By Andy Wood, Managing Director, GI Insight
It is no secret that the hospitality industry has always struggled to retain loyal customers thanks to the infrequency of its transactions with customers, which makes it much harder to obtain useful data to inform customer communications.
This has been highlighted by a new study into customer/industry relationships, which has shown that while holiday, hotel and travel companies are not doing terribly when it comes to building and maintaining strong bonds with customers, nor are they doing as well as they could.
How did hotels rate?
The 2013 Customer Intimacy Index asked 1,000-plus respondents to rate ‘your supermarket’, ‘your bank’ and 14 other types of businesses on how well they felt these companies knew them – with the scores representing levels of familiarity ranging from ‘knows me like a close friend’ to ‘treats me like a total stranger’.
Holiday, hotel and travel companies were only just above average – with a score of 105 – despite having extensive opportunities to gather unique data on their customers. However, as transactions between customers and hotels tend to be of higher value and lower frequency than in other sectors –as opposed to industries where people spend less, but buy more often – it can be challenging for hotel companies to maintain longstanding relationships.
The above average score shows that consumers do feel that the information they provide to hotel companies is being used to tailor communications to some extent, but that there is room for improvement.
The frontrunners and disappointments in customer intimacy
The hotel industry would benefit from taking a look at the sectors that ranked the highest when it comes to knowing their customers well.
Top of the table were supermarkets, followed by banks and mobile service providers – all sectors that make good use of the data they gather on their customers through initiatives such as loyalty schemes.
The sectors trailing at the bottom of the table also provide some valuable lessons on what is going wrong. Car manufacturers, computer/tablet manufacturers and home furnishings/DIY all fared badly as these are the companies where big one-off purchases are more likely, which makes it harder for these companies to gain a detailed understanding of individual customers’ buying habits.
What can hotels do to improve the score?
It may sound obvious, but the key to knowing the needs of your customer is actually knowing who your customer is.
One of the top reasons for staying in hotels in the UK is for business trips, and it is important to remember that businesspeople are consumers too. There is a lot to be said for a loyalty programme that offers frequent visitors special offers and discounts, and there are many hotels who have wised up to the usefulness of these programmes when it comes to creating strong customer bonds. Intercontinental Hotels Group, for example, already have a Rewards Club where visitors can earn points for each time they stay in certain hotels.
It seems obvious that by offering points – which can then be redeemed against trips away and further nights in a hotel – regular travellers are far more likely to return to a particular hotel so they can keep earning points. A vast number of hotels, however, aren’t taking advantage of this.
Track customer habits
Offering a rewards scheme also enables business to track consumer transactions and habits more closely – enabling marketers to offer different promotions to the relevant people based on their transactional data.
By using data insight to notice that a business books rooms for its staff regularly, a hotel can then offer that business a promotion on a conference room, or a group discount to incentivise that business to remain loyal. The benefits of this kind of programme are undeniable, and if properly implemented, a well-developed loyalty programme can become an indispensable sales and marketing tool.
Hotels need to take the plunge and adapt to the changing consumer landscape, and those who do so first will have an immediate advantage over their competitors.
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