The function of consultative selling for DMOs

Within almost all industries using the correct sales approaches is crucial, and for Destination Marketing Organizations this is no different. Especially when handling new clients, such as event planners or meeting planners, it is very important to use the correct sales approach. There are three different types of approaches which are usually subdivided into two categories; transactional selling and complex sales.

Transactional selling is when the client only wants to buy the product. They know exactly what to buy and just want that product or service for the best price without any extras. This type of selling is not used a lot by DMOs. Within the complex sales category there are two different types of sales, these are consultative selling and strategic selling. When applying consultative selling the client is still in doubt about buying and using the product, in this case ‘selection or application assistance’ is needed. Strategic selling is focused on business-to-business markets.

Within the DMO industry complex sales, and especially consultative sales, are in most cases the best option to apply. In general, clients like event planners or meeting planners are not totally certain yet which exact ‘product or service’ within the destination they are looking for, so there is space to give the clients insights and solutions which they did not consider yet. Showing involvement and ingenuity can help to convince the clients to choose for a certain destination since most planners are not limited by one specific location.

According to the article ‘Searching for the Future: Challenges Faced by Destination Marketing Organizations’ by Gretzel, Fesenmaier, Formica and O’leary (2006) there is a lot more competition for DMOs these days then there was in the past. This is caused by companies that are contacting city councils or country commissioners directly to offer the same services for lower prices. This is an advantage for the destination because there will be more money left for other aspects such as paving roads for example. Furthermore, it is becoming more and more complicated to set a specific destination apart from the others in terms of experience and value. Customer knowledge, which means  knowing the needs and wants of the client as well as their usage criteria, can help with getting and maintaining relationships with new clients. Having good customer knowledge is an important aspect in order to be successful when using consultative selling because it will differentiate the destination from all others.

In conclusion, within the DMO industry choosing the correct selling approach is crucial since the competition is growing. When using consultative selling the focus should be on gaining customer knowledge so the clients can receive extra insights and information which is a service that the other, similar, destinations do not offer.

References:

Gretzel, U., Fesenmaier, D. R., Formica, S. and O’leary, J. T. (2006). Searching for the Future: Challenges Faced by Destination Marketing Organizations. Journal of Travel Research.Retrieved from: http://s3.amazonaws.com/academia.edu.documents/30211845/formica_gretzel_et_al.-complete.pdf?AWSAccessKeyId=AKIAJ56TQJRTWSMTNPEA&Expires=1476092321&Signature=%2Bn5%2FA02ZtHXCiSOhWwNPOwnubhI%3D&response-content-disposition=inline%3B%20filename%3DSearching_for_the_future_Challenges_face.pdf

Peelen, E. and Beltman, R. (2013). Customer Relationship Management. Pearson Education Limited. Harlow, United Kingdom.

 

Segmentation techniques for DMOs

Segmentation is an important aspect for almost all companies, thus also for Destination Marketing Organizations. In order to gain knowledge about future clients it is essential for DMOs to know how to segment in a correct and efficient way. In short segmentation means to divide all current clients into different groups which are based on certain segmentation criteria. These are geographical characteristics, demographic characteristics, socioeconomic data, behaviour and psychographic characteristics.

There are many different ways to segment a market. According to the book ‘Customer Relationship Management’ by Peelen and Beltman the following aspects are important for good and workable segmentation solutions; measurable, substantial, accessible, differentiable and actionable. Furthermore, a needed requirement for a segmentation solution is that it is stable, which means that few changes occur within the category over time. The different possibilities when choosing a segmentation technique are the Recency Frequency Monetary Value technique (RFM), the Chi-squared Automated Interaction Detection technique (CHAID) and the Classification and Regression Trees technique (CART).

As mentioned in the article ‘Market segmentation approaches: do they benefit destination marketers?’ by Fuller, Halan and Wilde a segmentation technique that could be used by DMOs is the RFM technique. This technique calculates the index value based on scores received from the clients on the following three criteria; Last purchase date, purchase frequency and amount spent. Some advantages of using this technique are that it is very accurate in predicting what the response to marketing campaigns will be and it employs transaction data. A disadvantage is that the clients who buy most are more often slected for a promotion, which can lead to clients feeling too much ‘mail’ pressure. Another disadvantage is that in order to use the Recency Frequency Monetary Value technique a company needs to have it’s own booking channel. Most of the time DMOs do not have this. In this case the CHAID or the CART technique could be used.

Both of these techniques use a tree diagram to analyse the clients. At the top of the diagram the total database is displayed and on the levels below the clients are divided according to the most significant segmentation criteria.  Even though both of these techniques are very similar there are differences. The CHAID technique is limited by a certain number of classes that can be included, but on each different level more than two segments can be identified. When applying the CART technique on the other hand, there is no limitation to a certain number of classes. A disadvantage of this technique is that the database always splits in two, so at each level only two segments can be identified.

In conclusion, when deciding which segmentation technique to use, the first thing that needs to be done is to choose the right segmentation criteria. Once this is done, the best fitting technique can be decided. The RFM technique can be a good decision for DMOs, if there is an internal booking channel. Otherwise a decision between the CHAID and the CART technique should be made.

References:

Fuller, D., Halan, J. and Wilde, S. (2005). Market segmentation approaches: do they benefit destination marketers? Southern Cross University/Business School. Retrieved from: http://epubs.scu.edu.au/cgi/viewcontent.cgi?article=1146&context=comm_pubs

Peelen, E., and Beltman, R., (2013). Customer Relationship Management. Pearson Education Limited. Harlow, United Kingdom.

 

Increasing a DMO’s profit by applying the long tail distribution strategy

The long tail distribution strategy by Chris Anderson focusses on products and services in the tail of distribution. These products have little sales volume because they have a very particular nature. So for example, in many online stores the already popular products are promoted, in order to attract more customers than the competitors. The other products are sold as well, but those items do not make a big impact. However, some stores have such an amount of inventory that the less popular items in total make most of the profit, these are the long tail products. In general they have little sales volume but there are many in numbers.

In the tourism industry the long tail distribution strategy is becoming successful due to advances in communication technology and social networking. This Internet-based economy gives more people access to a broader range of goods, services and information to choose from. Furthermore, companies like DMOs are not limited by a certain amount of meter, so they have the possibility to offer a wide range of products, services or in this case destinations.

The article ‘Long Tail Tourism: New geographies for marketing niche tourism products’ by Lew (2008)  states that the long tail distribution strategy is already being applied to certain businesses within the tourism industry. A good example is the accommodation sector. The ‘short head’ consists out of the large hotel chains and aggregator websites such as Expedia.com and Hotels.com. The long tail consists out of a few different sectors. First the larger niche markets such as last minute travel and corporate travel. This is followed by single destination specialists and hotel auction sites such as youth hostels and B&Bs. Even further down the long tail are more obscure accommodation options such as couch surfing.

Furthermore, according to Lew’s article, the  following three aspects should be taken into account when a DMO applies the long tail distribution strategy. First of all, it is required to have a sufficient number of products. Also, minimizing storage and distribution costs by strategic warehousing is needed. Lastly the company needs to develop a broad and deep market and distribution channels. Chris Anderson also states that tourism related companies should apply three rules for developing the supply side when using the long tail distribution channel. The first one is to ‘Make Everything Available’. For DMOs this can mean to expand the diversity of offerings and to develop different ways to experience attractions and services. The second rule is to ‘Cut The Price, Then Lower It’. This means to offer the client the product for a price based on the actual cost with an appropriate profit. The last rule is ‘Help Me Find It’. The website should be easy to understand and it should have a broad web presence which can created by the use of search engine optimization.

In conclusion, when taking these two factors and the advices  by Chris Anderson into account, DMOs should be able to increase their profit when using this strategy. They are not limited by a certain amount of square meters to fit products and there are still many less known niche markets and destinations.

References

Lew, A. A. (2008). ‘Long Tail Tourism: New geographies for marketing niche tourism products’. Journal of Travel & Tourism Marketing, Vol. 25. Retrieved from: https://nau.edu/uploadedFiles/Academic/SBS/GPR/Forms/Long-Tail-Tourism-Lew.pdf

Peelen, E. and Beltman, R. (2013). Customer Relationship Management. Pearson Education Limited. Harlow, United Kingdom.

 

The honeycomb framework of social media – beneficial for DMOs?

A study done by Haysa, Page and Buhalisb (2012) reveals that the use of social media among Destination Marketing Organizations is still very experimental. The study concluded that the social media strategies of most DMOs are not executed in an effective and successful manner, even though there are a few exceptions such as VisitBritain and Tourism Queensland. It also states that if DMOs use a more innovative and creative approach towards social media they could benefit greatly.

The article ‘The 5 principles of engagement marketing’ by Marketo mentions that potential clients such as event planners or meeting planners can be engaged in many different ways. One of these is by adapting the message that appears when they visit the company’s website based on their behaviour on Facebook. Another example is to send clients information which is based on their behaviour on social media. This way the information will include topics that the clients researched before. These kind of methods are part of using social media as a tool and will make the clients feel as if they are treated as an individual. To make sure a company uses the right type of social media tools, the honeycomb framework can be used.

Peelen and Beltman determined that the honeycomb of social media, which consists out of 7 blocks, allows companies to develop a social media strategy which is specific for their company. The blocks can be used individually or together to help managers understand more about available social media choices. The honeycomb framework can be used for clients such as event and meeting planners but also for individual interested customers. The seven different blocks are identity, conversations, sharing, presence, relationships, reputation and group. Even though all the blocks are important, sharing, presence, and reputation are in general the most relevant blocks for DMOs.

The sharing block focusses on how social media users exchange, receive and distribute content. Videos, photos, locations, product reviews and blog posts are some of the most popular items to share. It is for all companies important to know what interests potential clients and customers have in common. For DMOs it is also useful to know which groups of people are interested in for example a specific city or area.

Another important block, the presence block, covers the degree to which users can know if others are accessible. This is done by using  GPS chips and mobile devices. Lots of people let others know where they are and if they are available to talk or meet. For DMOs and even more for the event and meeting planners it is important to know where potential customers are and when they are at this location.

Finally, the reputation block describes how things such as brands, products and people are viewed by others. For many users these opinions matter in their decision making and therefore DMOs should also take this into account.

In conclusion, the honeycomb of social media is beneficial for DMOs because it will help them to use their social media tools as efficient as possible. The blocks of the honeycomb can be used in different combinations, depending on the type of company and the goals. When using the honeycomb of social media every DMO is able to create personalized and effective social media tools.

References:

Hays, S., Page, S. J., and Buhalisb, D. (2012). Social media as a destination marketing tool: its use by national tourism organisations. Retrieved from: http://resolver.ebscohost.com.proxy1.dom1.nhtv.nl/openurl?sid=google&auinit=S&aulast=Hays&atitle=Social+media+as+a+destination+marketing+tool%3a+its+use+by+national+tourism+organisations&id=doi%3a10.1080%2f13683500.2012.662215&title=Current+Issues+in+Tourism&volume=16&issue=3&date=2013&spage=211&linksourcecustid=13163&site=ftf-live

Peelen, E. and Beltman, R. (2013). Customer Relationship Management. Pearson Education Limited. Harlow, United Kingdom.