Four actionable steps to stay relevant through customization and personalized servicesby Meng-Mei (Maggie) Chen
Hoteliers are seeing their relevance diminishing almost by the day as customers increasingly turn to alternative (non-hotel) types of accommodation and make reservations through online travel agencies (OTAs) rather than book directly with the hotels themselves.
Hoteliers cannot afford to give up though and must stay relevant. Leveraging customer data and technology to initiate customized offerings and personalization could help to make them more relevant. However, when some industry experts advocate personalization, somehow the suggested solutions tend to be more related to selling upgrades or improving their e-mail marketing – precisely the kinds of activities which do not contribute to relevance.
When we talk about ‘personalization’ and ‘customization’, we should see them as different concepts rather than as one and the same. Customization involves offering customers alternative choices to customize based on their preferences, whereas personalization involves serving customers based on their preferences. Customization empowers customers and works better for new customers; while personalization leverages data collected from previous stays, and works better with repeat customers. The distinction between personalization and customization is critical for the hotel industry if it is to implement personalized services.
Hotel chains execute standard operating procedures or SOPs to achieve consistency among their properties, often at the cost of personalization opportunities. Once I stayed in a hotel for a week. The welcome fruit basket included cherry tomatoes, apples, and oranges. I love cherry tomatoes, and ate them all immediately. For the remaining five days however, the hotel never refilled the cherry tomatoes, nor removed the apples or oranges. The hotel also provided shampoo and conditioner in large bottles, but left them at the sink. Every morning I moved the shampoo and conditioner to the shower area, and by nightfall they were back at the sink. The hotel staff worked hard on carrying out their SOPs, but did not modify their behavior to suit my preferences. Their supervisors probably evaluated these employees favorably because of the perfect execution of the SOPs, yet personalization is not part of those procedures, and could even challenge the SOPs themselves.
The hotel industry collects all sorts of customer data, but registration and payment data do not contribute to personalization. To provide personalized services, hoteliers need to collect preference data even before the guest arrives. When hoteliers send out reservation confirmation e-mails, they could ask customers to provide some preference data: for example, whether they prefer tea or coffee, a particular scent or type of shampoo, and what their robe size is, etc. Most hotels do not collect such data and probably most customers won’t take the time to provide the data either. Without actionable preference data, hoteliers can’t provide optimum personalized services.
Some hoteliers believe social media could be used to collect personal data. Travel and Leisure magazine once reported a hotel had used social media to learn a guest had a dog named Bo. The hotel staff left a dog toy in her room with a note saying ‘Bo misses you!”. Another hotel printed out a male guest’s family photo, and left the photo in the room with a note saying “Happy Father’s Day!” (When I discussed these two examples with my students, most thought the hotels had invaded their customers’ privacy.)
These challenges – the hotels’ SOPs, the lack of actionable preference data, and privacy – limit the industry’s ability to provide truly personalized services. Hoteliers need to understand the limitations set by these challenges, but should not be discouraged.
Here are four actionable steps to stay relevant:
1. Hoteliers should make hotel stays better and more convenient for customers.
Hotel guests on business or on holiday may not be in their comfort zone in a particular city or location and count on hoteliers to act as their local guide. Hoteliers know the local neighborhood better than any search engine or OTA and could leverage their up-to-date knowledge to enrich customers’ local experiences. This sharing of local knowledge could start before customers step into the hotel through blogs such as “24 hours in Lausanne”, “Three best museums in Lausanne” and “Family weekend in Lausanne”. These would not only improve a hotel’s website search engine visibility, but also reach potential hotel customers.
As for additional services, many hotels lend out adapters and mobile phone chargers when customers request them. Some hotels now also offer universal sockets and popular phone charger stations in rooms.
Most hotels now have flat screen TVs. However, many customers like to watch content on their own devices. Why don't hoteliers offer customers the opportunity to watch content on the hotel's flat screen TV? Providing HDMI or VGA cables should serve the purpose.
These two examples are not personalized services, but most customers appreciate them. Again, the goal of hoteliers is to stay relevant. Making things better and easier, though not personalized as such, will bring hotels closer to their customers.
2. Hoteliers should initiate customization opportunities. The four-star Hotel Lugano Dante in Switzerland offers online check-in and provides a portal called “My Page” for guests to customize their experiences. The Lugano Dante offers 150 options, including baby cribs, changing tables, baby bathtubs, drinks in the mini bar, boat ride tickets, etc. As you would expect, baby-related services are popular for families traveling with young children. Other customers can customize their mini bar contents, order specific pillows and blankets, and may enjoy a sense of control.
When hoteliers understand their customers’ problems, they can offer relevant solutions. Drawing on the Lugano Dante example, hoteliers could provide a range of options such as portable chargers, adapters, humidifiers, air purifiers, printers, shredders, presentation clickers, yoga mats, desktop screens, etc. Hotels already send out reservation confirmation e-mails and could utilize technology similar to “My Page” to offer customization opportunities.
3. Hoteliers should improve employees’ ability to collect data and develop customer preference data centers.
Hotel employees may not have extensive travel experience themselves, nor know the types of actionable data to collect. Hoteliers need to communicate the importance of collecting preference data and train employees to collect this information. Similar to the cherry tomato and shampoo examples, hotel employees could record the items consumed (or not consumed) in mini bars, the last TV channel watched, room temperature, and even the takeaway containers found in the hotel rooms. In short, hoteliers could learn a lot about customer preferences through customer behavior.
When I checked into a hotel recently, I was pleasantly surprised to find a welcome fruit basket containing dragon fruit which I ate immediately, while leaving the other items untouched. The next day, I found another dragon fruit in the fruit basket, together with two new fruits. The hotel had noticed my consumption pattern and provided more choices to learn my preferences. Bravo!
4. Hoteliers need to use customer data.
Once customization and data collection are under way, hoteliers need to evaluate employee performance with regard to data collection and the sharing of information. Due to high staff turnover in the industry, hotels cannot rely on individual employees memorizing customer preference data and must count on technology to act as the hotel’s extended memory. Remember, the goal is to stay relevant and leveraging data to provide personalized services is one of the means to achieve that.
Hotels in some tourist destinations may have very few repeat customers and may question if the investment in data collection is justified. Given lower data storage costs and improved employee efficiency in collecting data, these costs will continue to decrease over time. Furthermore, even if a hotel does have a relatively low rate of repeat customers, it still could benefit from data analysis and offer more tailored services based on customer data.
To stay relevant, the hotel industry needs to change. Hoteliers should start by making things better and more convenient for travelers. By offering customization options, hotels can give customers a greater sense of control while learning more about their preferences. Once the customer is at the hotel, trained employees can discreetly collect data which can be used to provide personalized services. An easy-to-use, accessible data storage and sharing system will facilitate the entire data collection efforts and the four actionable steps highlighted here will help hoteliers to stay relevant.
Dr Meng-Mei (Maggie) Chen is assistant professor of marketing at EHL.