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E-commerce

When More is More: Upselling as a Sales & Marketing Tactic (Travel Tuesday)

by Tim on June 18, 2013

in E-commerce,Engagement,Marketing,Strategy,Travel Marketing

Incredible growth onine image Here’s a staggering statistic about the hospitality industry: On average, roughly 30%-40% of all room inventory goes unsold most nights (obviously, the number varies depending on seasonality and the like).

The thing is, this isn’t news. According the AH&LA, hotel occupancy has ranged between 63% and 70% since the 1960′s. This, despite loads of new distribution models, shifting industry alliances, consolidation among suppliers and distributors, and on and on and on.

So, here’s a thought: Why bother? I’m serious (at least to a degree). Instead of working like crazy to drive increases in occupancy, why not look to improve revenues from existing customers?

That’s the premise behind a new whitepaper sponsored by Nor1 that I’ve written for HSMAI, “When More is More: Upselling as a Sales & Marketing Tactic.”

Upselling offers hotel marketers and revenue managers the opportunity to increase their share of wallet from existing guests by providing these guests valuable options following their reservation. It’s all about understanding what your guests value and anticipating their needs. And it’s a great example of offering your guests more value throughout their purchase path.

The paper examines best practices for making upselling work in your business, highlighting the importance of:

Process. This includes identifying all products available for upsell; reviewing amenities in the hotel, including room types and views, to offer your guests the greatest value; and determining the appropriate time and at what price to offer these amenities.
Data. Including tracking your guests’ preferences following their stays and using predictive analytics to suggest offers, timing and pricing based on guest behavior.
Technology. Making best use of the tools available to hotel marketing teams to help track your guests’ changing needs and offering the right value to guests at the right time to capture the sale.
Personnel. Getting every member of the hotel team to work together to provide your guests a great experience during the reservation process, and providing guests the best offer at the right time such as via pre-arrival email blasts, at check-in, during the stay and following the stay to ensure both repeat visits and increased satisfaction.

Of course, upselling isn’t a “silver bullet.” When seeking to initiate an upselling program, make sure you avoid the following mistakes:

Upselling before closing the initial sale. Don’t present an upsell offer too early in the process or you’ll risk the overall sale. You must first sell something to the guest before you can upsell them.
Worrying about guests ‘gaming’ the system. Properties avoid upselling in fear that the guest will request and receive free upgrades on subsequent stays after enjoying premium amenities. However, selling upgrades can enlighten the guest to what all the hotel has to offer, and once they experience a premium service, they are likely to request it again.
Improperly valuing the upgrade. Consumers focus on the relative value of one thing compared to another, and price upgrades should come accordingly. Guests are unlikely to pay for a service that costs twice as much as their hotel room but may be enticed by an upgrade to a suite for a diminutive cost.
Not investing in the appropriate tools. It’s difficult to anticipate a guest’s needs without having known his or her purchase history and preferences. The correct tools can lead to better guest experiences, retention and recommendation.

The paper covers these topics and a whole lot more in much greater detail. You can read HSMAI’s press release here or register with HSMAI and Nor1 to receive your copy here.

Interested in learning more about the future of marketing? Register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.

And you might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tagged as: conversion, conversion rate, conversion rate optimization, Marketing, marketing 101, marketing strategy, revenue management, travel, travel marketing, upselling

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How Safe is Your Industry From Amazon?

by Tim on June 17, 2013

in E-commerce,Facebook,Google,microsoft,Mobile,Strategy

Your industry is dying. And it’s all Amazon’s fault.

Many existing companies, and entire industries, exhibit a siege mentality. Travel long ago shifted away from travel agents and towards online players. Newspapers and magazines seem locked in a race to the bottom, competing for fewer and fewer ad dollars. Big-box retail is screwed. Just this week, Derek Thompson at The Atlantic noted,

“[JCPenney] …is just the latest bold-faced retail brand on the brink of extinction. Circuit City is dead; Best Buy is dying. Borders is gone; Barnes & Noble is shuttering storefronts. Kmart has closed 40 percent of its stores in the past decade. As recently as 1998, Sears was in the Dow 30. Today, Sears Holding isn’t even in the S&P 500. “

And it doesn’t matter how strong your brand is. During a recent panel discussion, Hollywood legend Steven Spielberg sat in front of a rapt audience and,

“…predicted an “implosion” in the film industry is inevitable, whereby a half dozen or so $250 million movies flop at the box office and alter the industry forever. “

George Lucas echoed that point, stating,

“‘You’re talking about Steven Spielberg and George Lucas can’t get their movie into a theater,’ [George] Lucas said.”

Back in the “Web 1.0″ world of 1995-2001, people called this trend “getting Amazon’d.” Meaning, of course, that the web retailer (or similar players in other industries), was making off with your customers by offering lower prices, product innovations, or, more rarely, improved customer service.

To be fair, it wasn’t/isn’t just Amazon. It’s also Apple, Google, Facebook, and Microsoft (or, as I call ‘em, AGFAM). And it’s their smaller competitors, nipping at these larger players’ heels — or, more commonly, building on their platforms.

I’ve been talking about these changes for a while (for example, here and here). But Daniel Burrus on LinkedIn succinctly explains the importance of these changes,

“Three digital accelerators have been driving the transition from change to transformation for many years, but due to their predictable exponential rate, they have now reached an inflection point — a point where processes, products, services, and careers no longer change; rather, they transform. The three digital accelerators are processing power, digital storage, and digital bandwidth.”

Or, as they’re also known, Moore’s Law, Kryder’s Law, and Butter’s Law, respectively.

Because these laws foliow an exponential curve, they get bigger, faster, than most people can get their head around.

For instance, Moore’s Law effectively says that a given amount of computing power doubles once every 18 months. That means in practice that computing power gets 10 times more powerful every 5 years and 100 times more powerful every ten. The corollary states that the price for a given amount of computing power will decrease by half in 18 months.

Put another way, the mobile phone in your pocket will be 10 times as powerful in just 5 years and almost 100 times more powerful within 10 years. You can see why that’s tough to grasp. So, to put it more simply, the current top-of-the-line iPhones, iPads, and Android devices will cost between $1.99 and $6.99 within a decade.

Don’t believe me? Microsoft recently placed a print ad in Forbes magazine that functioned as a T-mobile wireless router. Even with Microsoft’s deep pockets, you wouldn’t throw away hundreds or thousands of brand new routers, would you? Of course not. But you could afford to throw away 10-year old ones.

But the real question is whether this has to be this way.

I say of course not.

Now, obviously, advances in computing power and storage and bandwidth will change the way your customers interact with your business and your industry. I don’t dispute this fact. And of course many companies (such as the AGFAM-ily) will seek to exploit the opportunities these advances provide.

But as Thompson notes in the Atlantic piece, while highlighting customer-focused retailers like Costco, Trader Joe’s, Wegmans, and QuikTrip,

“Increasingly, there seem to be two kinds of stores—those in a race to the price bottom, and those closely guarding the patina of a shopping experience. Perhaps that’s because, more and more, there are two distinct kinds of customers.” [Emphasis mine]

Marketing is always about meeting your customers’ needs. Period. It doesn’t matter whether two types of customers exist, three, or a dozen. Technology advances offer an opportunity to meet the needs those customer types have head on.

A former boss of mine used to talk about “the power of ‘and’.” Meaning, that most things weren’t “either/or.” For example, it’s not Amazon or you, Google or you, Facebook or you. It’s all of these at the same time.

Don’t run in fear from Amazon (or Google, Facebook, Apple and Microsoft). Embrace the realities that Moore’s Law (and Kryder’s Law, and Butter’s Law) create. Take a good look at what your customers are doing, how their needs are changing, and how the tools offered by the big boys (and their smaller competitors) help you address those customer needs.

Your industry undoubtedly faces challenges from the folks directly in the AGFAM group and those using their platforms to challenge the status quo. Those efforts will likely cause your industry, at least as you know it today, to die. But by focusing on recognizing and adapting to your customers’ changing needs, no one says you have to die with it.

And you might also enjoy some of our past coverage of the social, local, mobile web and what it means for your business, including:

Tagged as: Marketing, marketing 101, marketing strategy, Strategy

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Thinks Out Loud Episode 31: Local Search, Where U @?

by Tim on June 13, 2013

in E-commerce,Podcast,Search,Strategy

Headlines

Contact information for the podcast: podcast@timpeter.com

Technical details: Recorded using a Shure SM57 microphone
through a Mackie Onyx Blackjack USB recording interface into Logic Express 9 for the Mac.

Running time: 11m 55s

You can subscribe to Thinks Out Loud in iTunes [iTunes link], subscribe via our dedicated podcast RSS feed (or better yet, given that Google’s killing Reader, sign up for our free newsletter). You can also download/listen to the podcast here on Thinks using the player below: