Leveraging Your CRM Investment for Increased Customer Loyalty, Shareholder Value

By Neale Redington Partner, Deloitte | October 28, 2008

CRM can enhance your brand value by delivering compelling experiences each and every time there is an interaction between you and your customer. Properly executed, CRM can help hotel executives improve customer satisfaction and loyalty, and can ultimately improve the bottom line and increase shareholder value.

Targeted use of CRM expands on the theory that a company should focus its resources and investments on its most loyal customers. When identifying loyal customers, it's important to take into account customer profitability- what your customers are actually paying and how much it costs to serve them. Consider the hotel chain that realized many of its frequent guests were using external booking engines. The cost of serving the customer (namely the cost of servicing the hotel room) appeared to be the same and the customer often believed that he/she was paying the same room rate. However, the chain realized that profitability of these customers after commissions or rate breakage (the difference between the apparent rate on a website and the amount received by the hotel) was significantly lower than the frequent customers who booked via the chain website. As a result, the chain encouraged the external booking guests to book on its own website and substantially improved profitability.

The hospitality industry is particularly well-positioned to benefit from the CRM concept and practices. Through their choices of where they stay, what they eat, and what activities they participate in, hotel customers are making their preferences known. Exactly how you use that information, though, is a crucial part of your CRM strategy. Having a lot of information about your customers doesn't mean that you know them. CRM can help you identify ways to grow more revenue through up-selling and cross-selling opportunities, but only if you truly know who and what you're dealing with.

While most hotel executives acknowledge the benefits of CRM, many are hesitant to make the investment. This concern is understandable, as who hasn't heard reports of companies in the not so distant past spending millions of dollars on CRM technology based on little more than faith? Hotel executives today want to fully understand the real impact that CRM will have on their business before they take that first step. Too many large investments with too few demonstrable results have left senior executives wary of spending more money without first seeing a direct link to shareholder value.

Driving Value Through CRM

Organizations must first determine a customer relations strategy and a supporting work plan to ensure that their CRM implementations are efficient and provide the most returns. Following are some key issues to keep in mind when embarking on a CRM process:

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Coming up in June 2019...

Sales & Marketing: Selling Experiences

There are innumerable strategies that Hotel Sales and Marketing Directors employ to find, engage and entice guests to their property, and those strategies are constantly evolving. A breakthrough technology, pioneering platform, or even a simple algorithm update can cause new trends to emerge and upend the best laid plans. Sales and marketing departments must remain agile so they can adapt to the ever changing digital landscape. As an example, the popularity of virtual reality is on the rise, as 360 interactive technologies become more mainstream. Chatbots and artificial intelligence are also poised to become the next big things, as they take guest personalization to a whole new level. But one sales and marketing trend that is currently resulting in major benefits for hotels is experiential marketing - the effort to deliver an experience to potential guests. Mainly this is accomplished through the creative use of video and images, and by utilizing what has become known as User Generated Content. By sharing actual personal content (videos and pictures) from satisfied guests who have experienced the delights of a property, prospective guests can more easily imagine themselves having the same experience. Similarly, Hotel Generated Content is equally important. Hotels are more than beds and effective video presentations can tell a compelling story - a story about what makes the hotel appealing and unique. A video walk-through of rooms is essential, as are video tours in different areas of a hotel. The goal is to highlight what makes the property exceptional, but also to show real people having real fun - an experience that prospective guests can have too. The June Hotel Business Review will report on some of these issues and strategies, and examine how some sales and marketing professionals are integrating them into their operations.