Typically promotions are targeted at guests who are more likely to respond to promotions, however, this does not consider whether the guest would have made the booking even without the promotion. With margins under pressure, the promotions need to be targeted at guests whose behavior will change from no booking to booking due to the promotion. First and foremost, marketers need to know who the persuadable guests are.
This is achieved by using uplift modeling. Uplift modeling is a statistical technique that identifies the incremental impact of a promotion for each individual. Once we have identified the persuadable guest. Then, marketers need to know their locus of control. E.g. Should they offer discounts or amenities? Is social media better than email? In short, Marketers need to know if they are on the following diagonal:
Traditionally, the approach has been to design a promotion and then look for the best target group for that promotion. We contend that a better methodology is to identify the target persuadable guests and then design the promotions around the identified guests.
This results in two big benefits
- Focused promotions targeting Persuadable guests drive savings straight to the bottom-line
- The resources saved can be re-invested into building a decision engineering infrastructure that drives higher percentages on the diagonal – i.e. top line growth
- Identifying and targeting persuadable guests has resulted in substantial bottom line and top line impact for a number of hospitality companies.
For information on the analytics and technology needed to implement this, reach out to us at Hospitality Solutions.