For a customer, the difference between liking a hotel property and feeling a loyal bond with a hotel brand might be a few simple touches.
Employees at a favorite hotel property might remember a guest’s preferences after a number of stays. Employees at a beloved hotel brand already know those preferences the first time the guest arrives at any of the properties, and they make that customer feel like a truly valued member.
The key is to use the data hotel companies already own to deepen relationships with high-value guests through the concepts of “know me” and “value me.” By doing so, a hotel brand can and will increase loyalty among high-value guests and therefore its share of total hotel spending of its best customers.
“Value me” means treating a customer in a way that shows appreciation for the value of the relationship. Invite her to the manager’s happy hour. Upgrade her to a suite on a vacation trip.
“Know me” means knowing the entirety of the relationship and the context for different events that have happened in the past. Don't provide a future vacation offer for the property where the guest stays week after week, no matter how special that property is. Don’t pre-populate a vacation club application for a guest who is not married. Spare a guest a celebration of a birthday he prefers not to acknowledge.
Valuing without knowing is equivalent to being friendly with a stranger. Similarly, knowing without valuing leaves the customer feeling vulnerable and can seem disingenuous or creepy.
Understanding the relationship
If you know and value the customer, you can determine the state of the guest relationship and set the right strategy to strengthen that relationship. When done well, it can mean boosting the share of hotel spending for a high-value customer. When hotel companies make no attempt at managing this relationship, what we call the customer’s state of engagement, they risk seeing churn of their best customers of 20% a year or more.
The successful hotel companies will be the ones that use data to truly understand their relationships with top guests, not just customer segmentation, but more importantly engagement state. After all, the usual reason people travel doesn’t change much, whether for business or leisure, as a road warrior or as a retiree. However, that customer’s engagement with a brand might vary over time, so it needs to be closely monitored and tracked.
The states of customer relationships, or engagement, vary across the customer’s life cycle. The basic levels are new member, developing member, elite member, and decelerating member. Some guests might regress as they focus on other relationships with other brands. Some might be a bit promiscuous and be dedicated to multiple brands.
The state of engagement
Assessing customers’ states of engagement isn’t easy. It requires understanding the signals hidden within the customer data that define engagement state and predict future changes.
For example, is a customer staying with the brand less this year than in the past year? On the one hand, the customer might still have high engagement but just doesn’t travel as much as the previous year. On the other hand, by using predictive analytics and machine learning, one can determine if the state of engagement has deteriorated by looking at a combination of signals.
For example, find out if the guest typically gets the room type he requested, or how often he gets a promised upgrade. Include the number and nature of the calls the customer makes to your call center. Is the guest’s point balance at historic lows? Did the guest cancel a co-branded credit card? How does the guest respond to customer satisfaction surveys? Were any complaints made in the survey or to the staff?
These can be powerful signals about the state of engagement. This also provides a great opportunity for the hotel brand to demonstrate that it knows and values the guest by reacting in a way that addresses the signals the guest is sending.
The real prize is to pull the guest into a state of engagement that includes an emotional commitment to the hotel brand because the hotel brand makes life better. Even a guest who prefers to be at home rather than traveling will enjoy a truly personalized experience. The hotel brand earns the highest degree of loyalty and share of that guest’s hotel spending, and, most important of all, outrageously evangelical word-of-mouth marketing.
Douglas Carlucci and Jessica McLaughlin are partners with Oliver Wyman’s transportation practice. Mr. Carlucci is based in San Francisco and Ms. McLaughlin is based in Toronto.
The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.