How smart phones create value fusion in the hotel industry

Nowadays, people are always on their smart phones and connected to the network, which creates opportunities for customer engagement. Mobile devices, such as smart phones, have created a new phenomenon; Value Fusion. It’s defined as value that can be achieved for the entire network of consumers and firms simultaneously, just by being on the mobile network. Value Fusion can be produced by an individual consumer or by a group of consumers. It can also be produced by a firm or by a group of firms. Contributions to Value Fusion can be active, passive, interactive, or aggregated. Since there is virtually no time delay, all benefits can be experienced at the same time, just-in-time, and in real-time (Larivière, 2013).

Value fusion create value for both guests and hotels.

Benefits for guests

First of all, guests are able to search and find information that is relevant in making consumption decisions. For example online reviews, navigation apps, and company websites (information value). Secondly, consumers of mobile devices are able to express personality, status and image in a public context via apps such as Facebook and Twitter (identity value). Moreover, they can also join clubs via these apps, which also projects identity. Furthermore, mobile devices and social media facilitate social interactions, but can also be used to gain social approval and enhance self-image among other individuals (social value).  Consumers can also be entertained via mobile devices by listening to music, watching videos, playing games, etc. Also by just browsing through web pages people kill time while waiting for a bus for example (entertainment value). Another benefit mobile devices offer consumers is emotional value, most mobile users enjoy using the technology or they are able to avoid negative feelings and solve problems anywhere and anytime. Lastly, mobile devices provide consumers with two extra benefits which are convenience value and monetary value. Convenience value is obtained by achieving tasks easily, fast, and effectively. Furthermore mobile devices provide consumers with multitasking convenience, transactional convenience, and mobile commerce. Monetary value is achieved by the opportunity to compare and choose between competing offers (Larivière, 2013).

Benefits for hotels

Also hotels benefit from mobile devices. Firstly, they can deepen their relationships with guests and create more revenue. Geo-location enables hotels to create relevant, customized promotions. Moreover, via social login hotels can access rich demographic and psychographic data based on the users social media accounts. Therefore, hotels can develop a better view of potential guests and optimize customized offerings (market insight and customer knowledge). Furthermore hotels have the opportunity to receive information about the current status of their guests’ mobile app activities and also enables them to react just in time on consumer activities. Mobile apps also offer hotels more connection points and service delivery episodes with the guest, which can be used to build a strong relationship and create brand loyalty. Secondly, hotels can reduce marketing costs, since text messages and e-mails are cheaper than other media. Furthermore, hotels can reduce costs on serving customers. An example is the Accor hotels chain. Guests can book their stay through the app or on the website. Two days before arrival they get an e-mail to complete their online booking, which can be done even faster with the Le Club Accorhotels card, which already has your personal information. On the day of arrival guests receive an SMS with practical information related to their mode of transport. Upon arrival your key will be ready and there is no need to check-in at the reception again. Guests are also able to check-out faster, they only have to return their key at reception and will receive their invoice by e-mail (Accorhotels, 2016). Furthermore, mobile devices create customer co-creation and customer influence. Guests can posts reviews of their stay and influence each other. They are in this way contributing to the promotion of the hotel and to the meaning of the brand. Mobile apps enable hotels to integrate the guest into central elements of service delivery process, such as the mobile self-check-in (Larivière, 2013).

Sources

Accor hotels (2016). Le Club. Retrieved from: http://www.accorhotels.com/gb/leclub/program/online-check-in-fast-check-out.shtml

Larivière, H. Joosten, E.C. Malthouse, M. van Birgelen, P.A. Werner, M. Huang (2013) Value fusion: The blending of consumer and firm value in the dinstinct context of mobile technologies and social media. Journal of Service Management, Volume 24, Issue 3.

The use of neural networks for online bookings in the hotel industry.

Data mining is a method to find relationships between data. In a broader sense: the discovery of knowledge in databases. It is a tool for automated discovery of the interesting non-obvious patterns hidden in a database that have a high potential for contributing to the bottom line (Peelen and Beltman, 2013).

Peelen and Beltman mention several data mining techniques which can all be useful in the hotel industry:

  • neural networks
  • evolutionary computation
  • association rules
  • decision trees
  • case-based reasoning

However this blog will only focus on neural networks and give an example of how these networks can be applied with online-bookings. Neural networks are characterized by one input and one output layer. However, it is possible to apply additional layers. The ones between the input and output layer are referred to as hidden levels and there is no value given to them. In order to determine the final model, the weights and values of the nodes at the hidden levels will have to be calculated. They will be adjusted so that the input values correspond with the desired output values (Peelen and Beltman, 2013).

Nowadays, online bookings mostly include the whole service and policies offered by the hotel to the customers. Hotels provide a range of services to customers, which are mostly not limited to the simple reservation. Therefore, instruments should be more complete and sophisticated to pursue customer loyalty and customer take over (Corazzaa, 2014).

The software used to support customer bookings must route the customer’s preferences. The software should offer continuous service, a multi-language environment and safety of transactions. However, it should also have Definition Paths based on the characterization of the customer, which are a set of questions asked to customers in order to assess his or her booking preferences. This can be done through online questions or analyzing historical data of customers. The collection of this data enables the hotel to offer specific services of the customers’ choice (Corazzaa, 2014).

By using a neural network, hotels are able to offer a suitable function that receives as inputs the state of the hotel (for example the current number of rooms available, the number of free rooms tomorrow, etc.) along with the requests of the customer, and provides as output a solution, or alternative solution if the requests are not satisfactory. These functions and values strongly depend on the hotel structure. Therefore, it might be useful to use multiple layers in the neural network to map known input datasets into known output datasets, since there might be unknown functions with an unknown capability (Corazzaa, 2014).

For the greatest effectiveness it is important to keep updating the Definition Paths and keep the neural networks up to date. Since neural networks are already time consuming, using this data mining tool might not be convenient for every hotel.

Sources

Corazzaa M., Fasanoc G., Masonc F. (2014). An Artificial Neural Network-based technique for on-line hotel booking. Procedia Economics and Finance, Volume 15, Pages 45-55

Peelen, E. & Beltman, R. (2013). Customer Relationship Management (Second Edition). Amsterdam: Pearson Education Benelux BV

Mass customization in hotels

There are numerous ways of customization for hotels, however, in this blog the focus will be on mass customization. This kind of customization means that instead of the customer choosing one product variant, each customer provides unique information so that the product may be tailored to their specific needs. The production process must be very flexible in order to satisfy these needs. It requires the organization to react immediately and quickly to customer wishes.

There are  four different ways to implement mass customization, depending on the way wishes of customers are communicated to the hotel and how the hotel reacts on it: cosmetic, transparent, collaborative and adaptive (Peelen and Beltman, 2013).

The first approach, cosmetic customization, means that the product stays the same, however, its representation is adjusted. Most hotels already do this by offering their products in different locations or to different customers. They do this by adjusting the representation, which means they approach customers differently.

Transparent customization means only the product is adapted, but the representation stays the same. Hotel guests are offered a personalized product, but are not informed about the changes that are especially made for them. An example of this is the Hilton Requests Upon Arrival, by the Hilton hotel chain. This gives guests the choice and control over their entire hotel stay with the ability to check-in and choose their exact room from digital floor plans, as well as customize their stay by purchasing upgrades and making special requests for items to be delivered to their room, on their mobile devices, tablets and computers (Hilton, 2016).

Collaborative customization entails that both the product and representation are adapted. This may difficult in the hotel industry, since the product itself, which is a overnight stay, doesn’t change. However, hotels also offer other products, such as breakfast. This product and its representation can be adapted. An example is the Hilton Breakfast. The hotel started their Hilton Breakfast in 2007 with this premise: “Everyone’s idea of the perfect breakfast is different“.  Guests can choose their kind of breakfast and only have to follow the color of the chosen breakfast at the buffet. The color-coded breakfasts include Low Fat & Low Calorie, Hi-Energy, High Fiber, Low Cholestrol, and Indulgence  (Hilton, 2016).

Lastly, there is adaptive customization, which means both the product and the representation stay the same. Hotels can use this by offering guests extra’s, for example a wakeup call in the morning.

 

Sources:

Hilton (2016) Retrieved from: http://www.hiltonhotels.com

Peelen, E. & Beltman, R. (2013). Customer Relationship Management (Second Edition). Amsterdam: Pearson Education Benelux BV.

Creating customer loyalty among hotel guests

Marketo (2015) states that companies should focus more on their customers, rather than their product, branding, or their team. It is most important to get to know the customer as an individual and create meaningful interactions with people. Therefore an engagement marketing strategy was developed which has five principles:

  • connecting with people as individuals
  • connecting to people based on what they do
  • connecting with people continuously over time
  • connecting with people directed towards an outcome
  • connecting with people everywhere they are

In this blog we will focus on how hotels should connect with people continuously over time. Hotels want to maintain a relationship with their customers and create customer loyalty, but how should they do this? Marketo (2015) gives three steps to recognize loyal customers, find more of them, and to get more out of them

Step 1: Identify and segment your most loyal customers

Firstly, you need to find out which customers are loyal and which are not, because they should be treated differently in marketing campaigns. This can be done through a customer engagement platform, which manages and reports interactions. Out of these interactions with your brand customer profiles can be build, focused on the customers’ interests, preferences, and habits. This information can be used to create unique and personalized customer experiences.

To find your loyal and non-loyal customers, each customer in your engagement platform can be measured against metrics that define early-stage loyalty and later-stage loyalty. Examples of early-stage loyalty are; email subscriptions, social engagement in means of followings, likes, and shares, Click-Through rates, and surveys and feedback. Some examples of later-stage loyalty measurements are customer spend, customer satisfaction, customer lifetime value. After segmenting your customers you will be able to create campaigns with the right tone and benefits for each segment.

Step 2: Build more loyal customers through insights gained

By connecting with your customers frequently, long lasting customer loyalty can be build, which comes in more bookings from returning guests or an increasing number of loyal customers. By using the information from your customer engagement platform you can found out more about hobbies, interests, or reasons of choosing your hotel and in this way deepen your relationship with guests. Loyalty programs are a great tool to build and maintain these relationships.

Step 3: Communicate based on who they are and what they do

As Step 1 explained it is important to find out more about individual customers to engage and keep them loyal. However, non-loyal customers should not be forgotten, since you need a different type of engagement. After defining your loyal and non-loyal customers in Step 1, you should look for differences and similarities in habits and activities. This way you can communicate with non-loyal customers in a more personal way and guide them toward habits and activities from already loyal customers. Also customers that have pulled away from your brand can be won back by using relevant communications based on paying attention on social media and to bad reviews or complaints. According to an SDL study 30% of the guests a hotel had will go back after they see the hotel has improved.

Lastly, when developing attractive offers and campaigns for new loyal guests, it is important to consider the impact these offers and campaigns may have on guests that are already-loyal to the hotel. Acknowledgement of the customers’ loyalty and including already-loyal customers in these new offers and campaigns is vital.

Sources:

Marketo (2015). The 5 Principles of Engagement Marketing. Retrieved from Marketo: file:///C:/Users/F.%20van%20den%20Eijnden/Downloads/The-5-Principles-of-Engagement-Marketing-Marketo.pdf

Marketo (2015). Three Steps to a Winning Consumer Loyalty Strategy. Retrieved from Marketo: file:///C:/Users/F.%20van%20den%20Eijnden/Downloads/Three-Steps-To-Winning-Consumer-Loyalty-Marketo.pdf