I have never considered marketing to be an esoteric or abstract domain in which only Geniuses are capable of producing miracles. While it is true that marketing is an extremely precise, even mathematical science, and must be supported by good ideas, this also holds true for all other professional domains.
But what about relationship marketing, that intangible marketing approach whose purpose is to increase the life cycle of your own guests (loyal guests repeating “consumption” of a brand)? Is it possible to apply a scientific methodology to make it a real success?
The answer is: YES! As long as you know the right KPIs.
Happy reading!
Definition and formula
Definition of KPI:
“KPI stands for Key Performance Indicator. KPIs can be used, among other things, in the area of management in general, in the domain of marketing and advertising, or in the field of website audience analysis.
KPIs reflect the factors taken into account to measure the overall effectiveness of a commercial or marketing tool, or of a particular campaign or action.”
Some examples of hotel KPIs: number of direct bookings, occupancy rate, average room rate, ratings on Booking.com, etc.
But beware of the most critical KPI trap: too many KPIs! There are dozens of useful KPIs, but consulting them all at the same time causes confusion and prevents
logical decision-making.
The right way to select KPIs for a given project is to proceed as follows: 1) Define the final goal of the project, then 2) identify the steps necessary to achieve this goal. That’s all there is to it!
Formula to keep in mind: a hotel implementing a good loyalty strategy will see its regular clientele double in the space of 12 to 18 months (according to a study we conducted with nearly 300 hotels).
Guest Loyalty KPIs
The goal is to get guests to return to your hotel. So the first KPI:
KPI 1: NUMBER OF GUESTS RETURNING TO YOUR HOTEL
Be careful not to use the number of nights or the number of bookings as a KPI. These two components are interesting, but they are not directly impacted by your loyalty actions. While very useful for other analyses, they could mislead you concerning the subject of loyalty.
To discover the steps you need to take that will lead you to your goal, let’s just look back in time. A guest will come back because they were encouraged to go back. Therefore, the second KPI:
KPI 2: NUMBER OF EMAILS SENT MONTHLY TO YOUR PREVIOUS GUESTS
Other types of email campaigns you could conduct are not included in the calculation; only those sent to your previous guests are counted.
However, for a guest to return, it is not enough to send them an email. For example A a guest who has had a bad experience will never return to you, regardless of the quality of your email.
It is unlikely that a merely satisfied guest will return – although this can happen – While a pleased guest is highly likely to do so.
By applying the Net Promoter Score (NPS) methodology to a company, it is easy to understand the phenomenon. This methodology consists of dividing your guests into 3 categories:
Detractors: scores from 0 to 6. Detractors are part of a potentially dangerous group. They are often disappointed and can hurt your
brand. This group has the potential to speak badly about it. A guest who evaluates your business between 0 and 6 should have necessitated a proactive outreach to solve their problems before the damage was so significant.
Passives: scores of 7 and 8. Passives are usually neutral guests who are generally satisfied but do not have the same enthusiasm as the Promoters. They give a score of 7 Or 8 but remain reluctant to recommend your business. This category is the most vulnerable to offers from your competition. Passives are thus the most difficult to convert.
Promoters: scores of 9 or 10. They are described as the most loyal and satisfied guests of your business. They will continue to buy your products or services, while also recommending your brand to other potential buyers, such as their family or friends.
The NPS helps you identify Detractors and Passives so you can turn them into Promoters. Hence the third KPI:
KPI 3: THE PERCENTAGE OF PROMOTERS AMONG YOUR GUESTS
Let’s keep going up the chain! The next KPI should, therefore, be something measurable that would mean the transformation of a Passive into a Promoter.
But what factor influences the result and makes the difference between a comment such as “the hotel was good”, and a more enthusiastic statement such as “WOW! The hotel was absolutely incredible! I loved it”?
Is it the geographical location? The quality of the bedding? Breakfast?
Well no, not to the extent you might expect. Of course, those factors come into play… Nevertheless, the most important factor is the quality of customer service (see our previous study on the subject: http://blog.experience-hotel.com/an-analysis-of-the-ten-best-hotels-in-the-world/).
And isn’t customer service directly responding appropriately, accurately, and quickly to your guests’ needs? I intentionally use the word “appropriately” because, by itself, it defines the quality of the interaction with your guest. For example, A guest asks you where they can eat…
- Option 1: You do not know them, so you send them to the nearest restaurant.
- Option 2: You know that this guest likes fishing. So you assume that they want fish and you send them a little further to a restaurant specializing in fish dishes.
In the second example, your knowledge of this guest has allowed you to offer exceptional customer service. They will definitely be a Promoter once they leave your hotel.
Our fourth KPI is, therefore, the percentage of your guests that you know. Or (to make the calculation easier):
KPI 4: THE PERCENTAGE OF YOUR GUESTS CORRECTLY SEGMENTED IN YOUR GUEST DATABASE
Of course, “correctly segmented” is different for each hotel. It will be up to you to determine the type of minimal segmentation you need to offer a personalized service to each of your guests. Personally, I consider the following list to be the bare the minimum that a hotel should know about each of its guests:
- Age
- Type of traveller (alone, couple, etc.)
- Reason for travel (tourism, business, etc.)
- Dates of stay
- Type of room reserved
- Nationality
- Level of satisfaction
- Regular guest/ New guest
- Source of reservation (OTA, direct, etc.)
- Frequency of travel in your area
And now we come to the last KPI, which is the most important of all!
KPI 5: THE PERCENTAGE OF GUEST EMAIL ADDRESSES IN YOUR DATABASE
Because without an email address, you will certainly not be able to contact your guests with pre-reception surveys, you will not be able to set up quality control during their stay, and you will not be able to send them loyalty emails, etc.
There are many techniques to obtain these email addresses, but that is not the subject of this article.
Conclusion
After following these 5 KPIs, let’s put them back in the correct order:
- The percentage of guests in your database for whom you have email addresses;
- The rate of your guests correctly segmented in your guest database;
- The percentage of your guests who are Promoters;
- The number of email campaigns sent monthly to your previous guests;
- The number of guests returning to your hotel.
Here’s what your guest loyalty control chart might look like:
Of course, this is just an example. But it is still simple enough to be usable and practical, without getting lost in the hazy meanderings of KPIs. It focuses on the essentials and mentions indicators that link relevant cause and effect relationships.
Put your KPIs in place now and please feel free to contact me if you need help on the subject.
Thank you!
