Data Mining and Customer Relationships in the hotel industry

 

From creating a personalised strategy to putting out the fire when crisis’ hits, all of these are made possible when you listen in and monitor the conversations your consumers are having.

One of the challenges presented by CRM is to make explicit the implicit customer knowledge found in the minds of the contact persons, so that it can be recorded, distributed and used for a larger group of customers. Current experiences with data analysis are still somewhat sad. The data-mining techniques which have been launched have not yet produced the kinds of results which were originally expected of them, and statistical techniques are laborious, place many demands on the data material and cannot handle all the issues. On the other hand, it is encouraging that a portion of these results can be explained as restricting from unskilled and careless use of the techniques. (peelen and Beltman, 2013)

One of these techniques is called Social listening. It can identify particular problems in a business, discover how competitors are doing and find topics of particular interest to a target market. But it seems computers are yet to understand the tones of irony and sarcasm, so there can be a great deal of confusion when it comes to deciding what percentage of comments is negative and which isn’t. The key for the hotel industry is to understand these tones of irony and sarcasm and respond to these comments. (Matthews, 2016)

Imagine that you are a marketing manager for a hotel. You are responsible for managing the relationships with the hotel’s customers. One of your current concerns is customer attention, which has been troubling severely into your margins. You understand that the cost of making them loyal is significantly less than the cost of attracting new customers, so you need to figure out a cost-effective way of doing this.

According to Thearling (2016)The traditional approach to solving this problem is to pick out your good customers (that is, the ones who spend a lot of money within the hotel) and try to persuade them to book for another period in your hotel. This persuasion might involve some sort of gift (possibly a bottle of wine) or maybe a discount on the room. The value of the gift might be based on the amount that a customer spends, with big spenders receiving the best offers.

This solution is probably very wasteful. There are undoubtedly many “good” customers who would be willing to stick around without receiving an expensive gift. The customers to concentrate on are the ones that will be leaving. Don’t worry about the ones who will stay. (thearling, 2016)

This solution to the customer attention problem has been turned around from the way in which it should be perceived. Instead of providing the customer with something that is proportional to their value to your hotel, you should instead be providing the customer with something proportional to your value to them. Give your customers what they need.

There are differences between your customers, and you need to understand those differences in order to optimize your relationships. One big spending customer might value the relationship because of your high reliability, and thus wouldn’t need a gift in order to continue with it. On the other hand, a customer who takes advantage of all of the latest special offers and special services might require a better deal or other gift in order to stick around for another year. Or they might simply want a better room rate because they want a more luxurious room for less money . The key is determining which type of customer you’re dealing with.

According to Thearling (2016) Considering the timing is very important. You can’t wait until a week before a customer’s is making the booking and then pitch them an offer in order to prevent them from considering another hotel. By then, they have likely decided what they are going to do and you are unlikely to affect their decision at such a late date. On the other hand, you don’t have to start the process immediately upon persuading a customer. It might be months before they have an understanding of your company’s value to them, so any efforts now would also be wasted. The key is finding the correct middle ground, which could very well come from your understanding of your market and the customers in that market.

Bibliography

Matthews, D. (2016, September 1). Racounteur. Retrieved from How connected data is targeting consumers: http://raconteur.net/business/how-connected-data-is-targeting-consumers

Peelen, E., & Beltman, R. (2013). Customer Relationship Management. United Kingdom: Pearon Education Limited.

Thearling, K. (2016, October 3). thearling.com. Retrieved from Data mining and customer relationships: http://www.thearling.com/text/whexcerpt/whexcerpt.htm

 

 

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