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Personalization: The new holy grail


By Jeff Weinstein on 3/8/2017

Discounted rates via direct bookings are nice, but they aren’t a very personal approach in an increasingly depersonalized world, nor are they differentiators for hotel companies in their battles to own their customers.

What hoteliers are learning to do, not without serious growing pains, is create distinct guest experiences. They are personalizing communication with direct messaging and content on mobile platforms, training for service moments that make or break relationships, creating more sophisticated apps that relieve pain points, and slowly developing systems that better interpret the reams of data often housed in disparate systems. But despite miniscule budgets in comparison to OTAs and other disruptive competitors, hoteliers can say “game on” as they start to employ more data scientists and seize every opportunity to personalize the guest experience, which many consider the new holy grail of loyalty.

“Hotel brands have had data scientists working on pricing optimization, and now they are mining their loyalty profiles,” says Cindy Estis Green, CEO of Kalibri Labs, Washington, D.C., which consults on distribution strategy, revenue management and big data. But it’s hard to mine data when property management systems (PMS) don’t connect with the legacy central reservation systems (CRS).

Systems issues

“The core problem is fulfillment systems,” says Marco Benvenuti, co-founder of Las Vegas-based Duetto, a revenue strategy consultancy. “Systems need to go the extra mile so that records can handle personalization. Right now, PMS and CRS are structured around rate plans and codes and would need an infinite amount of flexibility to personalize. So today it’s still predominantly one-promotion-fits-all, which is not personalization. Hotel companies have smart marketers, but when they see the reality of their fulfillment systems they are handcuffed. There is no engine to personalize.”

Those handcuffs, at least in the near term, benefit small hotel companies with smaller databases and greater opportunity to create more human interactions. They tend to know who their customers are and what they want. In those cases, people can supply what technology can’t, but it’s not feasible on a larger scale.

The long-term answer for bigger hotel companies, says Benvenuti, is building a standard application programming interface, or API, to connect technologies, because nice-to-have platforms like direct messaging will not revolutionize the hotel industry.

“The industry must move to the cloud so everyone can connect and unlock data,” he implores, adding that industry consolidation might help start this movement. “CEOs must look beyond their silos and move to the cloud. Expedia is spending millions to move to the cloud, but hotel brands are not doing this.”

Wyndham Worldwide says it is doing just that and about a year ago started moving its PMS, CRS and digital platforms to the cloud, according to Barry Goldstein, senior vice president and chief digital and distribution officer at the Parsippany, New Jersey-based giant. “From a PMS perspective, we are about 80% to 90% done, and we are about one-third of the way through moving our brand’s CRSs to the cloud.”

The company also has completed moving digital platforms to the cloud. “About three-quarters of the way through this year we will be able to start to take all that customer data and understand it better,” he says.

Once Wyndham has the cloud-based system in place, Goldstein says it can take rewards data, a new reservation and perhaps data sent by text, and recommend amenities and services to a guest or anticipate needs for a better property-level experience. “To us, it’s micro-moments,” he says. “It is providing a more curated number of choices instead of an incredible number of potential choices that you may have at the time of a booking, or even when you get on property.”

But until more hoteliers reach for the cloud, they are working mightily to personalize stays via strategies that include, among others, greater activation of loyalty programs, continual testing and refinement of communication platforms such as direct messaging and beacon technology, and by delivering more customized content via apps, the web and social media. Not surprisingly, most of this work is taking a mobile-first approach.

Improving across channels

Delivering “in the moment” on a mobile platform is why Marriott International just launched, after a nine-month process, a reiteration of its mobile app. George Corbin, vice president of digital strategy, calls it the first part of a multi-pronged strategy around deepening a one-to-one relationship with customers. “It’s not just about improving personalization on the app, but frankly across our channels,” he says.

In the new version of the app, the user experience is more contextual. If it’s a guest’s check-in day, the app will open on the “stay” screen and allow, for example, a check-in option, the ability to make requests before arrival, and, say, driving directions. “It’s all the relevant services that you need for that moment served up in context so you don’t have to hunt and peck for it,” Corbin says.

After generally observing that app ergonomics are not always optimal, the new Marriott app was created with the “One Button.” “Travelers do a lot of tapping around, and it’s hard to do when you’re moving through an airport,” Corbin explains. “When you tap the One Button located very conveniently for your thumb, it will cycle through the different use cases, for example, the booking screen; you can tap again and it will pull up the upcoming stay screen; again and it will pull up the rewards screen.”

Marriott also incorporated a news feed concept similar to Facebook or Twitter. “We’re not making the mistake of trying to cram so much into a single screen so you’re bludgeoning the customer,” he says. The feed provides information relevant to guests at a particular moment. For example, a guest checking-in can tap the “stay” screen and see hotel services and content on dining and nightlife.

Before relaunching the app, Marriott tested for three things: customer adoption, asking customers what they want on the app and designing it for optimal use; technology that works all the time and is scalable globally; and operationalization – could the company deliver on its promises. “The operational side was our biggest concern, so flawless execution was our tagline,” Corbin says.

Operationalization also means using multiple languages to make sure tens of thousands of front-line employees are trained to understand some changes to common protocols.

Corbin adds there is one other key aspect of training he calls, “ride the existing rails wherever you can.” He means staff can revert to protocols they understand and still make sense instead of “ripping things out by the roots and starting out with something completely new and foreign.”

Tracking activity

While “riding the existing rail” is a good fallback plan, along with allowing staff to go off script when appropriate to personalize stays, technology plays a growing role to track guest activity and create more opportunities to personalize and monetize visits, including beacon technology and geo-fencing.

Hilton’s Fun Finder application uses beacons at select hotels to understand guest preferences, location and events, and via sending personalized messaging based on where the guest is on the property, according to Jonathon Wardman, vice president of CRM at Hilton. “The potential is huge, not just for tracking guests’ locations but, for example, to help guests track the location of their room service order,” he says.

Using Wi-Fi, GPS and beacon technology, Fun Finder uses customer data to provide recommendations based on arrival and departure information, preferences collected in a pre-arrival survey, the current time and guest location.

According to a Hilton representative, there have been positive and negative results along the way with Fun Finder. Message timing and delivery have been optimized based on guest responses, and navigation has been tweaked for accuracy. Of course, awareness is critical to success of the app, and Hilton says it has more than tripled the number of downloads since launching it in early September.

Marriott is geo-fencing its portfolio, according to Vice President of Loyalty Thom Kozik. “The greatest thing about it is we’re not only able to monitor any social media chatter about us when customers or members or guests use our hashtag, but because of geo-fencing, we’re able to see any chatter around anything going on in our properties,” he says. For instance, if there’s talk of a traffic jam around a Marriott hotel, the hotel team can re-engage with members through social media and guests on property to offer alternative routes.

Kozik says Marriott is expanding beacon programming, which started with standard, local offers a couple of years ago as a proof of concept. Now, because of this data set and the ability to see member history and behavior, Marriott can have a dialogue with guests in the app based on preferences shown in the past. “If guests never respond to any one of those offers, we tune that down, de-emphasize that approach and prioritize another message that may be more relevant,” Kozik says. “That level of personalization of the messages, by the number of beacons, by the number of hotels, is literally a breakthrough.”

Measuring the ROI on beacon-delivered offers remains elusive, according to Kozik, who says Marriott monitors conversions to a certain degree on activation by rewards members, but because of all the point of sale systems across the portfolio, it’s challenging to develop an entirely accurate picture of revenue uplift across the board. “We’ve got a good control set and we’re able to use that to justify the further investment, but we’re never going to have the 100% picture,” he says.

Direct messaging

While once considered more obtrusive, many hotel guests look at direct messaging through any number of platforms as a value-add. Data suggests that first contact resolution opportunities play a huge role in guest stay satisfaction, and often can lead to a satisfaction score higher than that of a guest who had no issues during a stay.

Marriott’s Corbin says about 25% of guests need resolution to one issue or another, and those who have received a response in near-real time greatly impacted satisfaction scores. “What we have proven, and guests have since acknowledged is, in fact, using technology further humanizes the experience,” he says. In one case, a guest used a live chat function to ask for a barbecue restaurant recommendation. The staff member responding generated such rapport that the guest sought him out the next day, put his arm around him, took a selfie and posted it to his social media account.

Marriott’s Kozik adds that a Facebook chatbot is used to make offers to customers who have linked their Facebook accounts to their loyalty accounts. However, he cautions that chatbots should stick to answering questions and avoid confusing customers who then have to call for an explanation.

Managing it all

Questions have also arisen as to who is responsible for managing personalization. “This is evolving at Hilton, but we’re into a good rhythm whereby the personalization engine is being regarded by brands and regional marketing colleagues as another channel,” Wardman says. “It’s always a good sign when people are asking to use your capability, rather than you having to seek their buy-in. We’re at that stage. We’ve evolved our team to be split into capability builders, front-end experts (program/strategy design) and back-end experts (coding and testing.)”

Wyndham’s Goldstein suggests that operators will start to see an organization structure dedicated to personalization that probably reports to the chief marketing officer, who interacts with key business units – digital, brand marketing and operations. “But for now, it lives in multiple places and we’re kind of doing it through collaboration,” he adds.

Cost versus ROI

The ROI can be very attractive if a personalization plan is extensive enough to cover a wealth of use cases, touchpoints and offers, Hilton’s Wardman says. “ROI can start to decline if the amount of sophistication and granularity of content bifurcation outweighs the efficiency needed to arbitrate. For example, creating 400 versions of an offer is technically possible, but the effort to do so might be greater than the benefit. There are diminishing returns with granularity.”

For Marriott, ROI goes beyond whether the customer accepted the offer, Kozik says. “If I can, through that orchestration, keep a certain percentage of members from opting out of email, then I can keep an open channel of communication with them – what is the value attribute to that?” he asks. Increasing precision “has a tremendous impact,” he says.

Kozik further states, “A lot of industries have tended to look at personalization as an attempt to get customers to do something or behave a certain way in the moment. And the reality is our customers have been members for decades in some cases. Personalization has to accommodate that and converse with the member in a way that acknowledges that and recognizes that.” He later adds, “You need to look at the customer relationship as a dialogue over time… The customers’ stay patterns change – they have a kid, they stop staying for a while, they have a job change – all these things matter and need to be encompassed into the personalization.”


 
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