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Data Matters and Why Loyal Members Could be More Lucrative Than You Think
IN-DEPTH: The ability to understand a loyal guest's preferences and serve them accordingly can not only help to retain customers but can also drive greater return on essential IT investments. EyeforTravel's Ritesh Gupta investigates
Hotel companies know only too well that they are sitting on millions of records that detail the behaviour of their guests and loyalty members. However, much needs to be done to make the most of available data. Specifically, the ability to group these guests accurately and devise a tailored communication strategy remains a challenge.
The industry has been sharpening its customer-centric strategies and processes to enable them to improve the end-to-end customer experience. But, in general, hotel companies are still catching up within the hospitality vertical, says Ryan Draude, senior director, loyalty marketing at Choice Hotels International. For example, he points to the progressive tactics of gaming resorts that have executed accurate segmentation strategies based on clear lifetime value forecasts for their customer segments.
"Even looking at the major chains, I'm amazed at how the direct marketing pieces that my colleagues and I receive still do not reflect the past business I have brought them, or more importantly what I feel they should be pushing me to do," says Draude. However, the data is not the issue, it is the ability to group these guests accurately.
Hotel companies constantly look at updating their member profiles to reflect their unique preferences or passions. Creating differentiation in what can often be a largely commoditised playing field comes down to the ability to recognise each guest or member as uniquely as possible - a significant challenge that is dependent on data.
Draude says the industry has witnessed some interesting developments in recent years. For example, companies are soliciting loyalty members to categorise their passions - for food, travel, drink and so on. Based on their behavior during a previous stay, hotels can then aim to surprise these guests with items from their category..
"Recognition efforts like this can significantly impact retention, especially among high value elites, and also per stay spend. And a strategy like this does not have to be overly complex - even a simple solicitation for a check-in gift preference (water, soda, snacks, and so on) can make all the difference in creating those customer intimacy moments," says Draude.
Putting the customer first
All of this sounds great, but reaching customers isn't always easy especially when, like Choice, your membership base has tripled in just over five years. In May this year, the group's rewards programme ‘Choice Privileges' reached the 15-million membership mark. Unsurprisingly then, customer information is fragmented across multiple operational systems, spread across multiple sites and brands, as well as corporate data warehouses and loyalty systems.
However, the company is moving toward creating a unique master profile of each guest or member that reflects data points captured and stored across a variety of different platforms - bookings, customer service history, on-property selections like F&B, etc and so on, says Draude. Each of these elements forms a piece of the larger customer communication strategy.
"The effort behind assigning a unique key to each guest and tying that across large data environments is staggering," says Draude. However, this is critical to really understanding why members behave as they do, and how exactly to communicate with them. "I'd love to one day have the advantage of tying a member's past experiences into their check-in commentary so that a front-desk clerk could be notified to go the extra mile - think how significant that one event could be toward shaping (or re-casting) the perception of our brand," he stresses.
Some of the key initiatives in any customer-centric strategy include:
To break down organisational silos and lead such strategic change requires investment. "Well to be honest, money talks, and I have been surprised how often outside departments are surprised at the monetary impact of a successful loyalty programme," he says. In the end, the key drivers of securing precious IT resources to build a comprehensive system across groups requires being able to demonstrate revenue growth or cost reduction potential.
"The good news is, you have the metrics to demonstrate each," explains Draude. Interestingly the ‘Choice Privileges' programme drives nearly 1 in 3 dollars of revenue received by the group. Once signed up, members deliver more nights per year than non-member guests. "This is a huge contribution that often is not known outside of the marketing, finance and e-commerce departments," he says. It is therefore an incentive to cultivate existing relationships rather than invest in costly external channels to attract new members.
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