The importance of data for cross-selling in the hospitality industry

According to Peelen and Beltman (2013), cross-selling is the sales of a product or service to current customers who are already purchasing one or more products from a particular company. Different forms of cross-selling are identified, such as when customers buy one or more products during a contact, when customers buy a second or third product during a later contact, when customers buy another product within the same product range, or when customers expand the product they already bought by buying a product from another category. In the hospitality industry, cross-selling occurs when hotels sell their guests in-house services and products for example.

However, hotels are not very successful yet in cross-selling their guests services and products. According to research done by Travel Tripper, only 3% of the hotel guests book add-ons during their online booking process. On top of that, when customers are presented with too many options on products and services they can additionally book beside their hotel room, they might even abandon their entire booking (Lee, 2015). It seems that hotels still have a lot they can gain from cross-selling. So how can hotels successfully cross-sell their products and services to their customers?

The key to a successful cross-selling strategy for hotels is being there at the right place and at the right time for their guests. First, when looking at timing for cross-selling, customers are most receptive for cross-selling when they are in the phase of ‘pre-trip buzz’. When approaching customers during this phase, it is more likely that they purchase additional services or products from the hotel. Approaching customers can be done by sending them an email with offers (Lee, 2015).

However, the perfect timing will not immediately make cross-selling very successful for hotels. On top of that, it is vital for hotels that they appeal to their customers’ appeal to buy. This can only be done with offers that really speak to the customer; the offers need to compliment their original purchase and the offers need to fit the customer’s individual preferences. In order for hotels to be able to offer their customers personal offers, they need to know their customers. Hotels can only get to know their customers if they use data. Data will help hotels to get an insight into what their customers want (Subramanian, 2013).

So when hotels want to cross-sell products or services to their customers, it is crucial that their offers are well-timed and personalized. It is impossible for hotels to do this without analysing and using data.

 

Bibliography

Lee, J. (2015, August 10). Upselling & Cross-selling: The difference and why it matters. Retrieved October 02, 2016, from http://www.traveltripper.com/blog/upselling-and-cross-selling-the-difference-and-why-it-matters-for-hotels/

Peelen, E., & Beltman, R. (2013). Customer Relationship Management (2nd edition).

Subramanian, R. (2013, March 8). Tips for Using Big Data to Optimize Upsell and Cross-Sell Strategies. Retrieved October 2, 2016, from http://www.mytotalretail.com/article/big-data-can-grow-your-retail-business-upsell-cross-sell-strategies/all/

How to get to know your hotel guest?

Having knowledge about you guests has many benefits. One of them is that knowing your guest’s preferences helps you to improve your service: E.g. having the favourite drink or pillow type ready for your guest upon arrival. Another benefit is that it helps the marketing department with creating suited offers and promotions. Peelen and Beltman (2013) state that to develop intensive relationships with customers, companies will not only have to form an image of the customer as a buyer, but also as a user and a person or an organisation in their own context. So the question is which data do you need to get to know your guest?

First you start with the identification of the guest. Here you collect the most basic data such as the name, address, city, telephone number and e-mail address. When you have this data you will be able to start segmentation. Segmentation helps you categorise guests in sub-groups and can for example be done on the base of age, origin or sex. “Sub-groups are crucial in order to be able to provide them with a differentiated offering.” (Peelen & Beltman, 2013).

After the identification and segmentation, it is also important to determine in an early stage what the guests’ communication channel preferences are. Knowing what their opinion on different channels is and when they are active on which channel helps you to reach the guest more easily and decreases the chance that your messages are seen as disruptive.

The above mentioned information will help you to create a first insight on who your guest is and how to reach them but it is also important to know what their connection is with your company. First you can look at the transaction history and customer value. Information such as: which services are previously used? How much have they spend in the past? How recently do they purchase? Etc.. help you to gain a deeper understanding of your guest. According to Peelen and Beltman (2013) “direct marketing practice has taught us that historical buying behaviour is one of the best predictors of future purchase behaviour.”

Communication history is important to be able to conduct an on-going dialogue in which repetition can be avoided. A communication summary can offer points of reference in determining the method which might be used to achieve increased depth in the conversation so that more personal data can be exchanged (Peelen & Beltman, 2013). Also, the communication history should make it possible to see the complaint history. Analysing what complaints there have been in the past, how the company dealt with them and how the customer responded helps you to prevent making mistakes again and in case a mistake is made again you will know how to react.

Furthermore having an insight on events in a guests life will give you the opportunity to make offers to the guest at exactly the right time. E.g. when you know a guest’s wedding date you can make an offer on the bridal suite for their wedding night, or you can make an offer the years after to celebrate their anniversary. Gathering data on events is difficult but some of this type of data can be procured from third-party organisations.

Last but certainly not least important in getting to know your customer is knowing how satisfied they are. Satisfaction can be measured overall but it is also very useful to know how satisfied they are with certain elements of your service. This knowledge will help you to improve the service according to the guests wishes.

Collecting all this information will help you to get to know the buyer, the user and the person within your hotel guest and enables you to improve your service and helps your marketing. Which will eventually lead to happier guests that are more likely to return or to spread positive word of mouth advertisement about your hotel.

Sources:

Peelen, E., & Beltman, R. (2013). Customer relationship management. Pearson Education Limited.

The digital voice of the customer -it gives data. Are airlines listening to it?

Often we can hear the saying – Data is the king! But is it really true? Data is just details, notifications of actions taken. It becomes information when data has a meaning. Data reveals something about the customer’s identity and profile and when organizations use this information, it becomes knowledge (Peelen & Beltman, 2013). Understanding individual customers helps to build the relationship with them. CRM can analyse relevant customer data and use it in the marketing activities.

To build a wholesome customer knowledge, data has to be compiled from different sources. Customer databases are a crucial factor for company’s success. Social media channels are another source for data. People talk on social media, they complain, suggest, adore and hate. Some of these people are your customers. Not always are they aware that you are listening.

Still underestimated by some companies, social media carries a lot of data that can be used as useful information for the company. It is not anymore only about the likes and shares. Social listening can be used as a research tool. “Social listening can pinpoint particular problems in a business, discover how competitors are doing and find topics of particular interest to a target market” (Griffith, 2016). It captures mentions of your brand, competitors, topics etc. across the internet.

The airline industry is customer service orientated. People rely on airline companies to bring them from one place to another in a safe and pleasant way. Not always everything runs smooth. Often there are delays, cancellations, changes etc. This is an industry where unpredictable events has to be taken into consideration. Social Media allows airline companies to monitor what people are saying, what are they complaining about, what they want etc.

So, how can airlines benefit from social listening? A member of communication team of JetBlue – Morgan, revealed a great example on how social listening can improve services. A customer of the JetBlue once was complaining on social media that he has to pay a fee for his bike despite it is foldable and fits into his suitcase. Tweet was received in an afternoon. It turned into a conversation and on the next morning JetBlue made changes in their policy that allowed to take folding bikes that fitted into checked bags with no extra fee (JetBlue, 2016).

Another airline company – Southwest Airlines in 2014 started a 30-person “social business” department. It also includes a listening center that also works as a hub for various groups of the organization. Groups from HR, sales, IT and others often go by to see how the information collected from social listening can be applied in their departments. Once, this department ran a marketing campaign #FeesDontFly that rewarded people who were talking about about other airlines’ hidden fees (Pathak, 2015).

Social media provides airlines with a lot of data. It is crucial to listen to what customers are saying about you. Social listening is not just about the communication with the customers, the increase of their satisfaction and engagement. Is is also an important research tool. It can reveal useful information about competitors or flaws in the product, if used right.


Bibliography:

Griffith G. (2016). Get to know customers better by monitoring social media sentiment.Retrieved October 2, 2016 from http://raconteur.net/business/get-to-know-customers-better-by-monitoring-social-media-sentiment

JetBlue. (2016). A day in the life: Social Media. Retriewed October 2, 2016 from  http://blog.jetblue.com/a-day-in-the-life-social-media/

Pathak S. (2015). How Sothwest Airlines turned social media into social business. Retriewed October 2, 2016 from http://digiday.com/brands/southwest-airlines-turned-social-media-social-business/

Peelen, E., & Beltman, R. (2013). Customer Relationship Management.Harlow: Pearson Education Limited.

How can hotels transfer customer knowledge to an unforgettable customer experience?

Nowadays “big data” is becoming more important with the increase of the desire for personalized experiences. In order to personalize experiences, hotels should acquire information about the customer. Therefore it might be a good idea to set up a database. Although, it becomes clear that a database costs money and time, because relevant data needs to be gathered and managed continuously (Peelen and Beltman, 2013). Is it worth it?

According to Peelen and Beltman (2013) customer knowledge will help building relationship with the guests, because once you know your customers, you will be able to improve the value of the relationship between you and your customer. So what will it take to use this database and customer knowledge to create an unforgettable customer experience?

In order to create this experience, hotels need to build a relationship with the customer. With regard to this, it is important that hotels look at the customer from different perspectives: as a user, as a buyer and as a person or organization in his or her own context. Only focussing on the customer as buyer will lead to implicitly implementing either product leadership or operational excellence from the value disciplines of Tracy and Wiersema (1998). Customer intimacy is the third value discipline involved in this strategy and needs to be taken into account as well (Peelen and Belt, 2013). To counterbalance this properly, data needs to be collected via third parties, because the transactional activities of your guests only will not lead to that “unforgettable hotel experience”.

Well you might think that using social media to acquire this information is easy, but this is far more difficult than often is assumed. These other types of data have less to do with the behaviour and more to do with the real characteristics of the customer, which makes it less objectively measurable. Besides that, a person’s personality and values are abstract and hard to sense. It is therefore a real challenge to measure and keep track of this specific data. Communication may contribute to the personalization of relationship management (Peelen and Belt, 2013).

Let’s look at the Sol Wave House hotel in Mallorca. This hotel is the world’s first “tweet experience hotel” and they represent holidays which are made for sharing. The Sol Wave House incorporates the social media platform Twitter wherever possible: guests can check in through the hotels designated Twitter app, they can socialize with other guests through this app, and even order room service using a specific hashtag (Newenham, 2015). They are creating this unique and unforgettable experience thanks to their customer database, which is richly filled with important information. So how do they do this?

The Sol Wave House hotel is letting the customers give their information to them instead of trying to figure out their interests, wishes and demands, because Everything is just a tweet away. The staff of the hotel can follow all the chats customers have with each other in the tweet community they created. Furthermore, they organize a competition where they ask for people their favourite holiday memory. Also, guests can order their favourite cocktail by using the hashtag #poolbarorder. The next time they stay in the hotel there might be their favourite cocktail waiting for them at their hotel room. All this information, which is placed by the guests themselves on Twitter, can be used to create an unforgettable experience (Sol Wave House, n.d.).

Next to this, The Sol Wave Hotel is the perfect example of using good social listening strategy by using a twitter community. Social media listening is more than just watching people mentioning your company and replying when you need to. It is a process of tracking conversations and then use them to discover opportunities to create content for those audiences (Beese, 2015). The Sol Wave House can track conversations easily by searching for specific phrases or words that guests can use when they stay in their hotel or have stayed in the hotel.

It is important for every hotel to practise social listening. When hotels only monitor mentions with the “@”, they risk missing out on over 30 per cent of negative and positive feedback (Beese, 2015). This information should not be missed. So to keep this massive amount of data together, it is important to have a database, collect data properly from different sources and analyse it frequently. Take advantage of all the touch points with the customer and it will be possible to create that unforgettable customer experience. It might cost time and money, but it will be all worth it.

 

Bibliography

Beese, J. (2015, November 18). What Is Social Listening & Why Is It Important? | Sprout Social. Retrieved September 29, 2016, from http://sproutsocial.com/insights/social-listening/

Matthews, D. (2016, September). How connected data is targeting consumers – Raconteur. Retrieved September 30, 2016, from http://raconteur.net/business/how-connected-data-is-targeting-consumers

Newenham, J. (2015, April). MeetingsBooker.com | The 7 Most Innovative Hotels On Social Media in 2015. Retrieved September 30, 2016, from https://www.meetingsbooker.com/blog/post/2015/04/01/some-of-the-best-hotels-to-follow-on-social-media-in-2015

Peelen, E., & Beltman, R. (2013). Customer relationship management (2nd ed.). United Kingdom: Pearson.

Sol Wave House, (n.d.), Sol Hotel Majorca | Wave House Mallorca, Retrieved September 30, 2016, from http://www.wavehousemallorca.com/en/sol-hotel-majorca.html

How important is digital up-selling and cross-selling to tour operators?

Cross-selling and up-selling are very similar in different ways. Most important, both strategies offer the clients extra options for their booking and are important for a functioning customer relationship. Tour operators must truly understand their customers, to place the right advertisement ads on websites or send informative emails. Offers made to the customers mainly depend on the customers’ interests, needs and wants. Amazon, for example, sells 35% of their revenue from cross-selling. (Carlson, 2013)

According to Ed Peelen (2013) “cross-selling is the sale of products to current customers who are already purchasing one or more products from the supplying company.” It is specified to current customers as data has already been collected on those clients and the company can target them better. If new clients are targeted the advertisement ads are usually based upon the buying behavior of existing customers and gives a wide variety of products. Those cross-selling ads on websites are usually very visible to the client and is found after a booking. To increase the interest of the clients, the online tour operator connects the ads with the previous booking searches. (Kenny, 2016) This way the customer has the feeling to be taken care of and being remembered by the company from a previous booking.

Up-selling, on the other hand, is a kind of upgrade to the client. With an example of the online tour operator “booking.com” it can be shown that up-selling is also done less obvious to the clients: By comparing different options on the same page with various information, the client starts to compare the initial desire with better options and might upgrade themselves. Next to the different hotels, rooms and other options are shown to choose from as well. With up-sales customers often gain the feeling that they win something, which makes them longer lasting for the company and forms a bond. Accordingly, “upselling isn’t just a sales tactic; it’s a customer happiness tactic” and plays an important role in the customer lifetime value, if the up-selling is done right. (Markidan, 2014)

Cross-selling and up-selling focus mainly on existing customers, as it can cost four times as much to sell to a new customer as it does to sell to an existing one. By cross-selling and up-selling to clients already on the client roster, companies can sell more products and services, reduce the cost of sales, enhance customer loyalty and drive revenue. (Kenny, 2016) But cross-selling and up-selling are not only good for the tour operators but also for the clients, as it is made sure of, that the customer picks the right product for them and that they have everything to use that product. (Lazazzera, 2015)

In conclusion it can be said, that customers are willing to spend more money if they have the feeling of getting value for their money (Huddleston, 2016) and that it is very important to provide the clients with maximum value for full satisfaction. Accordingly, cross-selling and up-selling are very important to keep and engage existing and new clients and to advise them, even if it’s not personal.

 

Sources

Carlson, K. (2013, October 14). Cross-sell & up-sell: If you like this blog post, you may also like… Retrieved October 01, 2016, from The Future of Customer Engagement and Commerce: http://www.the-future-of-commerce.com/2013/10/14/ecommerce-cross-sell-up-sell/

Huddleston, J. (2016, June 22). Customer Expansion Revenue Strategies: Expert Cross-sell and Upsell Tips. Retrieved October 01, 2016, from Service Source: http://www.servicesource.com/blog/customer-expansion-revenue-strategies-expert-cross-sell-and-upsell-tips

Kenny, E. (2016, February 9). How to master up-selling and cross-selling in Travel. Retrieved September 30, 2016, from Boxever: http://www.boxever.com/how-to-master-up-selling-and-cross-selling-in-travel

Lazazzera, R. (2015, March 05). Would You Like Fries With That? How to Increase Revenue, Improve the Customer Experience with Upselling. Retrieved October 01, 2016, from Shopify: https://www.shopify.com/blog/17579484-how-to-increase-revenue-and-improve-the-customer-experience-with-upselling-and-cross-selling

Markidan, L. (2014, October 7). How to Use Upselling to Increase Customer Happiness, Retention and Revenue. Retrieved September 30, 2016, from Groove: https://www.groovehq.com/support/upsells

Peelen, E., & Beltman, R. (2013). Customer Relationship Management (Vol. 2). Boston: Pearson Education Limited. Retrieved September 30, 2016

The Editors. (2016, January 01). How to Cross Sell and Up Sell. Retrieved October 01, 2016, from dun&bradstreet: http://www.dnb.com/perspectives/marketing-sales/how-to-cross-sell-up-sell.html

Customer differentiation can increase the engagement value

Within the tour operator business, the customers might be differentiated into different segmentation groups. Guidelines should be followed so the different homogeneous customer groups are measurable, substantial, accessible, differentiable and actionable. (Peelen & Beltman, 2013)

Most tour operators do not differentiate customers but specialize on a certain location. Research has shown that different target markets have certain values to a company. Therefore, because of differentiation tour operators can specify their target market and focus on their personal and individual needs and wants to increase customer engagement and purchasing.

Finding the most effective categorization from the whole population is one of the greatest challenges (Peelen & Beltman, 2013) but for this blog the travelers will be categorized into 4 categories: Business travelers, Leisure travelers, Families/Groups and Special needs travelers.

According to Julie Dent (Customer Journey Mapping: A Walk In Customers’ Shoes, 2013) Business travelers have the most importance in the tourism business, as the fix costs are relatively low, no extra services are required and these travelers usually have policies and contract that binds them to one certain tour operators. However, Business travelers have the highest expectations and a higher number of important elements within their travel. Following are the Leisure travelers, which can be share mainly the same aspects as the Business travelers. Though the expectations of Leisure travelers are lower, they still find a big number of elements important during their stay. However, they usually also have more options than any other target group. Families, Groups and Special Needs travelers are easier to satisfy within their travels, this could be because the availabilities for those travelers are limited.

Due to the different wants, needs and expectations of the customers the value of the customer to the tour operators shift. To integrate certain target markets more within the tour operating industry many businesses started to concentrate on the target markets undervalued by big firms. Those tour operators can be found on different online sites such as Disability Travel Agents (2015) or Ambrose (2008).

Furthermore great satisfaction in this specialized kind of field also offers greater possibilities for the marketing and customer engagement. Justin Skeesuck is bound to a wheelchair and widely known for his inspirations and instructions for disabled travel. On his facebook page he posts regularly about his trips to different places and gives advise to other disabled travelers. (Skeesuck, n.d.) This also includes his experiences travel agencies.

Especially in todays world, where traveling has become very easy, travelers with special needs and bigger groups seek for tour operators with experience and knowledge. If managing a company with a good image and reliable tours for a certain customer segment, those travelers are more likely to stay with one company and to recommend it other of their own field. This can also take affect when a tour operator concentrates on business or leisure travelers, but the choices for those travelers are growing fast and they might not be that easy to keep with one sinlge company.

 

Sources

Ambrose, J. (2008). Tour Operators. Retrieved September 23, 2016, from DisablesdTravelers.com: http://www.executiveclasstravelers.com/1/tour_operators.htm

Dent, J. (2013). Customer Journey Mapping: A Walk In Customers’ Shoes. Retrieved September 23, 2016, from http://www.ascendforairlines.com/sites/default/files/article_0.pdf

Disability Travel Agents. (2015). Travel Agents & Tour Operators. Retrieved September 23, 2016, from TravelGuide.org: http://www.travelguides.org/travelagents.html

Peelen, E., & Beltman, R. (2013). Customer Relationship Management (Vol. 2). Boston: Pearson Education Limited. Retrieved September 23, 2016

Skeesuck, J. (n.d.). The Disabled Traveler. Retrieved September 23, 2016, from Facebook: https://www.facebook.com/thedisabledtraveler/about/?entry_point=page_nav_about_item&tab=page_info

Tour Operators and the use of cluster analysis

The goal of cluster analysis is to classify subjects as customers in relatively homogeneous groups, or clusters. Each customer can be placed in only one group, and there is no overlap between the clusters. Good segmentation solutions are accessible, actionable, differentiable, measurable, and substantial. (Ed peelen & Rob Beltman, 2013)

Cluster analysis is used in market research which is beneficial for Tour Operators. It is used to divide customers into market segments and to better understand the relationships between different groups of customers. The goals of cluster analysis is to identify groups, before starting you don’t know who belongs in which group and often you don’t even know the number of groups. (Marija J. Norusis, 2009)

When performing a cluster analysis you start with you customer database and subdivide these into homogeneous groups. First you choose the segmentation variables for your clusters or groups. Next, you must decide whether to standardize the variables in some way so that they all contribute equally to the distance or similarity between customers. After you decide which cluster procedure is best to use. There are many cluster algorithms, you choose a clustering procedure based on the number of customers and types of variables you want to use for forming clusters. As well you can look at how many clusters you need to represent your data. You do this by looking at how similar clusters are when you create additional clusters or collapse existing ones. A commonly used clustering procedure is the K-means. In K-means clustering, you select the number of clusters you want. The algorithm iteratively estimates the cluster means and assigns each case to the cluster for which its distance to the cluster mean is the smallest. (Marija J. Norusis, 2009)

The K-means procedure is explained by using a Tour Operator as an example. When performing the K-means cluster analysis, first the number of groups will be distinguished. For this Tour Operator we use two clusters or segments. The first cluster is called group A and the second Group B. The Tour Operator chooses segmentation variables for the two groups. Next, a computer draws two observations when looking at the customer database. By Using the customer database, you may be able to form clusters of customers who have similar buying habits or demographics. Individual subjects are assigned to the group which is closest to them in terms of distance. After, the average scores for the segmentation criteria are calculated for the two groups. A new group classification is then formed on the basis of the cluster averages, and objects are allocated to the clusters for which the distance to the cluster average is the smallest. After finishing this cluster analysis, Tour Operators can divide their holiday offers between clusters and provide them with offers that are most receptive to them. By knowing these customer habits, you can for example send your customers and email with the most appealing holiday offers for them. After doing this you can also make a cluster analysis by looking at your customer’s response patterns. (Ed Peelen & Rob Beltman, 2013)

Overall we can conclude that the use of cluster analysis is an important tool for Tour Operators to determine customer segments and target them accordingly. A cluster analysis can provide a Tour Operator with valuable information to make the Tour Operator’s business more profitable by using their insights in different clusters.

Bibliography

Ed Peelen & Rob beltman. 2013. Customer Relationship Management. United Kingdom: Pearson Education Limited.

Marija J. Norusis, 2015. SPSS 16.0 Statistical Procedures Companion. Cluster Analysis. Retrieved from: http://www.norusis.com/pdf/SPC_v13.pdf

Figure: Chire, 2010. Different cluster analysis results on ”mouse” data set. Retrieved from: https://commons.wikimedia.org/wiki/File:ClusterAnalysis_Mouse.svg