Travel Industry Marketing Conversations

by the folks at ITI Marketing, Inc.

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Posts Tagged ‘word-of-mouth’

Successful Marketing in difficult economic times

Posted by TeamITI on February 23, 2009

strategyEvery sector of business, including hospitality, faces momentous challenges stemming from the global recession. Occupancy is suffering, and all indications are that the deterioration will persist for quite some time. The latest Blue Chip Economic Indicators Report, a composite forecast of 52 economists, projects the worst recession since World War II with an upturn not beginning until late 2009. Some predict it may take longer.

PricewaterhouseCoopers estimates 2009 average U.S. hotel occupancy will fall to 56.5 percent — a decline of 5.2 percent from 2008 and the lowest in more than 20 years. More importantly PwC projects RevPAR to decline 11.2 percent this year. It is hard to imagine any hotel getting through this year unscathed. In fact, many hotels will see occupancy and RevPar decline much more than the 5.2 percent and 11.2 percent averages predicted by PwC.

There will be a substantial number of underperforming hotels in the months ahead. Likewise there will also be hotels that perform significantly above the PwC “norms.” While occupancy and revenue for these hotels may dip, it will be significantly less than competitors and their subsequent recovery from this recession will be much quicker. These hotels will capture more than their fair share of profitable customers still traveling.

How will this be accomplished? What are these overachieving hotels doing to outperform competition? One of the answers can be found in the way they approach marketing. Here are six strategic drivers of the marketing programs you are likely to find in more successful hotels. These are what will help them outperform their competitors during this recession and beyond.

Excerpts or the six strategic drivers:

1. Focus More on Delivering Value

While a few well positioned and prepared hotels were able to make it through the 2001/02 recession without significant price reductions, today’s economic downturn is far more serious. This one isn’t localized — it’s global — so even the more successful hotels will need some rate flexibility. Instead of “slashing” rates, however, they will
focus more on reducing rates slightly while adding value for their guests.

This requires creativity and focus for the hotel and its marketing partners when developing marketing programs and promotions. The creativity is in the packaging and the focus is on the customer.

2. Maintain Marketing Pressure

Don’t slash advertising – Companies that slash advertising in a downturn, leave empty space in consumers’ minds for aggressive marketers to make strong inroads.The way consumers learn and retain information probably hasn’t changed much since 1982 so, when you are out of sight you are still out of mind.

Communicate value — During recessionary times people are looking to get the most value they can from every dollar they spend. Value, therefore is an important message to build into marketing campaigns in a downturn.

Create emotional appeals – This is especially important to marketers of luxury goods and services. They should use emotional appeals, emphasizing the need for emotional release or comfort in difficult times.

3. Manage Customer Relationships

In 1996 Frederick Reichheld published his now famous book, “The Loyalty Effect.” Today, the vast majority of business executives accept his once-radical theories that — “loyalty makes economic sense” and that — “achieving profitable growth is impossible without building a loyal base of customers.” He showed that companies with the most loyal customers are also the most profitable.

So while many hotels focus primarily on attracting new customers — heads in beds — the more profitable ones have a balanced approach toward customer acquisition and retention and are actively managing customer relationships to create loyalty. In the end they look to maximize the lifetime value of each guest.

4. Build a Centralized Marketing Database

The foundation for Customer Relationship Marketing is a centralized marketing database. This is not your PMS, which only has customer data and is designed more for accounting than for marketing purposes.

Fortunately, centralized marketing programs that can easily and affordably synchronize with your PMS are now available. These systems have the advantage of merging both customer and prospect information for launching communications. Importantly, accountability is built in so you can measure the effectiveness of your CRM initiatives.

5. Get Strong Direct & Database Marketing Support

Direct marketing (both online and off line) is a science for managing customer relationships throughout the customer lifecycle. Being a specialized discipline, it is vastly underutilized by most hotels.

6. Maximize Word-of Mouth Advertising

Pick up any research on advertising effectiveness and you’ll see word-of-mouth at the top of the list – oftentimes well ahead of whatever makes it to the #2 position. One of the nicest things about word-of-mouth is it is essentially free!

So when advertising budgets are under so much pressure to perform, take advantage of something that costs you nothing and performs better than anything else.

A number of recent consumer research studies show online customer reviews are
becoming increasingly influential in motivating people to purchase. In fact one published by Rubicon Consulting shows online reviews in the #2 position behind word-of- mouth.

The implication is obvious — to truly maximize the benefits of word-of-mouth advertising you must focus on generating more and more positive offline and online guest reviews. You need to embrace outlets like TripAdvisor as a positive marketing force and develop comprehensive strategies so your hotel reviews provide a competitive advantage.

Look at it from the traveler’s perspective. The majority want to read other traveler’s reviews. Do you offer reviews on your hotel’s web site? How many reviews do you have? How highly do you rank? Are you on the home page (Top 8 ) for your destination?

It’s time to develop a key influencers strategy, set goals and measure results.

Read more details about the 6 Strategic Drivers.

Posted in Articles & Research, Travel Industry News & Trends | Tagged: , , | Leave a Comment »

Online Communities Are Impacting Business – really?

Posted by TeamITI on November 6, 2008

usergeneratedRubicon Consulting‘s web practice team recently conducted a study which produced interesting results. The study shows that only a small percentage of users actively (and only from time to time) participates in online communities, therefore generating user content:

  • 90% of users are lurkers (i.e., read or observe, but don’t contribute).
  • 9% of users contribute from time to time, but other priorities dominate their time.
  • 1% of users participate a lot and account for most contributions: it can seem as if they don’t have lives because they often post just minutes after whatever event they’re commenting on occurs.

So what’s the buzz about user generated content if only a small percentage of web visitors are “creators”?  Well, it has been a long-known fact that the vast majority of online conversation is driven by a small group of web users — less than ten percent of them. The rest of the web community sits back and watches the interactions as a mostly-passive audience that only occasionally injects a few comments.

And that’s where the opportunity lies. Those personal reviews and comments about your service are far more influential than official reviews posted by a website or magazine, or information posted online by a you – the destination, hotel, tour company, attraction, airline etc.

The study continues to show that there are different types of web communities which have very different dynamics and user bases. Approaches that work well in one type of community may fail utterly in another, concludes the study.  There are five broad categories:

  • Proximity, where users share a geographic location (Craigslist is an example)
  • Purpose, where they share a common task (eBay, Wikipedia)
  • Passion, where they share a common interest (YouTube, Dogster)
  • Practice, where they share a common career or field of business (many online professional groups fall in this category; a great source for professional groups is LinkedIn)
  • Providence, where they discover connections with others (Facebook)

Business lesson: “Keep doing nothing except listening until you’ve worked out the reasoning and motivation behind those conversations, what it is customers really want, what types of customers hang around in your social media markets, who the most important or vociferous ones are and what makes them passionate about your product/service,” says Sachendra Yadav on his blog.

Read complete article here.

Posted in Articles & Research, Social Media | Tagged: , , | Leave a Comment »