Posts in category: Hotels

The rise of customer engagement

Customer engagement has become a buzzword among marketing professionals. Within only a few years, this term has experienced a meteoric rise, from being virtually non-existent to omnipresent, with Google spitting out more than 10 Millions of search hits by now. Major business consultancies have picked up on this term and a growing number of conferences, webinars, and think tanks are organized around this topic. Nowadays, it is almost a truism that customer engagement is a key to successful business in the digital age.

 What is customer engagement and why does it matter?

While definitions abound, the essence of customer engagement boils down to the interactions between a customer and a brand. Put differently, it is the outcome of customers’ psychological involvement with a brand that enhances their voluntary contributions to a company for a mutual benefit. Examples of customer engagement include recommendations and referrals, suggestions for service improvements, posting content on social media, writing reviews, rating dishes, sharing a company’s website, blogging about a product, and many more.

The higher customer engagement, the deeper the bond between a brand and a customer is and the more the customers are willing to contribute to the company’s success. It’s like having a hardcore fan base that not only supports its team during home matches but goes the extra mile to enhance the visibility of team and attract more supporters by developing choreographies, creating fan pages, and attracting new fan club members.

 Customer experience & customer engagement in the digital age

Customer engagement is the result of an outstanding customer experience. Simply put, when customers have the feelings that are getting more out of a business, they give more back to it. And today’s savvy consumers want a lot more than just a good product experience. In fact, as Millennial gradually replace the Baby Boomers as the largest consumer segment, customer expectations change dramatically. Millennial form the first true generation of digital natives and digital technology is part of their identity. They demand a digital experience from a brand and they look out for validation from their peer group on social networks before purchasing a product – product experience is a social experience for digital natives. Furthermore, savvy consumers want to have a say in the creation of a product, they want to be involved and are enthusiastic to give feedback and share their views with a company. They consider every interaction with a brand, be it face-to-face interactions in a store, online customer service, visiting the brand’s Facebook page, as part of their overall relationship with a company. In the digital age, customers first and foremost want to be engaged and this expectation extends beyond pure transactions.

Experience rewards & customer engagement

This new form of customer expectations disrupts the traditional way of customer relationship management. Because savvy consumers want to interact with a company beyond just pulling out the wallet, non-transactional rewards become essential for promoting customer engagement in the digital age. Long gone are the days when consumers were happy to carry a punch card around and whip it every time they buy a coffee. Indeed, according to a recent study in the US, 83% of surveyed consumers stated they are motivated by cash incentives other than product purchases, such as talking about a brand on social media or subscribing to a newsletter and 84% said they would spend more with retailers that offer points for activities other than spending.[1]

Because shopping is a journey to savvy consumers, rewards should not only tackle the actual transaction but also incentivize them in the pre-transaction and post-transaction phase in order to create an overall shopping experience. By rewarding non-transactional activities, such as liking a brand or sharing a link, companies have the great chance to create an intimate customer relationship, learn about customer preferences that otherwise remain hidden, and deliver messages that hit the audience’s nerves. Non-transactional rewards thus not only keep the customers engaged but also open up access to valuable customer data.

To sum up: as customer expectations have undergone dramatic changes in the course of digitization, businesses need to reach out to customers beyond pure monetary transactions. They need to create an overall customers experience that gets customers excited in order to be successful in the long run.

You are not yet convinced? On the next blog, we will cover the benefits of customer engagement in detail. 

Source: [1] COLLOQUY Loyalty Talks 2014. Https://www.colloquy.com/resources/pdf/magazines/20140527-mag.pdf.

Marketing; One of the repeated questions that I always receive is: How can we breakthrough the noise and stand out from the crowd?

In the era of extreme change and technology disruption marketing is not anymore such department that responsible for promotions, newsletter, social media or any of the misconception fixed rules that limited by conventional barriers of achievement. Marketing now is about the entire funnel -rather than simply winning new customers- using behavioral and contextual data that drives engagement and deliver personalized experience. If your desire is to build effective strategy to cut through the noise, you must see growth as fundamental end goal of your marketing efforts. When you adopt growth marketing mindset, you will get clear view of the customer experience funnel and focus only on the activities that grow the top-line not only to attract new customers or retain current customers but also to turn them into brand ambassadors. 

When you adopt growth marketing mindset, you will get clear view of the customer experience funnel and focus only on the activities that grow the top-line not only to attract new customers or retain current customers but also to turn them into brand ambassadors. 

5 DIFFERENCES BETWEEN MARKETING TRADITIONAL MINDSET AND GROWTH MINDSET

Channels

Both use almost the same channels but traditional mindset cares more about branding, promotions, storytelling and emotions. Instead, growth mindset looks for creative solutions and new ways for the ultimate utilization of the channels. Growth mindset will create opportunities for every customer to promote and refer the product to their family and friends. Likewise, growth mindset will test the channels and focus only on those which create growth both from the acquisition and retention side at the minimum or no cost. Growth mindset will focus only on the right channel to put the product in front of the right people, at the right time and become their default choice.

Product

Traditional marketing mindset focuses on GETTING THE CUSTOMER TO WANT OR LIKE THE PRODUCT. Growth mindset instead develops and offers A PRODUCT THAT CUSTOMER WANT and validate the product before thinking of the market fit. Growth mindset involves in the product development process and testing every touch-point in the customer experience funnel. Growth mindset will work to get the product out there, as fast as possible, and adjust based on feedback and keep improving on a regular basis.

Data

Traditional mindset considers data as measurement for the results. Most of the insights is about impressions, conversion rate, click-through rate, and unique visitors. These are important metrics, but they don’t translate well into business objectives. Growth mindset instead is a data driven marketing practices that properly utilize data and set of measurements to optimize and test the marketing activities. It is not limited to marketing channels but also extended to every step of the customer journey. Growth mindset transfers data into actions to improve customers’ experience, develop the product, kill bad ideas/designs quickly and scale good ones as fast as possible. Data could also be guidance to determine which channel to focus or where to spend the time and money.

Experiment

Traditional mindset relies on the old-style methods such as set and forget model, mass campaigns, follow trends or copycat which is not effective anymore. Instead, growth mindset comes up with hypotheses and fast trials. The growth mindset doesn’t be afraid to fail fast knowing that no one gets it right at first time so they adopt their mind to the LEAN approach “TRY, FAIL, LEARN and REPEAT”. Worth to mention that growth doesn’t come quickly instead it is built on consistent actions that add up over time. Rather than spending weeks developing ideas, design and message hoping for the best, come up with an idea, create a hypothesis, pick a growth metric, select targeted customers, develop a minimum campaign and launch it on a small scale until you get the scalable idea.

Relationship

Traditional mindset doesn’t take advantage to harness the power of relationship marketing, just result oriented focuses only on attracting new customers, once done, it’s over. Growth mindset focuses instead on building long lasting relationships with customers, suppliers and all other businesses. It invests in the experiences of the current customers, focus on customer success over customer service, promote the customers that use the product and promote other businesses at the same time. Growth mindset gives everyone the reason to promote the business as referral and spread the word around it. Likewise, partnership with other business which might will not buy or pay for the product, but definitely will tell others about it, will give the opportunity to use their channels to market your product and will give the constructive feedback you need to develop the product.

Traditional marketing mindset is not anymore an option, and those companies which don’t adapt to growth mindset and go beyond the comfort zone, will be left behind. 

By viewing growth as fundamental end goal of the marketing efforts, you can build effect strategy that cut through the noise. Traditional marketing mindset is not anymore an option, and those companies which don’t adapt to growth mindset and go beyond the comfort zone, will be left behind. The growth mindset is required for all types of business and any function of marketing as long as you wish to grow your business. Growth mindset can be applied to all members of your business; however, it isn’t trick or silver bullet. Growth mindset is more strategic and data driven than quick magical solution. Creativity and innovations replaced the big budgets to follow the quick move of the customers. Growth mindset begins with the team and not with the strategy to breakdown silos, and gets all team members to work toward growth, identify the growth opportunities and the right ideas to grow such opportunities.

Big Data in revenue management is one of the most important techniques for maximizing hotels’ profitability. RM is simply defined as the process of analyzing past and present data to predict the future and to ensure that property offers the right product to the ideal customer at the right time at the best price. The concept of revenue management has evolved dramatically over the past few years and still going forward for further transformation to serve the business unique needs. While RMS algorithms became increasingly relying on data and analytics to improve decisions and to determine the perfect pricing strategies, revenue management technology will continue evolving using behavioral data collected from customers to become more strategic, centralized and to achieve a better outcome for the property.

Hotels performance metrics moves from revenue per available room (REVPAR) to gross operation profit per available room (GOPPAR) and GOP per available square foot.

ROLE OF BIG DATA IN TOTAL REVENUE MANAGEMENT MODEL

According to Sheryl E. Kimes in her survey with 400 international RM professionals indicated that “Total Hotel RM” will begin gaining traction over the next five years. Hotels already recognize that they can significantly increase profits by applying RM practices to all revenue streams, including non-rooms areas such as function space, restaurants, spas, golf, and parking. Thus, hotels performance metrics are moving from revenue per available room (RevPAR) to gross operating profit per available room (GOPPAR) and GOP per available square foot. TRM fundamentally depends on aligning the data from departments such as sales, operations, and particularly marketing. Thus, for effective total revenue management outcome, hotels must take the concept of big data to the heart when it comes to leveraging customers’ data. With such in mind, it’s no wonder so many hotels’ chains have been quick to hop on the big data trend, but the shift is much more difficult when putting into practice.

PERSONALIZED PRICING STRATEGY

In the era of Big Data, the days of fixed prices seem to be coming to an end. Revenue tools are now more sophisticated to serve the current and future consumers who are more informed than ever, and any pricing strategy that seeks to fool or deceive them will not last.

Dynamic pricing is to set the prices according to variables that are not related to the customer such as the time of day, the day of the week, the season, the demand, the available supply, and the competitor’s prices. In dynamic pricing, almost everyone sees the same prices despite not all guests are equal, and their values can differ significantly. So that a “one size fit” approach proves to be ineffective.

Hoteliers should learn from startups like Netflix, Amazon, Airbnb and hundreds of others which prove personalization truly pay off both emotionally and financially.

Alternatively, personalized pricing is to offer rates based on full analysis of customers’ personas and customize those rates based on their characteristics, spending habits, preferences, and lifetime value. It could be also described as the customer-choice pricing model. Booker would have more options to select the individual components of the room and the amenities they want and leave off the ones they don’t, either spending extra or getting a cheaper rate in the process.

 Hoteliers should learn from startups like Netflix, Amazon, Airbnb and hundreds of others which prove personalization truly pay off both emotionally and financially. Hotel websites such as Orbitz and Auto-dealers like Tesla utilize personalized pricing to their advantage when conducting sales with a customer. Even Uber has dipped into personalized pricing by offering “premium pricing” to predict which users are willing to pay more to go to a certain location. 

 Hotels used to personalize experiences and services, and travelers are increasingly expecting perks and promotions based on their preferences. The same strategy expected to be applied to revenue management systems that will use customers’ data to introduce pricing strategies based on customers’ personas, history, spending habits and preferences. Big data will result in RMS transition from reactive to proactive, leveraging analytics to develop more customer-centric offers and an integrated profit optimization strategy that involves all parts of a hotel’s revenue-generating process.

Both personalized and dynamic pricing use data to give a competitive edge, while personalized pricing methods are still in their early adoption stages, it’s expected to be the norm very soon. Hotels can easily give customers more options to select the individual components of the room they want and avoid paying for things they don’t need while gaining more options that truly matter to them. The personalized-pricing business model can also function as a major brand differentiation, allowing hotels to stand out in an overcrowded market, provide a better experience and monetize all the available assets.

Source:

Kimes, Sheryl E. “The Future of Hotel Revenue Management.” Cornell University, Cornell University School of Hotel Administration, 13 Jan. 2017, https://scholarship.sha.cornell.edu/cgi/viewcontent.cgi?article=1239&context=chrpubs

• Hotels