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HOTEL BUSINESS REVIEW

APRIL FOCUS: Guest Service

 

Making the Customer Experience a Key Business Differentiator

By Dennis Armbruster Vice President and Managing Partner, LoyaltyOne Consulting | April 2015

In today's hyper-competitive, hyper-connected global marketplace, customer experience has assumed a major role as a key business differentiator. Within the hospitality industry, there's a growing understanding that competition based on price alone is no longer a viable strategy due to the potential volatility as well as the negative impact on profitability. In addition, technological advances have shortened the development cycle, so feature or function advantages can be quickly duplicated or enhanced, meaning product and service innovations are no longer the differentiators they once were. That leaves customer experience - personalized and unique, yet replicable - as the key differentiator. **Protecting Market Share & Margins** Failing to provide a distinctive experience puts a hotel back in the pack with its competitors. Without a differentiator, the hotel risks losing a customer's business to another property that's perceived as comparable - or perhaps even worse, interchangeable. On the other hand, research indicates that 86 percent of consumers said they would be willing to pay more for a better customer experience, according to the annual Consumer Experience Impact (CEI) survey. To protect both market share and margins, hotel properties must provide customers with consistent, compelling experiences—before, during, and after interactions—across all touch points. Management must align all its efforts with the customer service experience in mind. Within the organization, they must assign high value to anticipation of customers' real needs and desires, and incentivize and reward personal initiative in the pursuit of customer satisfaction. Hotel management must have the structure and processes in place to respond quickly to customer requests, then the capacity to follow up to confirm and reinforce these positive interactions. **A Team Effort** To a large degree, a positive customer experience comes down to the hotel employees who have direct interaction with customers. Management can provide the information, but the employee must have the motivation to deliver on the service commitment. Individual employee motivation factors can vary, but empowerment plays a significant part for most individuals. Empowerment gives responsibility to the employee and implies trust on behalf of the management. Given responsibility, employees also become more accountable. Employees need to be given the appropriate training to accept this responsibility, and to ensure that the expectations of management are understood. This also minimizes the chances for mistakes or mis-uses of employee empowerment. Empowerment can be effective in implementing “make it right” policies that allow employees to give refunds or credit (or other solutions) to disgruntled or disappointed customers. Retailers such as Amazon and consumer brands such as Cuisinart have been recognized for effectively implementing these types of customer approaches. Some hotels already use this approach to positive effect. Room upgrades, complimentary food or beverages, and even small gifts can help alleviate a situation involving an unhappy customer. To be effective, a specific budget line item should be created for these giveaways, and employees encouraged to utilize the opportunity on a timely basis - before a customer becomes too upset. Last but not least, a monitoring or feedback mechanism needs to be put in place. Gathering data from customer interactions, then adjusting programs as necessary, ensures that the organization is receptive and responsive - and fully aligned with the changing needs of customers. Leadership is critical to launching and leading initiatives such as this. Ultimately, however, it needs to be a team effort, with employees and management working in synchronization, with two-way communication featuring clear guidelines and expectations. **Millennial Motivation** One of the reasons for the emphasis on customer experience has to do with the changing customer demographic. Differentiation through customer experience is particularly important with the next dominant generational segment: millennials. Research shows this 80-million strong demographic, currently ages 18-29, highly values experiences (as opposed to material goods) and expects their brands to provide them. For example, a remarkable 84% of millennials told LoyaltyOne in a U.S. nationwide survey that being able to redeem customer reward points for a session with a chef or nutritionist would motivate them to shop more with a grocer offering such an opportunity. Hospitality brands can capitalize on that type of preference by creating and curating singular experiences like VIP access to special amenities or exclusive events. Discounts alone won't result in millennial business. This group relies on digital sources for price comparisons and can shift plans nearly as quickly as rates can get posted. Therefore, a price-driven strategy - in addition to decreasing profitability - will be ineffective unless tied to other promotional efforts. Getting millennials to enroll in a rewards program is the first step. Their membership provides crucial data such as purchase history and behavior that can inform sales strategies. Millennials, more than any other demographic, understand the need to “give to get,” and tend to be willing to share personal information if they perceive value in exchange for their data. Millennials with increasing disposable income look toward brands and their loyalty programs for rewards that create meaningful memories - and add value - in their lives. Hotel properties are uniquely positioned to take advantage of that: guests are away from home and open to a new experience. In addition, the personal connection that hotel staff can make a tremendous impact - curating that one-on-one interaction and providing the experiential value speaks most directly to this group. **Tiering and Timely Communication** Building customer loyalty through service ensures stronger relationships and sets the stage for repeat business and stable, long-term growth. But a superior experience starts with knowing the customer. Accurate data collection and management provides the insights that allow hotel properties to anticipate and personalize individual experiences. Capturing customer histories and preferences - and keeping them updated - is crucial for relevant, timely service. With accurate data, hotel properties can communicate with customers the way the customers want to be communicated with. The proliferation of media channels presents a significant challenge: many consumers prefer digital communication via their mobile phones, tablets or home computers. Customer communication serves as an important touch-point, and the ability to respond to preferences for format and frequency reflects positively on the sender. Of course, customers must be given the option to 'opt out' of communication - and then that decision must be respected. Responses can be tracked and evaluated to determine which type of offers are most effective, and how frequently communication should occur. The ability to test and adjust as necessary ensures efficient communications efforts. Customer data can also yield insights that help prioritize communication efforts. Creating customer tiers based on visits, spend, activity and other factors can ensure that resources are used effectively and efficiently, with the top customers receiving the most attention. **One-of-a-Kind Experiences** Many travel and hospitality brands have already adopted the approach and have been offering exceptional experiences to their top customers. - Starwood Hotels & Resorts allows members to earn rewards points toward advanced tickets and upgraded seating for Broadway shows. In addition, members can bid on once-in-a-lifetime experiences such as sitting with the stage manager, meeting the cast backstage and attending private after-parties for productions such as Annie, Wicked and Billy Elliot. - Global Hotel Alliance's GHA Discovery program offers authentic local experiences such as spending the day with a local fisherman off the coast of Portugal then having the catch prepared for dinner that evening. GHA partnered with top local shopping venues such as Harrods in London, Illum in Copenhagen and KaDeWe in Berlin for special access. Opportunities also included tickets for unique access to must-see events and shows in London, New York, and other destinations. - Caesar's Entertainment uses a real-time in-house database to track the preferences of high-end guests, and assigns these individuals a personal host. The host is the customer's contact for service at any time, at every visit. If the customer visits a property in another market, the host ensures a smooth transition to another host to perpetuate the positive experience. **Making the Customer Experience Matter** Providing an exceptional customer experience, more often than not, means being in the right place at the right time with the right service. Capturing and maintaining customer data provides the insight that allows that to happen. To begin that process: - **Segment Customers** - As the starting point, group customers by demographic, buying history, psychographic or other characteristics. Knowing customers and their tendencies enhances plans and allows the appropriate allocation of resources. Segmentation can also spotlight areas of opportunity - and provide the baseline for all marketing efforts. Setting customers in tiers, as referenced earlier, focuses efforts on top customers, and also assists with strategic planning and use of resources. - **Tailor Messages** - To have any impact, the content of customer communication must be timely, relevant and valuable. It must be in a format and a channel that they prefer. And it must give them a reason to change behavior, think differently or otherwise alter their perspective. The closer hotel properties get to that 'bulls-eye,' the more successful they can be. - **Keep the Big Picture in View** - Think long-term and consider the value of customer relationships over an extended period of time. Be ready to make sufficient investments to build credibility and trust with customers. In a crowded media environment with constant competition for customer attention, plan for multiple touch points and periodic assessments to track progress. Customer experience leaders who drive this kind of cultural and systemic change will radically affect their competitive position and business performance through the creation of authentic customer loyalty.

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If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

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