Focusing on the Persuadable Guest – An approach to enhance Promotion Effectiveness in Hospitality
From the Hospitality Solutions Team @ Absolutdata
Travel and Hospitality Service Providers need to manage an extremely complex Promotions Calendar. When you think of all the offers, messages and touch points that need to be optimized, its mind boggling.
The obvious answer? – get as many promotions out to as many customers through as many touch points as possible. To be fair, some firms have gotten smarter – especially when it comes to targeting. They use analytics to target those people that are most likely to respond. But that is neither necessary nor sufficient. Why? Quite simply because the focus is still on managing the promotions calendar instead of focusing on influencing the guest’s decision – and that is the goal, isn’t it?
When multiple objectives have to be met simultaneously, it’s easy to think that there is no one right answer – but that’s not true. Just because we don’t know what the right answer is doesn’t make the current approach right or even okay. It’s much simpler than that. It’s just plain wrong.
The right answer is to focus on the Persuadable Guest.
So in this article, let’s first understand the issue with the current approach, the consequences and the collateral damage involved. Then we can look at the definition of the Persuadable guest and review a couple of examples of how some campaigns beat their competitors by focusing on Persuadable Guests
Beyond that, keep an eye out for our next two articles on identifying the persuadable guests and the decision engineering needed to design promotions around them.
The Shotgun Approach – Multiple Type 1 & Type 2 errors
The current approach to promotion effectiveness is like using a shotgun with a sawed of barrel – good for the jungle, but very clumsy in the cyber world we now live in.
Think of one individual customer and what should be offered to him this week, month or quarter. Of all the promotions that a firm has planned, there is probably one that is right for him – if that. Then think of all the customers – how many of them are going to receive the promotion that’s right for them?
The big question is – what proportion of guests today get the right promotion? In other words, do the green circles make up 0% or 100% of the landscape?
The Persuadable Guest – knowing your Locus of Control
The Persuadable Guest is quite simply someone who (a) can be persuaded and (b) is not yet persuaded.
Marketers often go after loyal customers because they are more likely to respond. But the problem is that many of them would have turned up even without a promotion. On the other hand, there are also customers that cannot be persuaded. For e.g. if you are looking to cross sell more leisure, you don’t want to go after people that have already chosen you or your competition for their next leisure stay. Of course you also don’t want to go after someone who has no plans for leisure travel. You want to go after the fence sitters. Quite simply, it’s a waste of resources to go after anyone who is not going to change their decision, even if their decision is to come to you.
Let’s look at 2 very different examples of campaigns that benefitted from focusing on the persuadable customer – one from politics and another from a hospitality firm.
What can Hospitality Service Providers learn from Obama’s 2012 Presidential Campaign?
An article in the Los Angeles Times said “No other presidential campaign has relied so heavily on the science of analytics…” Obama’s campaign focused on the persuadable swing voters. In all fairness, so did his opponents, but his campaign, just did it better. Why is this relevant? Because the Persuadable Guest and the Persuadable Swing Voter have one thing in common – they are both significant in number and hiding in plain sight.
Some firms already enjoy a first mover advantage. Here is an example:
A large Travel and Hospitality services provider revenue in the tens of billions, tested this approach last year on one promotion. The purpose of the promotion was to drive weekend business. With our help, they first identified that nearly 20% of their member base already preferred them for their leisure needs, but often waited for a promotion, because they had been trained to expect it. That’s an example of Need not be Persuaded. We also found 35% of the customers had not leisure travel wallet or preferred boutique hotels for leisure – that constitutes the Cannot be Persuaded.
Then with a laser focus on the 45% fence sitters, they went to market with a significantly richer offer and doubled the promotional revenue. All this was done without any increase in budget.
Marketers who understand Persuadable Guests and then Design Promotions around them enjoy a competitive advantage. Marketers who know their persuadable guests can avoid wasting limited resources on prospects that cannot (or) need not be persuaded. These savings can be used to create better promotions for the persuadable Guests and drive incremental revenue.
The obvious next questions are (a) How do we identify the persuadable and (b) how do we design promotions around them? So, do look for our upcoming articles that will address these questions.
The Hospitality Solutions Team @ Absolutdata