The Changing Nature of Customers: A Hotels Perspective

Most, if not all, brands understand the importance of collecting quality data in the proper manner, especially hotel brands. Data leads to actionable insights on how to make individualized offers to specific customers, how to segment customers into more general profiles, what the customer life cycle for any given brand looks like, etc. The importance of gathering first-party data through loyalty programs, formal and informal surveys, and other voice of the customer outlets cannot be understated.
 
Mark Shipley, Senior Vice President of Client Services at Epsilon, seconds this idea. “First-party data is king as it ties directly to behavior.” He adds, “However, first-party data alone is only a partial view of the customer. Adding and leveraging third-party data allows the brand to enrich their first-party data, enabling a more complete and useable customer profile.”
 
Even after data has been collected, though, challenges still present themselves. One, of course, is sorting the useful data from the more trivial, unimportant information. Another challenge is measurement. In order to achieve any kind of success, brands need to construct attainable goals and implement valid methods to measure those goals. For example, if a brand wants to improve retention, then it needs to know how many customers call on its services more than once. In turn, to make sure that customers want to do this, the brand will need to commit itself to customer satisfaction. Measuring customer satisfaction follows as a logical necessity. Any brand that wants to improve retention will need to measure satisfaction.
 
The connection between goals and the benchmarks brands need to meet those goals is not always obvious, though. For example, if a brand wants to improve awareness, what should it strive to measure and how should it do so? Purchasing patterns? Possibly, but not necessarily. Let’s say Jane Doe always stays at Hotel X when she travels. This could be for a couple different reasons. It could be because she prefers Hotel X, or it could be because she isn’t aware of competing brands she might like better. So how does a Hotel X competitor, say Hotel Y, figure out which it is?
 
To address issues similar to this, Loyalty360 speaks with senior-level marketing representatives across a range of industries. In doing so, we identify best practices that brands can adopt to improve growth and revenue. In one of our recent discussions, we noticed several concepts emerging that are especially important to hotel brands. Overall, the ideas we discussed with hotel representatives reflect the need to understand the connection between a brand’s goals and the metrics it should use to meet those goals. Here, we present an overview of these ideas and the quotes on which this overview is based.   
 
One: Customer Satisfaction
 
Measuring customer satisfaction, as we’ve already seen, can be extremely important. In addition to improving retention, satisfaction can be a key factor in customer engagement and rewarding experiences. In general, satisfaction is one of those metrics that hotel brands will definitely want to be aware of, especially since satisfaction is more important in the hotel industry than anywhere else. Sure, customers want clothes that fit, drinks that taste good, or gas that doesn’t break the bank, but if a customer gets a shirt that’s too small or a coffee that isn’t good, he’ll be upset. His smaller investment of time and money will probably temper his anger, though. A customer that spends all day traveling, hands over $80 or $100 or even more to check into a hotel, and then finds that his accommodations are not to his liking will end up being a lot more dissatisfied than the coffee drinker or the shirt wearer. For this reason, customer satisfaction in the hotel industry is going to be relevant to any brand that wants to improve revenue.   
 
Michael Flaskey, CEO, Diamond Resorts International: We survey our members to measure our customer satisfaction areas, which are consistently in the mid-90s percentile. Also, 70 percent of our annual sales are coming from existing members.  This tells us that we’re hitting the mark and that our customers are happy, and as a result, they are very loyal because they are continuing to come back and purchase from us.
 
To read the full article with Michael, click here.
 
Mickael Damelincourt, Managing Director | Trump Hotel DC: We have our guest satisfaction index, or GSI. We have an email like most companies today asking our guests checking out various questions about their stay, housekeeping, the restaurant, bar etc. It’s not two questions but it’s not a hundred either. This is a very good indicator because it’s guests who actually stayed with us. The problem you have today is you have too many review sites, and people who have never stayed with us can post reviews. There is no proof the person stayed with us. I don’t spend too much time on those. We have some examples where it doesn’t make any sense because it doesn’t accurately describe the hotel.
 
To read the full article with Mickael, click here.
 
Two: Benefit Delivery
 
Measuring customer satisfaction is of extreme importance to hotels, but it’s one of the metrics that most brands at the top of their game will know they need to examine. Benefit delivery, on the other hand, isn’t as commonly measured, but the effects of doing so can be potent nonetheless. If a brand knows that it has (or hasn’t) delivered the benefits that it has said it will deliver, then it can change its operations accordingly. More than likely, benefit delivery will be measured on a spectrum. Some benefits will be delivered as customers expect, some will be delivered but won’t be of the quality that customers want, and some benefits might end up being overlooked. So, even for those brands that are managing benefit delivery well, gauging their location on the benefit delivery spectrum can have positive consequences. For example, imagine that a guest stays at Hotel X and receives nearly all of the benefits he expects, from room service and room clean up to amenities like spas, pools, and hot tubs. However, also imagine that one thing is overlooked—his wake-up call. This could completely sour his experience, even though every other benefit was to his liking. For this reason, measuring benefit delivery can be a key factor in improving customer experience.    
 
Robin Korman, Head of Loyalty Marketing and CRM, GHA: We do a few things. We have a post stay survey that goes out three days after departure that asks them to rank and rate various aspects of their stay in regard to the loyalty delivery. The hotel may send out something asking if the room was clean, staff was nice, fresh towels, etc. However, our survey is really about benefit delivery. Then, we have a membership services team that goes to the hotels on a regular basis and sees how benefits are delivered. We have a measurement matrix, where every quarter, hotels are measured on a lot of different levels, including enrollment, benefit delivery, guest satisfaction, and a variety of different components. How many local experiences did they encourage people to redeem at the front desk? We have a competition where the ones who do the best are given rewards. If they do not meet expectations, we have a membership services team to help them figure out why. There are ways that we are trying to measure, engage, rank, and reward but it will never be as systematic as something maybe a Marriott would have in place.
 
To read the full article with Robin, click here.
 
Three: Share of Mind
 
Share of mind is a notoriously hard metric to gauge. Brands can look at revenue and retention, and these factors may indicate how successful a brand is, but they don’t necessarily provide evidence that a given customer is thinking of Hotel Y first and foremost when he goes to book accommodations. The best strategy for measuring share of mind appears to be a multi-thronged approach in which data from return guests, loyalty program memberships, and services used are integrated to figure out if a given customer is considering multiple hotel brands before he books or if he already knows which brand he prefers. For this reason, Loyalty360 suggests that hotel brands need to innovate in this measurement space, get creative about possible solutions, and try out new tactics for determining share of mind.  
 
Anka Twum-Baah, VP Customer Loyalty & Content, Asia Pacific | Marriott International: Throughout much of my 15 years in the business, it has been all about share of wallet. But now brands are asking – how do we achieve share of mind? If someone is booking travel, how do we ensure that Marriott is at the top of their mind? We can measure that by looking at how often guests book with us, how much revenue comes from Marriott Rewards Members, how often they stay at multiple Marriott brands and how often they dine with us. I monitor these KPIs regularly in order to understand how we should be evolving our loyalty program for APAC. Measurement also helps us understand how to communicate with our customers, whether through traditional or less traditional marketing efforts.
 
To read the full article with Anka, click here.
 
Four: Engagement
 
Engagement, like customer satisfaction, is another metric that hotel brands really need to pay attention to. It is a standard benchmark across the hotel industry (not to mention a host of others), and brands that ignore it do so at their peril. Figuring out how engaged its customers are can tell a hotel if its benefits and amenities are on par with competitors, if the experiences it offers have any value, and how likely it will be to grow its customer base. It can factor into measuring share of mind and satisfaction, and improving engagement will improve retention as well. For this reason, we suggest that hotel brands measure engagement with an attentive eye by singling out the experiences and services that make their customers both emotionally attached and rationally loyal. If customers are willing to drive an extra hour for accommodations with a specific brand, then that brand can know it has succeeded in its engagement efforts.       
 
Gina Valenti, VP of Brand Hospitality | Hilton: We have a customer-development team as well as an owner-relations team. Within the owner-relations team, they have all sorts of metrics they use to take a look at if our owners engaged. They can tell us the exact stats on the percent of returns, are the owners new, have they built with other brands? Within the customer-development team, we have all types of lenses on the customer, from all of the metrics with the Hilton Honors as well as a satisfaction and loyalty tracking. We keep a very close eye on those metrics, and they let us know where we have our strengths and our opportunities.
 
To listen to the podcast with Gina, click here.
 
Five: Emotional Attachment
 
One metric that is valuable in gauging and improving all the others is emotion. Determining how customers feel about a hotel brand and establishing methods to improve that perception should therefore form a part of nearly all measurement activities brand undertake. If a customer feels emotionally attached to a brand, then share of mind, engagement, and satisfaction are all likely to increase. While it is true that an emotionally attached customer might be more disappointed in a brand that lets him down, that customer is also more likely to give the brand a second chance. In addition, emotionally attached customers tend to think of their preferred brands before any others and so will be more likely to seek that brand out, even if competitors might be more convenient. Consider, for example, two hotels off a highway exit. One is more visible and accessible, while the other is off the main road a little bit. In this scenario, the less accessible hotel can still beat its competitor, but to do so, its customer base will need to have greater emotional attachment to it. Therefore, we advise hotel brands to seek proven methods of measuring and creating emotionally involved customers.    
 
Mark Weinstein, Senior Vice President & Global Head of Loyalty and Partnerships | Hilton Worldwide: I would put the measurements into two buckets: There is perception and then there is behavior. The perception side of things would be social sentiment, our guest satisfaction and tracking, customer surveys, NPS, rankings, customer perspective, and awards that we win that indicate customer perception of the program. In other words, how are they feeling about us compared to other brands they are interacting with?
 
To read the full article with Mark, click here.
 
Conclusion
 
From this overview, we can deduce that hotel brands should take an active role in measuring customer satisfaction, engagement, and share of mind. In addition, they should determine the kinds of benefits their customers want, figure out if they’re delivering those benefits, and initiate steps to do so if they aren’t. Lastly (though perhaps of most importance), hotel brands should work towards measuring and establishing emotional attachments in their customers. Emotional attachment plays a role in most other metrics, so its value is extreme.
 
Measuring these five factors and establishing strategies based on performance in them will have quantifiable benefits. Customer retention and loyalty will increase, and revenue and growth will improve as a result. Because of this, Loyalty360 strongly urges hotel brands to survey their current measurement practices, determine if those practices are operating effectively, and then carefully examine the results. Once they’ve seen these results, brands can make plans to improve the factors they’ve measured or double down on efforts they’re already involved in. Doing so will lead to more successful marketing processes.
 
Erin Raese, Senior Vice President of Customer Loyalty at Aimia, adds, “These metrics are all key to reaching any brand’s end goal: to become a customer habit for supercharged growth. Companies should measure their numbers against industry benchmarks or aggregated data to determine how far they’re straying from their KPIs. The challenge is not in finding this data—as hospitality brands with outstanding programs are collecting data at every touchpoint—but rather using these data and developing an action plan that places your customers at its center.”  
 
This article is derived from a larger feature on how and why customers are changing across all industries. To view it, please click here
 

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