
Asset Value
In the hospitality industry, asset value involves the efficient and increasingly profitable management of physical assets, such as buildings, equipment, and infrastructure, as well as intangible assets like brand reputation, staff training, and guest data: https://www.xotels.com/en/glossary/hotel-asset
Behavioral Economics
This discipline examines the psychology behind economic and financial decision making. It challenges the assumption that individuals are entirely rational and acknowledges that their choices are frequently based on emotion and bias rather than facts and logic: https://www.economicshelp.org/blog/glossary/behavioural-economics/
Choice Architecture
The process of influencing decisions by the way that choices are presented. A choice architect is someone who creates the environment that, through non-intrusive means, influences decision-making: https://thedecisionlab.com/reference-guide/psychology/choice-architecture
Customer Loyalty Engagement Index (Brand Keys)
Brand drivers engage customers, engender loyalty and drive real profits. The brand whose drivers come closest to meeting (or even exceeding) those of the category ideal is always the one whose customers will demonstrate the highest levels of engagement and loyalty:
https://brandkeys.com/customer-loyalty-engagement-index/
Churn Rate
This refers to the rate at which guests stop transacting with a property. Understanding the churn rate is crucial in making better strategic decisions:
https://www.forbes.com/advisor/business/churn-rate/
Complex Adaptive System
A system in which many independent elements (or agents) interact, leading to emergent outcomes that are often difficult (or impossible) to predict simply by looking at the individual interactions: https://code.org/curriculum/science/files/CS_in_Science_Background_papers.pdf
​Customer Lifetime Value (CLV)
A measurement of how valuable a customer is to a brand, not just on a purchase-by-purchase basis but across the entire customer relationship measured over time: https://www.qualtrics.com/experience-management/customer/how-to-calculate-customerlifetime-value/
Deloitte Consumer Loyalty Survey (2021)
Consumers increasingly demand meaningful, and tailored, connections to loyalty programs. Deloitte surveys define, explain and quantify those connections over time. We use them to better understand guest visitation behaviour: https://www2.deloitte.com/us/en/pages/consulting/articles/consumer-loyalty-programs-andexpectations.html
Default Choices
Pre-set courses of action that take effect if nothing is asked of the decision maker. Since defaults do not require any effort, they are a powerful yet non-intrusive decision-making tool:
https://www.behavioraleconomics.com/resources/mini-encyclopedia-of-be/defaultoptionsetting/
Fogg Behavior Model
Dr. BJ Fogg founded the Behavior Design Lab at Stanford University, where he directs research and innovation. The Fogg Behavior Model shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and a Prompt. With the Fogg Behavior Model as the cornerstone, Dr. Fogg created a new way to design products and services. https://behaviormodel.org/
Enrollment Rate
This refers to the customers enrolled in a loyalty program. It is a calculable metric showing the initial participation rate and helps identify the appeal of a specific loyalty initiative:
https://calculator.academy/enrollment-rate-calculator/
Engagement Rate
Engagement rate is a metric used to assess the average number of interactions your social media content receives per follower. What counts as an interaction depends on the platform, but it most often refers to likes, reactions, shares, and comments:
https://corporatefinanceinstitute.com/resources/valuation/engagement-rate/
Gamification
Gamification is adding game mechanics into nongame environments, like a website, online community, learning management system or business' intranet to increase participation. The goal is to inspire collaboration, sharing and interaction. https://www.gamify.com/what-is-gamification
Gen X
This is a term typically used to describe the generation of individuals born between 1965 and 1980: https://www.britannica.com/topic/Generation-X
Gen Z
This is a term typically used to describe the generation of individuals born during the late 1990s and early 2000s:
https://www.britannica.com/topic/Generation-Z
Guest Satisfaction Score (GSS)
A guest (or customer) satisfaction score measures how happy a guest is with a product, service, interaction or any other guest experience. This metric is derived from customer satisfaction surveys:
https://www.cmswire.com/customer-experience/what-is-customer-satisfaction-score-csat/
Guest Loyalty Index (GLI)
This index gauges the probability of a guest continuing to re-visit a resort destination in the future. The premise behind this metric is simple: loyal guests are more likely to repurchase, refer, and engage with a resort destination brand than non-loyal customers.
https://streamloyalty.com/Loyalty-Blog/Loyalty-Articles/ArticleID/158/Understanding-the-
Customer-Loyalty-Index-and-Its-Significance
Hibiscus
Sometimes referred to as a symbol of the Caribbean’s transnational past, the hibiscus is a tropical bush that has large, brightly coloured and distinctive bell-shaped flowers. Considered to be a very feminine flower, it is usually given or worn by women.
https://www.collinsdictionary.com/dictionary/english/hibiscus
Hummingbirds
Loyalty is one of the defining characteristics of the hummingbird. It has been proven that they are attracted again and again over many years to a destination that welcomes them – which is why we chose a hummingbird for our logo: https://nationalzoo.si.edu/migratorybirds/hummingbirds
Inertia Principle
Inertia is one of the fundamental principles in classical physics and is described by Isaac Newton in his first law of motion. Used shrewdly, it can be a powerful decision-influencing tool:
https://www1.grc.nasa.gov/beginners-guide-to-aeronautics/newtons-laws-of-motion/
Iterative Optimization
The process of continuously refining and improving a strategy through data-driven experimentation and adaptation. The goal is to achieve higher returns on investment (ROI), and drive sustainable business growth: https://www.indeed.com/career-advice/careerdevelopment/
iterative-process
Key Performance Indicator (KPI)
A measurable target that indicates how individuals or businesses are performing in terms of meeting their goals. Reviewing and evaluating KPIs helps organizations determine if they are on track for hitting their desired objectives: https://www.forbes.com/advisor/business/what-isa-kpi-definition-examples/
Keep It Simple, Stupid (KISS)
A design principle which states that designs and/or systems should be as simple as possible. Simplicity guarantees the greatest levels of user acceptance and interaction: https://www.business.com/articles/keep-it-simple-why-businesses-need-to-kiss-more-andhow-to-do-it/
Khoros
A global customer engagement software company. It provides online social media marketing, social media analytics and research, digital care, and content management software and services to enterprise brands and agencies: https://khoros.com/
Lao Tzu
He was a Chinese philosopher credited with founding the philosophical system of Taoism. He is known as the author of the Tao-Te-Ching translated as “The Way of Virtue” or “The Classic of the Way and Virtue”). This work best exemplifies his thought: https://www.worldhistory.org/Lao-Tzu/
Loyalty Performance Indicator (LPI)
This is a metric used to measure business success in terms of acquisition, retention, repeat purchases, customer lifetime value (CLV), and other key variables of loyalty measurement: https://bscdesigner.com/loyalty-kpis.htm
Multi-Channel Marketing
This refers to the use of several media channels for spreading marketing messages. It can include email, social media, print, mobile, display ads, television, and more. When used together in a professionally balanced way multi-channel marketing can deliver massive impact:
https://www.sas.com/en_ca/insights/marketing/multichannel-marketing.html
Net Promoter Score (NPS)
This score measures guest loyalty by looking at their likelihood of recommending a given business to family, friends and acquaintances. NPS is often held up as representing the gold standard among all customer experience metrics:
https://www.netpromotersystem.com/about/measuring-your-net-promoter-score/
Nudge Theory
A nudge is an intervention that maintains freedom of choice but steers people in a particular direction. It is a fundamental tenet of choice architecture and is deployed by a wide range of businesses, perhaps most prominent of which is the global retailer Ikea.
https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/muchanew-about-nudging
Pareto Principle
Also known as the “80/20” rule, the principle states that for many events, roughly 80% of effects come from 20% of the causes. It can help prioritize tasks, optimize resources, and improve overall efficiency: https://www.simplypsychology.org/pareto-principle.html
Predictive Analytics
The process of using data analysis, machine learning, artificial intelligence, and statistical models to find patterns that might predict future behavior and forecast future outcomes: https://www.ibm.com/topics/predictive-analytics
Radical Transparency
A belief that honesty and openness leads to super-efficiency. It’s not trying to hide anything. It’s telling it how it is in a way that increases internal loyalty, drives employee motivation and can lead to stellar results: https://www.boldare.com/blog/how-radical-transparency-canimprove-business/
Random Variable
Such variables are often used in econometric or regression analysis to determine statistical relationships and predict outcomes:https://www.investopedia.com/terms/r/randomvariable.asp
Response Attribution
Response attribution (or better yet, revenue attribution) is the most important tool that exists for evaluating the complex paths guests follow before making a purchase: https://cdn-4.dmnews.com/response-attribution-a-new-lens-for-measuring-success/
Retention Rate (RR)
The retention rate refers to the percentage of customers who continue paying for a product over a given timeframe. According to research by Bain & Company, a 5% increase in customer retention can generate more than a 25% boost in profit. https://www.productplan.com/glossary/retention-rate/
Repeat Purchase Rate (RPR)
This is a key metric used in business, particularly in retail and e-commerce, to measure the percentage of customers who return to make another purchase. It is a crucial indicator of customer loyalty, satisfaction, and the overall success of a company's products and services.
https://popupsmart.com/encyclopedia/repeat-purchase-rate
Return on Investment (ROI)
A metric used to understand the profitability of an investment. ROI compares how much you paid for an investment to how much you earned to evaluate its efficiency: https://www.forbes.com/advisor/investing/roi-return-on-investment/
Stochastic Model
Stochastic modeling forecasts the probability of various outcomes under different conditions, using random variables: https://www.sciencedirect.com/topics/engineering/stochastic-model
​Total Guest Revenue (TGR)
This is is the total income that a destination resort generates from all its revenue streams, including that derived from other services such as bars and restaurants, room minibars, exclusive guest excursions, concierge services and more:
https://www.beonx.com/knowledge/articles/total-revenue-definition/