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know which half.
—Henry Ford
M
arketing is quickly emerging as the next area of opportunity for driving value through analytics in hospitality. The crowd- ed digital marketplace and increasing competition for the con- sumer have intensified the importance of better guest intelligence and smarter marketing actions. Recently, many hospitality companies have launched personalization initiatives, with the intention of mining guests’ expressed preferences and behaviors to design more individu- alized interactions. This is a highly complex initiative doomed to fail if not built on a solid foundation of data collection and analytics.Gaming companies have been calculating and tracking customer value for many years. The gaming industry is largely built on identify- ing and nurturing high value gamers, while still generating revenue from the rest of the patron base, so it is important to have a view of the potential of all casino patrons. Even with this ongoing focus on patron value, the marketing area in casinos has still been evolving in recent years. The proliferation of nongaming options, particularly in destination gaming markets like Las Vegas and Macau, is requiring that casinos understand the complete picture of patron spend, the so- called 360-degree view. Personalization is also of interest to casinos. As competition increases, any edge that shifts patron share of wallet can make the difference.
While digital has had broad impact across hotels and casinos, mar- keting has probably been the function most impacted by this shift.
Consumer behavior has changed rapidly over the last decade, largely driven by the digital transformation. The way that hospitality and gaming companies must engage their guests and patrons, as well as the opportunities to communicate the brand promise and brand value, have fundamentally changed. Channel complexity has increased, and with reviews and ratings, service triumphs and failures are out there for the world to see. Success depends on the ability to navigate the
messy digital environment, as search, PPC (pay-per-click), web traf- fic, Google Analytics, and SEO (search engine optimization) become household words for marketing. Complexity is growing. Skill sets are evolving. The landscape is getting more complex, and more crowded.
Marketing is fundamentally about demand generation. Marketers own the relationship with the individual guests and are responsible for building programs that result in bookings. Marketing has tradi- tionally been thought of as a creative discipline, rather than an ana- lytical discipline, but this reputation is rapidly changing. Particularly with the challenges associated with digital, most companies today realize that marketing needs to be a marriage of creativity with ana- lytical rigor (really, all of hospitality and gaming should be, right?).
In the following sections, I cover the data, analytics, resources, and technologies that will help transform your marketing organization from pure creative to a winning blend of art and science.
MArketing DAtA
The guest is at the core of marketing’s responsibility, so guest data is at the core of marketing data. Marketing should be concerned about collecting as much relevant information about the guests as possible.
This includes demographic (age, gender, geography), psychographic (personality, values, opinions, attitudes, lifestyles), and behavioral in- formation (recency, frequency, value).
Building a guest Profile
There is a constant debate in hospitality about the composition of a guest profile, and the best way to collect the data. Many hotel compa- nies use loyalty programs expressly for this purpose. A loyalty program effectively rewards guests for allowing the hotel to access and track their information. This means that loyalty programs must be designed with enough value to the guest that they are willing to allow this infor- mation to be collected. For example, many hotels offer free upgrades, access to specialized check-in experiences, or additional amenities as the guest collects loyalty status. These programs can become very ex- pensive for hotels, so it is important to carefully analyze the value you can get from the guest data as you design a program.
Loyalty programs have become relatively commonplace, practically a “me too” requirement. In fact, many frequent travelers are members of multiple programs, and strive to achieve just enough status with each program to satisfy their desire for upgrades and amenities. This behavior creates loyalty to the loyalty program, rather than loyalty to the brand itself, meaning that guests will happily switch to a pro- gram that offers them better benefits. Research suggests that fostering feelings of loyalty to the brand is what results in valuable outcomes from guests like likelihood to recommend, likelihood to return, and increased spend.
Note
Dr. Breffni Noone, Associate Professor, School of Hospitality Management at Penn State, and I recently conducted some research on the role of attitudinal loyalty in prepurchase evaluations, and we found that as attitudinal loyalty increased, sensitivity to negative reviews decreased, meaning that the guests who felt loyal to the brand did not pay as much attention to negative reviews (Noone and McGuire 2016).
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Many hospitality and gaming companies are working on ways to incorporate brand experiences into their loyalty programs, so that guests are exposed to the brand while collecting points. For example, Kimpton Karma™, Kimpton’s loyalty program, rewards guests for attending their wine hours or posting comments on social media. This encourages guests to experience the on-property activities that are core to the brand promise, and talk about them publically, presuming that this exposure will generate those valuable feelings of loyalty, as well as encourage other potential guests to try the brand.
There are companies today that promise that they can mine so- cial media and web interactions to round out guest profiles. A guest doesn’t even need to give you a complete profile for you to know all about them, including interests listed on Facebook, contact informa- tion, family and friends, pictures—think about all of the information about you that’s available in social channels. This is very tempting, of course, but I suggest extreme caution in how you approach gathering and using guest information, particularly the personal information
they reveal on social channels, even though they’ve released that publically.
In 2012, British Airways announced that they were going to start using facial recognition software to identify their most valuable pas- sengers at the airport, from profile pictures on social media.1 Their intention was to be able to provide better service to their best custom- ers, but there was an extremely negative reaction from the passengers.
Consumers are very sensitive to how their information is collected and used. My suggestion is to err on the side of caution and to only use information that your guests believe that they could have provided (even if they didn’t), and if you do collect information from the guest, be sure to use it responsibly. Just because you can collect it doesn’t mean you should. This line between relevant and engaging and creepy stalker is very thin!
As I mentioned in the chapter introduction, casinos also have a strong interest in building a robust patron profile. Rewards programs started in casinos primarily to identify the most profitable players, based on their observed and predicted gaming behavior, and to incen- tivize those patrons to continue to increase their share of wallet with that casino.
Figure 6.1 Is loyalty the holy grail for hotels and casinos, or is it an expensive “me too”?
Note
Harrah’s Entertainment (now Caesars), pioneered the casino rewards programs with their Total Rewards™ plan. Every time the patron games on the casino floor, they present their Total Rewards™ card. The card collects gaming behavior (spend, frequency, game preferences, duration), and based on that play behavior, rewards patrons with points and benefits. In their initial analysis of the data generated by the program, Harrah’s identified that their most valuable patrons, the backbone of their revenue and profits, were not the whales, or high-rollers, those patrons who spend thousands of dollars per hand, but rather, the frequent gamers in their locals’ markets who would come weekly and spend several hundred dollars. This revelation, driven by the casino’s analysis of the data collected by the card program, drove their business strategy. They focused on benefits that would attract and retain these high frequency gamers, and invested in markets with access to this profile of player (Davenport and Harris 2007). The key to the revelations for Harrah’s was that the patrons were incentivized to allow the casino to track their gaming behavior, and match that back to a demographic profile. I will speak more about gaming-specific data in Chapter 10.
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Both for hotels and casinos, the most important elements of the guest profile are any piece of data that generates an actionable result, something that could be used to cause the guests to behave differently, to explain a guest action, or help to understand a behavioral difference between one group of guests and another. These are the insights that would result in the hotel or casino treating one guest differently from another, or taking a specific action as relates to a particularly guest at that time. For example, a business traveler has different needs than a leisure traveler. Someone from China may want different ameni- ties in the room than someone from Canada. A patron who is driving distance from the casino might be more likely to respond to a last- minute deal than a patron who needs to book a flight. This is pretty broad information, with obvious actions associated. As data gets more detailed, it becomes more challenging. How much does gender matter, for example? Certainly, it matters to ensure you are going to address the guest properly in non-face-to-face communications, but is there a relationship with behavior? How about age? Many argue that the millennial generation behaves very differently from previous genera- tions, and has very different expectations for service, but how much
does that impact how you would market to them, or how you would design your service offerings? Think even more detailed—income, title, industry, marital status, number of children, or education. Despite the fact that it has become much easier to store and process large volumes of data, there is still overhead associated with maintaining guest data, and resources required to manage it, as I discussed in Chapter 2. It is still important to capture only what can be used so that you don’t incur a lot of overhead from unused data.
There are certain data points, like what products a guest prefers, how often that guest stays, how much they spend, and what their trip purpose is that are crucial for the analytics to identify the most valuable guests or patrons, calculate their likelihood to respond to cer- tain marketing campaigns, identify guests who are likely to attrite, and identify acquisition targets. The information around these core behav- ioral metrics, like demographic or psychographic indicators, may or may not be useful. Some of what is useful will depend on your brand, your business strategy, and your market. Many argue that more is bet- ter when it comes to guest profile data. This is probably true, but there is no point in gathering and storing information if it will not ultimately lead to a better decision. I am not advocating for or against any of these data sources that I bring up here. In fact, I can think of circumstances where the same data might be highly relevant and/or not matter at all.
The point I am trying to make is that every company needs to think about what data they want to collect in light of their own products and their own business strategies. One guest profile does not fit all, so to speak!
Campaign Performance
Marketers also collect data on the content and performance of cam- paigns, and can use this to report on past performance and predict future performance. Marketers should be monitoring response rates, to understand the percentage of the consumers who were sent the campaign who actually booked. They can also track click-throughs—
how many consumers opened emails or clicked on a banner ad. Click- throughs identify whether you have the right content or compelling enough copy to attract attention. Collected at the guest level, they are
also an indication of guests who are interested in this kind of promo- tion or property, even if they didn’t book this time. Keeping track of guest interest will help to increase response rates in the future.
emerging Data Sources
As the digital ecosystem evolves, so too do opportunities for marketing to collect new data. Hospitality and gaming companies are beginning to explore the following data sources.
Digital and Web Data
As the process of researching and purchasing a travel experience moved to the web, and now recently to mobile devices, marketers are having to collect and manage a whole set of new digital data. These can include keywords associated with search engine optimization, click stream data that tracks a guest’s path through the website, in- cluding what they hovered over but didn’t click on, and even informa- tion they started filling out but didn’t complete. Synthesizing this data can tell you how effective your website is in generating and capturing demand, keep you abreast of competitive movements in keywords, and measure the effectiveness of pay-per-click programs. It can also help uncover guest preferences and interests, which can be used for remarketing.
Social and Text Data
Hotel and casino managers are becoming more accustomed to the data generated by review sites and social engagement, and well recognize the impact of social data on their businesses. In fact, as I sit writing this chapter in a beautiful all-inclusive resort in the Caribbean, I have had no less than four staff members encourage me to write a review on TripAdvisor mentioning their name specifically—interesting strategy from the resort to encourage positive reviews. (But thanks, Biakely, JC, Jorge, and Mr. New York—I’ve had a fantastic time!) There are many emerging opportunities to collect and act on this social data.
Dr. Breffni Noone, Dr. Kristin Rohlfs, and I wrote a paper several years ago in which we helped hoteliers think about how social data
could be used for decision making. While we identified many areas of opportunity that hotels and casinos are now taking advantage of today, the basic premise still holds true that the easiest way to manage the data from these social channels is to start with the business prob- lem you are trying to solve and think about how social data and social channels can contribute to a better solution. Figure 6.2 details a frame- work to evaluate opportunities to leverage social data, considering the direction of the social interaction and the time frame of the decisions you are trying to make.
Data generated in social channels can be traditional quantitative data, but is more likely to be unstructured, nontraditional data (I dis- cussed the challenges associated with this data in Chapter 2). Quan- titative data include ratings, which are essentially an aggregate score representing the opinions of all reviewers, numbers of Twitter follow- ers, and Facebook friends. Unstructured sources could include text from reviews or posts, images, audio files, video files, and social net- work connections.
Social data is useful at the brand level, the property level, and at the individual guest level. Hotels and casinos can track reputation at the brand level or for an individual property. Mining the text data from all reviews from an individual property can provide insight into the elements of the product or service that are resonating most with guests or can identify service issues. Remember that social data is pub- lic data, so hotels and casinos can collect reputation data from the competitive set as well, and derive an apples-to-apples comparison of their reputation positions in the market, for an individual property or for the brand.
Figure 6.2 Identifying Opportunities to Use Social Data Source: Noone et al. 2011.
Time Scope SHORT TERM
Tactical
LONG TERM Strategic (3) Inform pricing, distribution,
and CRM strategy (4) Drive customer development
and retention (1) Inform promotions and pricing
decisions
(2) Drive short-term demand and build brand awareness INBOUND
Consumer-Generated Content OUTBOND Firm-Generated
Content
Information Flow