Building Loyalty by Personalizing the Guest Experience
By Michael DiLeva, Executive Vice President, The IDT Group
While that's understandable, what's disappointing is that all too often, the shallow implementation of such concepts leaves us working for the concept itself as opposed to the concept working for us. We become mired in the jargon, the mechanisms and the processes. The concept becomes the end itself, as opposed to simply the means to the end and we lose touch with what should be the business goals.
Customer Relationship Marketing (CRM) is a great example. Unlike other popular business concepts that emerged from best-selling books or landmark academic research, CRM more or less evolved from a long line of existing initiatives. It predominantly grew out of database marketing in the early 1980's, most notably with American Airlines' introduction of the landmark AAdvantage frequent flyer program (which ironically itself was somewhat of an evolution of the cultural phenomenon that was S&H Green Stamps) and was quickly followed in the hospitality industry just a few years later by Holiday Inn and Marriott.
CRM originally emerged with the noble goal of increasing revenues and margins by creating customer loyalty. And the path by which to achieve those goals involved the gathering of more information on customer activities and the creation of incentives - such as points or miles - to encourage the customer to increase or consolidate their activity with the provider. Today, some 25 years after its first introduction, CRM unfortunately hasn't evolved all that much and therein lies the problem.
At its core, CRM remains software centric and is hindered by its predominantly internal focus and transactional mindset. Despite incredible advances in information gathering and business intelligence that has revealed amazing information about customers, such information is usually only used by the staff-level, back-of-house marketing and finance teams. Little, if any information ever trickles down to the line level to allow the customer-facing associate to use it to meaningfully impact the guest experience. Even in the one operational area where CRM has made a difference - the Call Center - it's only used for service recovery and up-selling. And from the customer's perspective, the only value that they're receiving from CRM is points. Loyalty - which was the goal from the beginning - isn't achieved through an emotional connection, but is instead simply "bought" (or in reality "rented" since there's little to keep the customer from defecting) via the exchange of points for purchases.
It's because of those weaknesses that CRM is falling out of favor to a certain extent and many service providers are beginning to tout the emerging concept of "Customer Experience Management." Academically, the definition of Customer Experience Management isn't all that much different than that of CRM. Both are involved in managing the interaction with the customer across a number of channels and ideally at every point of contact. Where CEM really differs from CRM and why it should have a particular appeal for hospitality operators is that CEM at its core focuses on "meeting" customer needs as opposed to CRM which focuses more on "exploiting" those needs.
The differences are far from simply semantics and with the proper execution the results can be more than subtle. At its core, CES takes advantage of the fact that points don't make a difference (in fact, they're almost ubiquitous - do you know any airline or hotel company that doesn't have one?), and leverages the philosophy that loyalty can't be bought, but it can be earned via product differentiation. CES is the evolution of CRM as it focuses not on delivering a beneficial and meaningful impact to the transaction, but instead positively impacting and influencing the actual overall shopping or utilization experience itself. And just like the early adopters in the first wave of CRM implementation drove substantial results, the companies that take the lead in introducing CES to impact the guest experience will find themselves with a true competitive advantage.
Ironically, hospitality is the perfect industry to leverage CES strategies since our industry by definition is involved in providing guests with a lodging experience. While that experience can range from simple accommodations to seemingly limitless dining and entertainment options, an opportunity exists to positively impact that experience at each point of contact. Execution of CES tactics can be as simple as a limited service property offering a guest a bottle of their favorite soft drink when they check-in (a high-touch gesture with a perceived value far beyond the small expense) or a five-star vacation resort using new on demand printing or desktop publishing tools to create a custom, personalized dinner menu including a recommended set of courses based upon the guest's interests or past orders.
What's ironic is that unlike CRM, which due to the cost of a points program effectively discounts the price of the product for frequent customers, CES can actually allow hoteliers to charge more to loyal guests. That's due to the simple fact that while the notion of "value" is clearly different for everyone, most people are willing to pay more if they receive a service or experience that "connects" with their unique value assessment.
The challenge of course is how to recognize the interests of each customer and how to deliver that information to the line level associate so that they can adapt their interaction with the guest to make it more relevant and meaningful. Fortunately, new database technologies and services have made such capabilities within the reach of even the smallest independent property. And even formerly cost-prohibitive technologies, like handheld wireless devices, are now affordable enough to place robust customer history and profile information into the hands of virtually every front-line associate.
The keys to Customer Experience Management are to make the investment in the appropriate gathering of customer information - both from internal and external sources - to complete the "picture" or profile of your guests in regard to their interests and preferences. Next, make the strategic and managerial commitment to interject those learnings throughout the "experience chain" - i.e. every point of contact with the guest. And lastly, make the moderate investment in training and communication to ensure that every associate understands the goals and the benefits associated with customizing the guest experience and the ways in which they can have a meaningful impact on customer loyalty.
By focusing on impacting not just the customer transaction, but the entire customer experience, hoteliers can positively impact key metrics as well as obtain a true competitive advantage.
Michael DiLeva is executive vice president of The IDT Group. He has near experience in the hospitality and gaming sectors, and has provided marketing, technology, CRM, networking and consulting services for major hotel companies in the US, France, UK and UAE. He holds a BS in Marketing Management from Rutgers University and a MBA from Saint Joseph's University. He completed an executive leadership program conducted by the University of Virginia's Darden School of Business and serves on the Technology Advisory Board for Penn State's School of Hospitality Management. Mr. DiLeva can be contacted at 215-487-3522 or email@example.com Extended Bio...
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