Tag Archives: Revenue Management

Competitive Advantage and Digital Transformation – Optimizing in Travel & Hospitality

In my last post I described a set of analytics projects that drive real competitive advantage in retail and eCommerce. These projects are meant to be the opening of the third and final stage of an analytically driven digital transformation. They are big, complex, important projects that make a real difference to the way the business works.

But I know folks outside retail (and they’re the majority of my client-base) get frustrated because so much of the analytics technology and conversation seems to reflect retail concerns. So in this post, I wanted to describe an alternative set of projects specifically for another industry (I picked Hospitality) and talk a little bit about some of the key analytics flashpoints in different industries. Every business is unique. There is no one right set of projects when you get to this phase of digital transformation, but there are analytics projects that are quite important to almost everyone in a given industry.

Here’s a fairly generic set of projects I’d typically attach to a presentation on digital transformation in hospitality.  You can see that about half the projects are the same as what I recommended for retail.

Digital Transformation Phase III Hospitality

Aggressive personalization is a core part of MOST good digital programs – almost regardless of industry. If you’re in health-care, financial services, retail, travel & hospitality, government or technology, then analytics-driven personalization should be a high priority. It’s actually a lot easier to say where personalization might not be near the top of the list: CPG and maybe manufacturing. In CPG, many web sites are too shallow and lack enough interesting content to make personalization effective. In fact, the Website itself is often pretty unimportant. CPG folks should probably be more worried about their marketing and social media analytics than personalization. Manufacturers might be on the same level, but a lot depends on the type of industry, how many products you have, how many audiences, and how much content. In every case, the more you have (product, audience, content), the more likely it is that personalization should be a strategic priority.

I also included Surprise-based Loyalty. Travel is actually the sector where I first developed these concepts. You can read a somewhat more detailed explanation in an article I recently published in the CIO Outlook for Travel & Hospitality. But there are quite a few reasons why hospitality, in particular, is a great place to build a surprise-based program. First, the hospitality industry has numerous opportunities to deliver surprise-based loyalty at little or no cost. That’s critical. Hospitality also has the requisite data to allow for powerful analytic targeting and has sufficient touches to make the concept powerful and workable. What’s more, most of the rewards programs in hospitality suffer from scale. Sure, a few global giants have the reach to make a traditional loyalty program appealing. But if you’re a boutique or mid-tier chain, your traditional loyalty program will never look particularly attractive. Surprise-based concepts get around all that. With no fixed cost, the ability to target and grow them organically, and real impact on loyalty, they deliver a fundamentally different kind of experience that doesn’t depend on scale and global reach.

My third project is another one that could appear almost everywhere: mobile optimization. For Hospitality, it’s particularly important to create a great mobile on-property experience and build out the mobile experience as the Hub for loyalty. Integration of mobile digital experiences with property systems enables a whole array of real experience difference makers – room selection, automatic upgrading, room bidding, expedited check-in, door control, service requests and, of course, plenty of surprise (and traditional) loyalty opportunities.

Why didn’t this show up in retail? Hey, it could. It might be sixth on my generic list. But many of the retailers I’m working with are struggling to figure out how to make mobile an important part of the experience. With all the beaconing and wifi we’ve seen, most opt-in systems simply don’t get enough adoption to make them worthwhile. I think it’s easier to drive adoption in hospitality. And adoption is critical to driving serious advantage.

When I talk about advanced Revenue Management I’m clearly hovering somewhere on the edge of what might reasonably be considered digital. There are lots of different ways to improve revenue management, but what I have in mind here are two specific types of analysis. The first is using digital view volume to feed demand signals into revenue management. This is a simple but effective technique for taking advantage of your digital data to improve your price planning. I also believe that in the zero-sum game that is room (and flight) planning, there are opportunities to use digital data collection from OTAs to reverse engineer competitor pricing strategies and then optimize your price curve to take advantage of that knowledge.

In retail, I talked about the growing importance of electronic signage and integrated digital experiences and optimizing the measurement of those (largely unmeasured) systems. In Hospitality, I’ve picked something that isn’t quite the same but falls in the same omni-channel category – optimizing the integration of on-property with digital. This cuts in both directions and overlaps with the analytics around mobile (obviously), personalization (obviously), surprise-loyalty (obviously) and revenue management. Revenue Management a little less obviously but most revenue management systems use time-based pricing not customer based pricing – often completely missing differentials in customer value from on-property behavior. Casino’s, of course, are the exception to this.

For resort properties, there are significant opportunities to integrate digital view behavior into on-property drives. But for almost every type of property there are ways to make the on-property experience better. Some of this is ridiculously easy. When I log into my hotel wifi, I almost always get the standard property page. No customization. No personalization. But I’m a heavy consumer of certain types of on-property experiences including some highly-profitable ones like late-night room service dinners. Do I ever get a dinner drive? A special offer? A loyalty treat? Nope. Pretty much never.

I put this digital/on-property integration high on the list mostly because when it comes to hospitality, the on-property experience is THE critical factor. I might love or hate the Website or even the App, but both are just little bumps on the great big behind that is the actual stay. If I can help make the stay experience better with digital, I’ve done something important.

So my top five projects for hospitality are:

  • Personalization
  • Surprise-based Loyalty
  • Digital Additions to Revenue Management
  • Mobile Experience and Loyalty Optimization
  • On-Property digital integration

As with retail, none are easy. Most involve complex integrations AND deep analytics to work well. But they form a powerful and powerfully related nexus of programs that drive real competitive advantage.

Of course, as I’ve tried to make clear, the selection of a top-five is utterly arbitrary. Every business will have its unique strategic priorities, market position, and brand. Those things matter. What’s more, the third phase of an analytics transformation is open-ended. There aren’t just five things. You don’t stop when (if ever) you’ve done these projects.

So it’s natural to ask what are some other commonly important projects that didn’t make the list (and weren’t already captured in the earlier two phases). Here, with some notes about industries, are some more things to chew on:

Digital Acquisition Optimization (Campaign-level): I’ve already covered both a campaign measurement framework and Mix/Attribution in the first two phases. But I haven’t been quite true to myself since I often tell clients to worry about optimizing your individual channels and campaigns first before you worry about attribution. There are more powerful analytic techniques for campaign-specific optimization than attribution – and many, many enterprises would be well-advised focus on those techniques as part of their overall digital transformation. I won’t say that every digital media buy I see sucks. But a lot do. This one isn’t specific to industry; it’s important to anyone dropping significant dime on digital marketing.

Right-Channeling Support:  This analytics project often makes my top-five list in financial services, technology, and health care (but it’s important in a lot of other places too). Not only is the call-center a significant cost for many an enterprise, it’s almost always a significant driver of churn and bad experience. That’s not always because call-centers are bad – it’s hard to do well. And these days, many people (I’m certainly in this bucket) flat out prefer digital servicing in most use-cases. So digital servicing is a big deal and it’s deeply analytic. Bridging digital and call is a huge analytics opportunity and one of the most important projects you can take in a digital transformation.

Digital Sales Support: If a field-sales force is a core part of your business, then digital analytics to support what they do is often in my top-five projects around transformation. Technology, Pharma, and certain areas of Financial Services (like Insurance and Wealth) all need to figure out how their digital assets play with their field sales force. Siloed approaches here are worse than silos in digital marketing attribution. You can NOT do this well unless you tackle it as an integrated effort with consistent measurement across the journey.

Content Attribution: When I was at the Digital Analytics Hub in Europe one of the most interesting parts of the discussion around transformation focused on the need for traditional companies to become, in effect, media companies. There’s nothing terribly original about this idea (not sure who’s it is), but it is terribly important and often it’s a huge stumbling block when it comes to transformation. Companies don’t build nearly enough content to be good at digital and they don’t measure it appropriately. Learning how to measure the content experience and how to take advantage of content are keys to effective digital transformation and anyone focused on building deeper sales cycles should think carefully about making content attribution a prominent part of their initial analytics plan.

Balancing Success:  One of the biggest failure points in digital transformation in my client-base involves situations where a digital property has several very important enterprise functions. Selling and generating leads, advertising and engagement, linear vs. direct consumption, building brands vs. generating revenue. These are all common examples. The problem is that most enterprises are wishy-washy when it comes to balancing these objectives. When I ask senior folks what they really want (or when I look at how people are measured), what I usually hear is both. That’s not helpful. There are analytic approaches to measuring the trade-offs in site real-estate and marketing between driving to multiple types of success. If you haven’t done the analytics work to figure this out and set appropriate incentives and performance measurements, you’re simply not going to be good at all – and perhaps any – of your core functions.

Well, I could go on of course. But I’m almost at four pages now – which I know is excessive. There are a lot of options. That’s why creating a strategic plan for analytics transformation isn’t trivial and it isn’t boilerplate. But as I pointed out in my introduction to the last post, this is the fun stuff.

In my next post, I hope to tackle those organizational issues I’ve been deferring for so long – but I may have one or two more detours up my sleeve!

[BTW – Early bird sign up for the U.S. version of the Digital Analytics Hub is coming up. If you’d like a promo code, just drop me a line!]

Gelato was the word I meant

I spent most of the last week on holiday in Italy. But since the holiday was built around a speaking gig in Italy at the Be Wizard Digital Marketing conference I still spent a couple of days talking analytics and digital. A couple of days I thoroughly enjoyed. The conference closed with a Q&A for a small group of speakers and while I got a few real analytics questions it felt more like a meet and greet – with plenty of puff-ball questions like “what word would use to describe the conference?” A question I failed miserably with the very pathetic answer “fun”.

I guess that’s why it’s better to ask me analytics questions.

The word I probably should have chosen is “gelato”.

And not just because I hogged down my usual totally ridiculous amount of fragola, melone, cioccolato, and pesca – scoop by scoop from Rimini to Venice.

Gelato because I had a series of rich conversations with Mat Sweezey from Salesforce (nee Pardot) who gave a terrific presentation on authenticity and what it means in this new digital marketing world. It’s easy to forget how dramatically digital has changed marketing and miss some of the really important lessons from those changes. Mat also showed me a presentation on agile that blends beautifully with the digital transformation story I’ve been trying to tell in the last six months. It’s a terrific deck with some slides that explain why test&learn and agile methods work so much better than traditional methods. It’s a presentation with the signal virtue of taking very difficult concepts and making them not just clear but compelling. That’s hard to do well.

Gelato because I also talked with and enjoyed a great presentation from Chris Anderson of Cornell. Chris led a two-hour workshop in the revenue management track (which happens to be a kind of side interest of mine). His presentation focused on the impact of social media content on sites like TripAdvisor on room pricing strategies. He’s done several compelling research projects with OTAs (Online Travel Agents) looking at the influence of social media content on buying decisions. His research has looked at key variables that drive influence (number of reviews and rating), how sensitive demand is to those factors, and how that sensitivity plays out by hotel class (turns out that the riskier the lodging decision the more impactful social reviews are). He’s also looked at review response strategies on TripAdvisor and has some compelling research showing how review response can significantly improve ratings outcomes but how it’s also possible to over-respond. Respond to everything, and you actually do worse than if you respond to nothing.

That’s a fascinating finding and very much in keeping with Mat’s arguments around authenticity. If you make responding to every social media post a corporate policy, what you say is necessarily going to sound forced and artificial.

That’s why it doesn’t work.

If you’re in the hospitality industry, you should see this presentation. In fact, there are lessons here for any company interested in the impact of reviews and social content and interested in taking a more strategic view of social outreach and branding. I think Chris’ data suggest significant and largely unexplored opportunities for both better revenue management decisions around OTA pricing and better strategies around the review ask.

Gelato because there was one question I didn’t get to answer that I wanted to (and somehow no matter how much gelato I consume I always want a little more).

Since I had to have translations of the panel questions at the end, I didn’t always get a chance to respond. Sometimes the discussion had moved on by the time I understood the question! And one of the questions – how can companies compete with publishers when it comes to content creation – seemed to me deeply related to both Mat and Chris’ presentations.

Here’s the question as I remember it:

If you’re a manufacturer or a hotel chain or a retailer, all you ever hear in digital marketing is how content is king. But you’re not a content company. So how do you compete?

The old-fashioned way is to hire an agency to write some content for you. That’s not going to work. You won’t have enough content, you’ll have to pay a lot for it, and it won’t be any good. To Mat’s point around authenticity, you’re not going to fool people. You’re not going to convince them that your content isn’t corporate, mass-produced, ad agency hack-work. Because it is and because people aren’t stupid. Building a personalization strategy to make bad content more relevant isn’t going to help much either. That’s why you don’t make it a corporate policy to reply to every review and why you don’t write replies from a central team of ad writers.

Stop trying to play by the old rules.

Make sure your customer relations, desk folks, and managers understand how to build relationships with social media and give them the tools to do it. If you want authentic content, find your evangelists. People who actually make, design, support or use your products. Give them a forum. A real one. And turn them loose. Find ways to encourage them. Find ways to magnify their voice. But turn them loose.

You can’t have it both ways. You can’t be authentic while you try to wrap every message in a Madison Avenue gift wrapping bought from the clever folks at your ad agency. Check out Mat’s presentation (he’s a Slideshare phenom). Think about the implications of unlimited content and the ways we filter. Process the implications. The world has changed and the worst strategy in the world is to keep doing things the old way.

So gelato because the Be Wizard conference, like Italy in general, was rich, sweet, cool and left me wanting to hear (and say) a bit more!

And speaking of conferences, we’re not that far away from my second European holiday with analytics baked in – The Digital Analytics Hub in London (early June). I’ve been to DA Hub several years running now – ever since two old friends of mine started it. It’s an all conversational conference modeled on X Change and it’s always one of the highlights of my year. In addition to facilitating a couple conversations, I’m also going to be leading a very deep-dive workshop into digital forecasting. I plan to walk through forecasting from the simplest sort of forecast (everything will stay the same) to increasingly advanced techniques that rely, first on averages and smoothing, and then to models. If you’re thinking about forecasting, I really think this workshop will be worth the whole conference (and the Hub is always great anyway)…

If you’ve got a chance to be in London in early June, don’t miss the Hub.