The Selection of a Right Channel Combination for a Tour Operating Business

Nowadays, channels are everywhere and it is essential to optimize the use a few of these channels, the so-called; multichannel strategy. The following article describes the ways in how to select the right channels for a tour operating business. It is presented in the following order; the range of channels, the degree of differentiation and the controllability (Beltman and Peelen, 2013).

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Figure 1. Right channel combination

The first step in choosing the right channels, is to determine the range of channels. A closer look needs to be taken into the different segments which need to be attracted. A selection needs to be made between conservative or open-minded people, passive or active people and instrumental or social people. Conservative people value certainty, so the use of familiar frameworks is appropriate. Moreover, they use the same channel, while open-minded people tend to use a new channel once in a while. Furthermore, passive people tend to listen to other opinions while active people like to make their own decisions. Lastly, instrumental people are efficient and targeted, while social consumers need to have contact with others. A tour operator could for example make a website wherein a community is situated. In here, they could focus on people who are conservative, passive and social (Beltman and Peelen, 2013).

The second step in choosing the right channels, is to determine the degree of differentiation. This needs to be researched as customers do not have equal wants and needs. Moreover, their behavior on different channels is different from each other as well. In here, organizations have thought of different approaches among different customers. For example, dividing them into a VIP group and a non-VIP group. The disadvantages of this approach is that the non-VIP group might feel disadvantaged and discriminated. Therefore, it is also possible to make no differences between customers. Either option needs to be well researched and well put together to avoid any possible conflicts. A tour operator could for example make no differences between customers and treat them all equally with a high and personalized service (Beltman and Peelen, 2013).

The third and final step in choosing the right channels, is to determine the controllability of the channels. The business needs to know whether it could handle the different channels with the goal that the customer experience is being reinforced. The different channels need to manageable when it comes to the costs and the performance. It is more important to have only a few channels, which are made of good quality and relevant content, then to have multiple channels which are incomplete (Clark, 2016). A tour operator could for example limit the range of channels and the degree of differentiation if the accessibility or the quality is not good enough (Beltman and Peelen, 2013).

As a conclusion it can be said that choosing the right channels can be a complex process which takes time and further research, or it can be made as easy and fast as possible. Nevertheless, a successful multichannel strategy can significantly benefit the revenues and the cost structure of the business (Beltman and Peelen, 2013).

Sources

Beltman, R., Peelen, E. (2013). Customer Relationship Management. Pearson. Retrieved at 9 october 2016; 259 – 266.

Clark, J. (2016). How to Choose the Right Social Media Channels to Reach Your Customers. Convince&Convert. Retrieved at 9 october 2016. Retrieved from: http://www.convinceandconvert.com/social-media-research/how-to-choose-the-right-social-channels-to-reach-your-customers/

The Limitations of Segmentation Data

Segmentation is a tool to divide the market into different segments, in which each segment can have its own way of approach. The world we are living in today is still working with segmentation, but the question arises whether segmentation does not fall short on multiple aspects.

Nowadays, businesses use segmentation data in their business models (Beltman and Peelen, 2013). It is a way to select a certain group of people (a segment) and to specially focus on those people. A suited approach could be developed and implemented to reach this group. Nevertheless, there are some limitations in using segmentation, which require further investigation.

Firstly, segmentation data only tells us what has happened, rather than it gives the reason why it has happened (Bennett and Seaton, 1996). The data can be used for certain products that have been bought by certain groups for a previous period, but it does not give an explanation why these certain groups have purchased that certain product. It is therefore impossible to make a good forecast for the future.

Secondly, a segmentation analysis tell us what is, rather than what it could be. It does not highlight the possibilities for the future (Bennett and Seaton, 1996). This segmentation data is of some extent, but it does not forecast the future and therefore it is quite useless. It gives information about the present situation but it does not show any other forecasts for the future.

Thirdly, the assumption that people from the same geographic or demographic base have the same needs, is an unrealistic assumption (Bennett and Seaton, 1996). This segmentation data kind of forgets the individuals inside the segmentation groups as well. The fact that everyone is unique and has different wants and needs, needs to be more recognized. Nowadays, many organizations seem to have problems in approaching every customer separately. The reason for this seems to be that the costs to reach every customer separately, are higher than the benefits. Therefore most companies fall back on segmentation which certainly focusses on a group of people, but leaves individual wishes unattended (Beltman and Peelen, 2013).

As a conclusion it can be noted that there are multiple limitations to segmentation data. Firstly, segmentation data only tells us what has happened, rather than it gives the reason why is has happened, secondly a segmentation analysis tell us what is, rather than what it could be and thirdly people from the same geographic or demographic base do not have the same needs. Although these limitations show that segmentation data will never be perfect, segmentation is a way to create a great approach to certain segments.

Sources:

Beltman, R., Peelen, E. (2013). Customer Relationship Management. Pearson. Retrieved at 1 october 2016.

Bennett, M.M., Seaton, A.V. (1996). The Marketing of Tourism Products: Concepts, Issues and Cases. Thomson. Retrieved at 30 september 2016. Retrieved from: https://books.google.nl/books?id=Zs9VZcfBjccC&printsec=frontcover&hl=nl#v=onepage&q&f=false

The Four Relationship Phases in a Relationship Policy

Eline Foekema, 25 september 2016.

Every company needs a relationship policy in order to be able to communicate as good as possible to its customers. The following article shows the four different phases in a relationship policy.

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Figure 1. Relationship policy per phase (Peelen, 1989)

The first stage is the exploratory phase, in which the company is being positioned as an attractive businesses so it will be able to acquire its first customers (figure 1). With this positive image, certain expectations have been raised, but since the company has not have a past, it can be perceived as a risky company. Therefore the company needs to reinforce relationships as well as increasing their commitment. In order to transfer customers from the explanatory phase to the saturation phase, providing information is essential, as well differentiating itself from competitors and doing cross-selling (the purchase of products which have not previously been purchased). Furthermore, in this phase it is important to keep track of satisfactional levels and notice any negative developments regarding the early relationships with the customers, and from thereon to take action (Beltman and Peelen, 2015).

The second stage is the growth phase. Within this stage it is essential that the company demonstrates activities which emphasize the uniqueness of the company (figure 1). If it fails to do so, it will loose the build-up relationships with some its customers. Moreover, other reasons of loosing customers can be of a lack of interaction, cross-selling, customization and failing in exceeding expectations. The goals of this phase are thus increasing commitment and continuing positive growth of the company (Beltman and Peelen, 2015).

The third phase is the maturity phase, and hopefully the last phase for he company to be in. Within this phase the profitability and the loyalty of the customers are stable and and are the highest level (figure 1). The customer fully trusts the company and vice versa. This phase shows that the relationship policy has worked and it pays off. The company needs to retain its current relationship policy (Beltman and Peelen, 2015). Furthermore, it needs to stay up-to-date with its social media, as social listening is an essential part in monitoring and analysing what the customers are saying about the company (Griffith, 2016). Moreover, social media can show how competitors are doing and what the interests are of a specific target market (Griffith, 2016).

After the development phases, the decline phase may arise. In here, the relationships that had been build are breaking down, from which the commitment lowers to a low level and ultimately the turnover decreases. There might be many reasons for this negative break-down, such as life events that have happened in the customer’s life. The only way to get out of this phase is to determine the cause and by suggesting solutions (Beltman and Peelen, 2015).

As a conclusion it can be said that there are four different phases in a relationship policy. For a company, it would be best to stay in the third phase, which is the maturity phase. This phase shows that the relationship policy clearly has worked and that the company needs to keep continuing this policy in order to sustain, and make eventual profits.

Sources

Beltman, R., Peelen, E. (2005). Customer Relationship Management. Harlow: Pearson Education Limited. Retrieved at 24 september 2016.

Griffith, G. (2016). Get to know customers better by monitoring social media sentiment. Raconteur. Retrieved at 25 september 2016. Retrieved from: http://raconteur.net/business/get-to-know-customers-better-by-monitoring-social-media-sentiment

Peelen, E. (1989). Relaties tussen consument en aanbieder, een basis voor herhalingsaankopen, Alblasserdam: Haveka. Retrieved at 24 september 2016.

The reasons why Booking.com does not make use of loyalty programs

Eline Foekema,  19 september 2016.

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Loyalty programs are all around us nowadays. From big companies to small companies, it seems like every business has made up their own loyalty program. But what actually is a loyalty program?

Loyalty programs can be defined as structured marketing efforts, which encourage loyal buying behavior, by giving the customers rewards. Examples of these loyalty programs can be points that can be redeemed for products or services from the company or from third parties, cash back rewards, first notice of new products and other related benefits. These benefits can usually be obtained by a personal card. With these cards customer data is being collected as the cards usually indicate what the buyer has bought before, and might also like in the future (Toporek, 2012).

Many companies and businesses make use of loyalty programs by today. And yet, a big player as Booking.com refuses to create such a loyalty program. Daniel Finnegan, the CFO of the Priceline Group, says that the performance of Booking.com has already been strong without using any loyalty programs. He claims that they would rather create a wonderful user experience for site visitors (as well as app users), instead of paying them to be loyal customers. Furthermore, he adds that paying the customers to be loyal, while they were going to book directly on the website of Booking.com anyway, is costly and a waste of money. Another aspect that Daniel Finnegan adds, is the fact that the expiration of points can be very frustrating to customers and can therefore develop difficulties with Booking.com (Schaal, 2016). Furthermore, loyalty programs which remember the past purchases and bring them up again, might not be suitable to the Booking.com users. They would receive an email asking them to book again at the same accommodation, while most people stay once in a lifetime in one hotel (Raconteur, 2016).

As a conclusion it can be said that Booking.com is operating on a high enough level, that it does not need any extra “help” to maintain the existing customers (which loyalty programs can do). Furthermore, Booking.com prefers to optimize the users experience of the site, rather than buying their customers. Buying customers can be costly and loyalty programs which remember past purchases do not work well for Booking.com users. Moreover, Booking.com does not want to engage itself in any confusing loyalty programs, which can be a disadvantage for the company in the end.

Bibliography

Raconteur. (2016). Loyalty is not enough. First4Loyalty. Retrieved at 18 september 2016.

Schaal, D. (2016). Booking.com Sees Loyalty Programs as a Burden, Not an Opportunity. Skift. Retrieved at 16 september 2016. Retrieved from: https://skift.com/2016/03/24/booking-com-sees-loyalty-programs-as-a-burden-not-an-opportunity/

Toporek, A. (2012). What is a loyalty program (and will it work for you)? Customers That Stick. Service Solutions. Retrieved at 16 september 2016. Retrieved from: http://customersthatstick.com/blog/what-is/what-is-a-loyalty-program/