How hotels can save money with compelling customer insights
All hoteliers want the most comprehensive customer insights possible – but how can hotel managers learn this valuable information?
Recently, the popular MOOC platform Coursera launched an interesting program called Hotel Management: Distribution, Revenue and Demand Management. The course aims to furnish hoteliers with an overview of current industry practice in distribution. On the completion of the program, hotel managers will have the tools necessary to navigate the complex network of traditional and web-based distribution channels. These skills will ensure increased efficiency, meaningful customer insights and higher turnover.
Taught by a faculty of business management and IT professionals, key questions include: How should hotels distribute online? What should a hotel website include? How can suppliers most effectively leverage OTAs? Essentially, the main goal is to describe how an omnichannel distribution strategy can maximize profit. However, one crucial point is omitted from the course description. Usually, hotels can only answer these questions by capturing customer data, which when analyzed, can generate powerful customer insights.
With detailed customer insights, hotels can improve the efficiency of their marketing efforts, their sales strategy and their operational structures. By implementing a meaningful, evidence-based approach, hoteliers can save money across their organization. Below, we discuss which questions to ask when approaching data analysis – and how these customer insights can save hotels money.
1. What are the aspirations of your customers?
Different hotels cater to different customers. For instance, the JW Marriott in Chicago has a very different client base to the 25-room Guesthouse Hotel in the same city. Although both are high-end hotels in Chicago, they present a very different offer. The large, corporate Marriott is close to the center of town, making the hotel suitable for business customers. Contrastingly, The Guesthouse is in artsy Andersonville, which appeals more to couples on romantic getaways or families on city breaks.
Through data analysis, hoteliers can construct a detailed profile of the customers who stay with them. From these individuated profiles, hotels can divide customers into segments. These divisions will enable hotels to identify their largest and most profitable customer groups. Therefore, when designing marketing content, hoteliers can tailor content to appeal to their customers’ aspirations.
For example, if a hotel’s largest customer segment is businesspeople, they may want to highlight the consistency of their service. Or, if their largest segment is families, a hotel may wish to promote its relaxed, child-friendly atmosphere. However, the strategy does not necessarily have to be focused on the largest customer base; a hotel may wish to target the most profitable guests. By adapting marketing content to high-spend customers, hotels save money, as marketing efforts are directed away from customer segments with low return.
2. What is the customer’s on-site behavior?
Once the customer has been attracted to the hotel’s website, clicked the ‘book now’ widget and begun the transaction, the business has the opportunity to really get to know their client. Data can give remarkable customer insights into behavior during the booking journey, furnishing an organization with a wealth of intelligence. Through this information, a hotel can suggest appropriate value-added extras, produce targeted advertising and deploy remarketing tools.
Additionally, data analysis can provide insights into customer behavior before their purchase begins. To illustrate, leveraging data can tell hotels how many days in advance the customer begins researching their trip before they book. Equally, data can also reveal how many other suppliers’ and agents’ websites the customer visited before they made their final choice.
Ultimately, this information allows hotels to streamline their marketing efforts. By deploying informed, targeted advertising, hotels can pitch their offers for maximal effect. Compared to a more haphazard, arbitrary approach, strategic advertising will dramatically reduce overheads.
3. How much is a customer worth?
The most profitable customer is a loyal customer. According to research, the purchase a new customer makes will not cover the marketing investment required to attract them. On average, it will cost a business more than six times more to acquire a new customer than to retain an existing one. Therefore, the key to maximizing return and minimizing overheads is to maintain loyal customers.
In banking and other sectors, analyzing and predicting CLV – or ‘Customer Lifetime Value’ – is standard operating procedure. However, within travel, few organizations conduct this protocol consistently or over a large scale, despite the amount of data available to them. Hotels can calculate CLV per customer using a simple formula:
(Average Spend) x (Number of Repeat Sales) x (Average Retention Time) = CLV
Simply put, this formula multiplies a customer’s usual spend by the number of stays over the timeframe within which they continue to return to the hotel. Together, these metrics provide a figure for how much a guest spends whilst a hotel has their custom – that is, their ‘lifetime value’. With a proper command of CLV projections, marketing and sales departments can justify investment in customer experience, loyalty schemes and remarketing.
4. How do customer needs and booking scenarios influence their choices?
Customer journeys should be plotted from the very moment the customer is inspired. Combined with location data, device usage, search history and preferences, hotels can gain detailed customer insights. This information will allow hotels to better understand their customers’ needs and the conditions that influence their choice of booking channel.
For instance, the ubiquity of mobile devices now means that ‘micro-moments’ have become a crucial part of marketing strategy. Micro-moments are compact, purposeful timeframes where consumers reach for their devices to search, know or buy. Today, exploiting the customer’s need for instant, easily accessible content is central to attracting them to a product. By focussing on the latest trends in technology and customer behavior, marketing investment can be concentrated on routes that boost return.
5. Customer insights: Boosting sales, saving money
There is a wealth of information in data. Furthermore, much of this information is likely to be at an organization’s fingertips. By leveraging relevant, qualitative data, hotels can gain incredible customer insights. Armed with this knowledge, hotels can focus marketing efforts towards profitable customer segments, effective channels, and sophisticated marketing strategy. This approach does not only boost turnover, it also streamlines operations; by focussing investment on proven approaches, hotels can limit overheads and maximize net profits.