Integrated marketing and hospitality analytics

Natalie Osborn
Natalie Osborn|May 11, 2012

This week I spoke with Bruce Swann, Customer Intelligence Solutions Manager, SAS. Bruce was a participant in last week’s webcast Customer-Focused Marketing for Hospitality and Gaming. Bruce works with many of SAS’ customers and prospects in the hospitality and gaming industry and is a strong proponent of integrated marketing.

What is integrated marketing?

Integrated marketing is a customer-centric, data driven method of communicating with your customers. The goal of integrated marketing is to co-ordinate all marketing channels to maximize the impact of your marketing efforts on your consumers while at the same time minimizing costs.

Are hospitality and gaming companies just getting started with integrated marketing, or is it already well established?

“Most companies are doing more than just getting started,” Bruce told me. He sees many hospitality and gaming companies using analytics and marketing automation to better plan, execute and measure their campaigns. “The focus of these efforts so far, however, has largely been on email or direct mail channels,” he said. Most do not incorporate channels such as: mobile, social and local; inbound marketing from the web or even the call center.   

How can hospitality and gaming companies expand their use of integrated marketing?

Bruce believes that many hospitality and gaming companies are starting to move towards marketing optimization practices. This involves looking across all of the different marketing initiatives that a company has planned for a specific period and use marketing optimization techniques to determine “the right offer to the right guest at the right time through the right channel.”

“A lot of marketing organizations are operating under constraints including budget, resources and customer contact policies,” Bruce explained. Marketing optimization techniques can help increase marketing campaign return on investment by determining the best offers for customers while managing changing business constraints, such as budget, channel capacity and contact policies.

What new trends emerging as a result of integrating marketing?

There are two main trends emerging from this movement towards integrated marketing. “The first is the need to integrate analytics into marketing efforts across all of the various marketing channels,” Bruce explained, “Not only email and direct email but also social, local and mobile channels.”  

The second trend Bruce sees emerging is using analytics in real time. “Using analytics and marketing optimization techniques to decide which is the best message or offer for a customer at the precise moment at which the customer is interacting with the firm is very exciting,” Bruce said. Whether the customer is engaged on the firm’s website, or interacting with the call center while making a reservation, choosing the best fit offer can based on the customers disposition or where they are in the customer lifecycle. “The benefits of these two techniques can be significant,” Bruce told me, “including more effective marketing communications, reduced opt out rates and increased customer retention.”

To learn more about integrated marketing techniques for the hospitality and gaming industry, download the SAS and Cornell Center for Hospitality Research on demand webcast Customer-Focused Marketing for Hospitality and Gaming.

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Customer-focused hospitality marketing at InterContinental Hotels Group

Natalie Osborn
Natalie Osborn|May 3, 2012

You'll appreciate the SAS and Cornell Center for Hospitality Research joint webcast, Customer-Focused Marketing for Hospitality and Gaming. I caught up with one of our participants, Larry Seligman, PhD., Director, Business Intelligence and Analytics for InterContinental Hotels Group (IHG) during a recent call. I asked Larry about some of the new channels that are emerging for hospitality marketers, and how these channels are being handled at InterContinental Hotels Group.

Social and Mobile

Larry sees a lot of energy being put into social and mobile marketing efforts. IHG has a very aggressive mobile application development program, and they are seeing significant growth in the bookings and revenue that come from the mobile channel in particular. “The mobile channel is nice because, like our normal web channel, we can sometimes identify the guest or the guest self-identifies, so we can link this mobile behavior to our Client Relationship Management (CRM) data,” Larry told me.

“Social and location data is more difficult to link back to our CRM database, so we have primarily used these channels for understanding general trends” explained Larry. “However, even if we can’t identify these guests,” Larry said, “we can segment on what we do know about them.” Larry explained that IHG is looking at ways to manage the social data outside of the CRM context. “We know that there are overlaps between the databases, but in many cases we are unable to identify these overlaps. We are working on solutions for that,” he said.

Larry thinks that while IHG has been conducting social media campaigns for some time, they are still novel in comparison to email and direct mail campaigns.  “I would expect as time goes by we will see more change in what is successful and what is not successful in social media campaigns because there is still an adjustment factor for the guest who is using social media,” Larry said. “Consumers are still experimenting with what happens when they respond to a campaign via social channels. When customers see offers on a social channel, they want to understand what will happen when they click on one of them.”  “Customers want to understand how clicking through on offers will impact their social media profile,” Larry explained, “as opposed to email marketing where the response and subsequent implications are already well understood by the customers."

Generally Larry sees customers tending to use mobile channels more and email less. Regardless of channel, Larry wants to make sure that IHG remains engaged with their customers. “We want to be able to understand more about our customers from the data that is available from all of the marketing channels that we use,” Larry said.  “And I really want to highlight that this is not just about optimizing short-term ROI.  Our mission is to provide Great Hotels that Guests Love.  Guests aren’t going to love us if we don’t understand how to communicate with them effectively and in their preferred methods.  To me, the right message through the right channel at the right time is as much a tool for gaining Guest Love as it is for gaining incremental revenue.”

Larry Seligman is joining Rohit Verma, PhD., Professor of Service Operations Management at the School of Hotel Administration, CornellUniversityand Executive Director for the Center for Hospitality Research and Bruce Swann, Customer Intelligence Solutions Manager, SAS, for the live webcast entitled Customer-Focused Marketing for Hospitality and Gaming on  Friday 4th May, 2012 at 11am EST.

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Innovations and opportunities: Analytics for hospitality marketers

Natalie Osborn
Natalie Osborn|April 25, 2012

This month, the Analytic Hospitality Executive looks at hospitality marketing and how you can get the most from your marketing spend. On May 4th, we will conclude this topic with a live webcast Customer-Focused Marketing for Hospitality and Gaming as a part of our Insights and Innovations for Hospitality and Gaming webcast series. We’ll be speaking to each of the webcast participants this month, kicking off with Rohit Verma, PhD., Executive Director for The Center for Hospitality Research. Rohit and his co-author Ken McGill published the 2011 Travel Industry Benchmarking: Marketing ROI, Opportunities, and Challenges in Online and Social Media Channels for Destination and Marketing Firms report in 2011.

What is the most exciting innovation in hospitality marketing?

I asked Rohit about his favorite innovations for hospitality marketing. “Mobile,” he told me, without hesitation, “although mobile may apply to more than just marketing.” While many companies are already using the location based data from mobile phones to track where a customer is located and send coupons, among other things, Rohit thinks that the enhanced data capabilities are the most exciting part of the growth in mobile devices. Using mobile data to identify trends and make correlations can give marketing teams a comprehensive picture of what their customers want. “All of this data can be used to provide intelligence to help inform marketing,” he explained.

One way to get some data is to mine the publicly available data that can be found on a variety of social media platforms, another is to create mobile services around your business that can supply a wealth of additional data. Rohit gave an example of a mobile hotel application that not only allows a customer to make reservations, but also allows them to book their wake-up call, check-in, order breakfast and schedule a spa appointment, all through the application. “Using analytics with all of this data,” Rohit explained, “furnishes marketers with valuable insights into their customers.”

How is mobile use set to evolve for the hospitality industry?

“If we look at the history of distribution channels and how they have evolved,” explained Rohit, “a customer used to call a travel agent or call the hotel directly.”  Once online booking became more prevalent, customers started booking online. After some time that became standard and every hotel or brand now has a web presence. Then hotel companies started listing their rooms on online travel agents like Travelocity, Expedia and Priceline. In the beginning phases of each major development, companies who were early adopters gained some incremental bookings. As new distribution channels become standard, however, companies would no longer gain additional bookings but lose bookings by not participating.

Now it is the same with mobile. Some companies have mobile applications right now, some don’t. Some companies offer mobile services, some don’t. As the number of mobile devices grows, so does the need for companies to have a mobile application. By not having an application, a company will likely remove itself from competition, just as it would now if it took itself off Expedia.

What is the biggest opportunity for hospitality marketers?

“A return to experimentation,” Rohit explained “is the biggest opportunity for marketers.” In market research there is a qualitative phase and a quantitative phase. In the qualitative phase, a researcher will look for the information that is available. Researchers typically use focus groups, interviews, and observations of their customers to try and get a sense of what their customers’ needs are. With the advent of social media, an immense amount of unstructured and qualitative information is available on the web. Quantitative research methods consist of archival data analysis and experimentation. Using analytics on unstructured data is a good substitute for the archival data analysis of the quantitative phase.

“What is lacking”, Rohit told me, “is experimentation. In the early days of web data, marketers still did a lot of experimentation.” A marketer could create a realistic version of their product or service and invite customers to evaluate them, or create some experiment based surveys, where customers evaluate different scenarios and provide feedback. Rohit believes that the problem with performing only archival data analysis and not experimentation is that you cannot get information about something that isn’t there. If you want to do something new, you will not be able to get data on that. Rohit worries that there is so much data and so much happening with social media and mobile that marketers will forget about experimentation. “This is very much to a company’s disadvantage,” he believes.

What advice would you give marketers to prepare for the future?

Fortunately, for this industry social media is a given. While hotel marketers have been very focused on reviews, they are starting to look past this and start to think – what is next? Just having a page on various social media channels is not sufficient. This is the time for hospitality marketers to start using analytics. Analytics are the only way that marketers can make sense of the vast amounts of data coming in. “So, hospitality marketers should plan for some of their marketing budgets to go towards analytics.” Rohit recommended.

One example Rohit gave for where analytics could make a difference is in marketing a brand. “It is here that there are a lot of opportunities and also a lot of challenges,” he said. In a world where brand messages are not only from carefully controlled sources within a company, but also in unstructured text from various social media channels, marketers need to take advantage of social media analytics if they want to understand the brand perceptions that exist about their company. “Otherwise it is very hard to keep track of what customers think of your company, reputation and value,” he told me.

You can hear Rohit talk more about these and other trends in the on demand webcast, Outlook 2012: The Hottest Trends and Issues for Hospitality and Gaming which was recorded from a live webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

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Using social media data and analytics at Las Vegas Sands

Natalie Osborn
Natalie Osborn|April 11, 2012

This week I caught up with Mark Molinari, corporate vice president of revenue management and distribution for Las Vegas Sands Corporation.  Mark has an extensive revenue management background at the Venetian and is excited to be kicking off social media programs for Las Vegas Sands as a whole. We talked about how he is thinking about using social media data, and where he sees social media analytics fitting in to his enterprise.

How are you thinking about social media data and analytics?

“We have been thinking about social media analytics for some time,” says Mark. They look at using social media data from two perspectives; first, using it for operations and service; and second, using it for revenue management, he explained. Las Vegas Sand has just released a global standard operating procedure for how their properties should respond to social media. Mark has been instrumental in encouraging the individual properties to address some of the issues that have been highlighted in review data such as trip advisor.  Many of these issues were easy fixes for the properties and have since lead to better standing within those sites.

When it comes to revenue management, Las Vegas Sands has been changing their guest surveys to understand what type of competitors their guests look at when they are deciding to choose a Las Vegas Sands property. This is increasing awareness of their competitor set from their guests’ perspective. In addition, Mark says, they look at how their guests evaluate their products and services so that they can better understand their value proposition relative to their competitor set.

While Mark explains that they are just getting started with social media, one of the things that he has been considering is using guest sentiment from social media to better position properties amongst their competitor sets. “From a pricing perspective – If I want to create a value proposition relative to another property, social media data, sentiment and feedback can be a way for us to evaluate and compare ourselves to other competitors.” he told me.  Mark also thinks about using social media analytic data to help him understand how guests are valuing different products and services.  “If we have particular packages or room types or offerings available, we can get some great unfiltered feedback on those products and do a better job of evaluating how to price better in the market”, he explained.

Of course, it is not all just about price. In addition to getting the right price, is it important that the guest has an experience that is worthy of the price that was paid. “Ultimately social media data helps us on two fronts,” Mark explains, “it enables us to provide better guest experience, in addition to potentially getting a premium for that experience.” There is an important relationship between using social media data to improve products and services, and using social media data to price. In the long term Mark knows that he will have greater pricing power if his whole organization is using the information gained from social media and acting on it.

How are marketing and revenue management working together using social media data?

Mark acknowledges that the marketing and revenue management teams at Las Vegas Sands are in the beginning stages of incorporating social media data into their interactions. He has a very solid foundation to work with. The revenue management and marketing teams have regular meetings to target promotions and develop strategies for particular periods, which marketing distributes through various channels. The challenge for revenue managers, Mark identifies, is how to incorporate social media feedback and data. “It’s our job as revenue managers to review how guest values their experience, how we are doing on specific offers, how we compare to our competitors and to try to incorporate that into our price positioning,” Mark told me.

As Kelly explained in her recent post, you need to use caution when linking social media data to performance metrics, as it is not as simple as a date by date comparison. Mark recognizes that this is one of the challenges he faces with social media data.  If guest perception of value declines, regardless of cause, it is very difficult to tie back this sentiment to specific periods and to rates that are paid, Mark explained. Surveys make this easier, Mark said, because they can be linked to a specific reservation. It is possible, for example, that the decline in perceived value at certain rate levels actually harms the brand. It is essential inputs like this that Mark expects to gain from social media data.

What does the future hold for incorporating social media data into your strategies and decisions?

Mark thinks that it is a very exciting time for hoteliers. “Suddenly we have access to all of this unfiltered information that we have not had before,” Mark said, “it is forcing us to change our perceptions and strategies.” For Las Vegas Sands, this change is starting with operations, but will be developed into revenue management this year.

Mark has his eye on many future uses of social media data for revenue management. He anticipates that social media data, just like competitive price data, will soon be an input to revenue management systems. Adding the social standing of competitors could be a first step, with a view to using this to understand the impact of social standing on price and eventually as an influence on their own price.

Ultimately, it is the guest’s experience that matters most to Mark.  “It is critical that we treat exchanges on social media in the same way we would a guest who wrote a letter to one of our properties.” Mark says. A guest’s experience at a property, whether staying in the hotel, gaming, shopping, attending a show or going to a night club, has plenty of opportunities for mishap. “Not every stay can be perfect,” Mark explains, “but, how you respond to these mishaps is what matters.” If a guest expresses their dissatisfaction through a social channel, it is a great opportunity for their properties to respond and demonstrate that they are engaged and willing to listen and resolve issues. “This provides comfort to more than just that guest, and shows many more that we are highly attentive to their needs while they are on property.”

With so many potential uses for social media analytics ahead, Mark and I agreed that we need to check back again in a year to see what has worked, and what new challenges he faces.

More information on using social media data is available in the white paper Acting on Customer Intelligence from Social Media: The new edge for building customer loyalty and your brand.

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What value does social media analytics bring to the hospitality industry?

Natalie Osborn
Natalie Osborn|March 29, 2012

Over the past three weeks we have been exploring how hospitality executives can identify the opportunities to leverage social media data across their enterprise. In this post I’ll investigate the value of applying robust analytics to social media data.

Any data set can seem overwhelming until it is organized and mined for answers to your business problems. Social media data is probably more so, because it is ad hoc, relatively unstructured and grows at an exponential rate.  This week I reached out to Mark Chaves, who is Director of Media Intelligence solutions for SAS, to get some insights into the value that a social media analytics tool can bring to a hospitality organization. Mark explained that the value gained from a social media analytics tool comes from three different areas.

Listen.

First, it gives you the ability to efficiently and effectively listen to what customers are saying about a particular aspect of your business, whether it is a particular property, brand or function within your business. Good analytic tools, Mark elaborates, automatically classify what consumers are saying. Efficiency comes from coupling this information with the right organization or team members. Then, you can quickly understand where problems are – whether it is the food and beverage service, the reception or the bathroom.

Effective listening results from a little known secret outside the world of social media analytics - sentiment accuracy is at very high levels, especially with review data. Good text analytics or analytical tools can take advantage of the fact that review data is linguistically rich and easy to process. It is possible to derive a lot of information from review data. For example, if a customer writes “in the hotel” in their review you can determine that they have stayed in a hotel. Once you know this, the information becomes more compartmentalized. Mark gives examples such as: “if the customer writes “TV”, they are speaking about the TV in the hotel room; if they mention food, it is either room service or the restaurant; if they mention a game, they mean gaming such as blackjack at a casino.” The data becomes very granular and accurate which increases the effectiveness of using it to determine some sort of action.

Mark was quick to point out that social media data can enhance existing listening mechanisms including customer surveys, call center interactions and feedback cards, among other things. Kelly addressed why you should not use social media to replace these mechanisms in her last post.

Engage.

Once you have gained efficiency and effectiveness at listening to your customers, the next level of value is to use this utility to intelligently respond, engage and converse with your customers. On the operational side, you can make sure that the right teams are given the right issues to which they need to respond. This makes the triage process a lot faster, and your issue resolution process is enhanced by interaction with the actual customers who experienced the problem.

Correlate.

Mark believes that the third level of value is the true analytics piece – the ability to assess social impact. This is where you can start to uncover relationships between social media volume or activity and its impact on your business. The impact on booking pace of day of week, seasonality, and special events is well established for the hospitality industry. But, what is the impact of online conversations on booking pace? What is the impact of negative or positive sentiment on booking pace? Can we discover leading or lagging indicators that will help us, for example, time our campaigns more effectively? 

Of course, as Kelly explained last week, “before you start running a bunch of correlations, you need to be sure you are comparing apples to apples.” Don’t try and link last night’s ADR (average daily rate), Occupancy and RevPAR (revenue per available room) with yesterday’s sentiment analysis, as you are not matching up the right data. “It is the prevailing sentiment (and price and positioning, and…and…) at the time the guest made the reservation that resulted in last night’s ADR and occupancy, NOT yesterday’s social media sentiment scores.” says Kelly.  However, the relationship of today’s sentiment analysis on today’s booking volume is a correlation worth exploring. Overall, Mark advises that you think about “social media as a real opportunity to improve your business, period, not just what you do on social media.”

Is there life after review data?

I asked Mark if there anything beyond review data for hospitality? In the hospitality industry, a customer’s experience of your products is preceded by a before phase, where your customer is planning their trip, and followed by an after phase, where your customer is discussing the experience of their trip. Mark believes that review data plays the biggest role in the before and the after, but that there is a lot of opportunity for hospitality organizations to mine social media for what happens between those two phases.

Mark paints a very familiar scenario for customers who use social media. While on a family trip, for example, a customer might upload photos to Facebook or Flickr, they might check-in to a location to receive a promotion offer, they might tweet about their experiences in the hotel, or upload video to YouTube. It’s these experiences that give hospitality executives the opportunity to explore a different set of data than just review data, and it’s these experiences that hospitality organizations should be tracking, monitoring and embracing. Whether they help you find clues on how to market better, or even understand how well your brand personality is being relayed into customer experiences, mining this experience data gives you the ability to know what your customers think about your products or services as they experience them.

What is next for social media analytics?

Mark’s focus on social media extends into multiple industries.  He sees several emerging trends that have the potential to impact the hospitality industry.  One is the ability to assess social impact, or using statistics to start to understand significant relationships between social data and business impacts. Another is the increased use of linguistics, which gains us the ability to go below property level characterizations and understand more about what is being said in social conversations. 

One of the game-changing trends that Mark predicts will impact the hospitality industry the most is the focus on brands being prepared to be a part of consumer experiences and not the other way around. Mark thinks that most brands, regardless of industry, have not figured that out as yet. Social technologies will continually change, but what doesn’t change is your customers need for authenticity. Facebook may be obsolete in as little as 5 years, and be replaced by something else.  Mobile devices are set to change the technology landscape by introducing more and more accurate location based data. What doesn’t change is that your customers still expect to walk into a hotel and be treated well. When hospitality organizations can figure that out, they will make themselves immune to any other changes.

More information on social media analytics is available in the white paper “Drive Profits and Improve Decisions with Social Media Analytics”,  from a webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

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Social Media Analytics and Hospitality: Take advantage of the opportunities, avoid the pitfalls

Kelly McGuire
Kelly McGuire|March 22, 2012

In the first two blog posts of the month, we have talked about how hospitality executives can identify opportunities to leverage social media data and channels across the enterprise.  I presented a framework for identifying social media opportunities, and Natalie talked about her conversation with my co-author, Breffni Noone, about how revenue managers should be thinking about social media.  Clearly, there are many exciting opportunities in this space, but as with anything, there are also traps to avoid.  Careful thought and planning can help you take advantage of the opportunities while avoiding the pitfalls.  In this post, I’ll outline a couple of “danger zones” that our analytic hospitality executives (or executives from any industry, really) should pay attention to.

It’s not a social media strategy; it’s a business strategy with a social component

Those companies who are, or will be, most effective in their use of social media data and channels approach the problem from the perspective of first identifying a business problem, or defining a business strategy, and then figuring out how social media fits.  I mentioned this in my previous post, but it bears repeating, and repeating again.  In my opinion, a major advantage of looking at social media in this way is that its applications outside of marketing start to become much more obvious.  Operations wants to know if the restaurant offerings are meeting the needs of the guests – mining reviews can provide insight into gaps in current offerings and guest preferences.  Human resources wants to know which training and incentive programs will be most effective – digging into service issues discussed in social media can help to direct that kind of investment.  As revenue management develops the distribution strategy – looking at sentiment of reviews compared to the competition will provide another data point into determining the “best” distribution channels.  If a hotel is planning a renovation  – feedback from guests in social media will help them understand how the guests are reacting to the physical plant, and how the property stacks up against the competition (does your competitor have more comfortable beds or nicer lobbies?).  This kind of insight can help to guide decision making, but it’s not the only thing you should look at, which brings me to my next point.

Understand what social data is, and what it isn’t

Use social media to enhance and augment existing analyses, but don’t replace traditional methods completely.  Remember, social data is uncontrolled feedback, rarely guided by any structured experimental design principles.  This means that results can lack statistical or scientific rigor when applied incorrectly or to applied to the wrong problem.  Take customer feedback for example.  Many refer to social media as a “24/7 focus group”.  This is true to a certain extent, but needs to be approached with caution.  Hearing what your guests are saying, in their own words, can be a valuable source of information about the guest experience, as well as a good place to pick up some additional needs and preferences you may have missed by not asking the right questions on your guest surveys.  However, the advantage is also a disadvantage.  If you stop paying attention to structured customer feedback altogether, you could end up surprised by service problems that you don't hear about until far too late.  You do need to check on elements that may have been noticed, but not remarked on, like speed of room service delivery, cleanliness, check-in or out process (Things reviewers are likely to remark on only when they are HUGE problems, not when it's a minor issue that you can correct before it becomes a HUGE problem).  A structured response format also allows you to ask about programs you are considering, but haven’t rolled out yet.  Things that your guests may not even think to mention.  Also consider that not all of your guests may be active in providing feedback through social channels (even if they are active “viewers” of this information).  Some important guests might be more comfortable telling you directly, in a less public format, about any problems or concerns.  You could be missing an important segment of feedback by only "listening" to one channel.

Steve Levigne, Vice President of US Strategy and Insight, during our Cornell/SAS webcast “Drive Profits and Improve Decisions with Social Media Analytics,” said that his team definitely pays attention to feedback in social channels, but they are still conducting more traditional experiments.  His quote: “At McDonald’s Corporation, we have huge investments in all the things we do; we’re looking at multi-million dollar decisions.  We want to make sure we are being as statistically sound and scientific as we can, to make sure that we are making the right decisions.  Social media is great, and it is providing us a lot of insight, but it is a complement to what we do right now, not a replacement.  Social media will become an increasing part of our portfolio of research tools.  It is helping us not only get instant feedback and understanding, but also giving us a little more texture.  So although it will not replace the more traditional methods we have used, it will be larger part of the mix.”  If you want to hear more, there’s a link to the webcast at the bottom of this post.

Use caution in pairing performance metrics with social metrics

Many vendors in the social space talk about the ability to “correlate” financial metrics with social media metrics.  Clearly there are relationships between social activity and financial performance on many levels from stock prices to conversions to the performance of your restaurants.  However, before you start running a bunch of correlations, you need to be sure you are comparing “apples to apples”.  For example, when comparing social media sentiment with hotel performance metrics like ADR (average daily rate), Occupancy and RevPAR (revenue per available room), you have to be careful that you are matching up the right data.  Remember, most hotel or casino sleeping room purchase decisions are made in advance.  "Today's" social sentiment is influencing bookings made today, but those bookings can be for anytime between tonight and 18 months from now or longer.   This means that it is the prevailing sentiment (and price and positioning, and…and…) at the time the guest made the reservation that resulted in last night’s ADR and occupancy, NOT yesterday’s social media sentiment scores.   Further, ADR and occupancy are an aggregate of all of the stays on the books, some of which could have come through channels that are not directly influenced by social media.  However, the reviews for your restaurants on Yelp right now may directly impact your business tonight, or into the future, depending on why the guest is researching your restaurant. This means that the problem is just not as simple as a date by date comparison. (This also means you need to carefully evaluate the claims of any solution provider that says that they tie social metrics to performance metrics.)

Remember, too, that social media analytics allow you to quantify information than can then be used in your predictive analytics, forecasting and optimization efforts.  Trying to predict stock price?  Brand reputation could be a significant variable to include in the modeling.  Want to understand the lifetime value of a customer?  Their “influence” within relevant social networks is likely an input into the value calculation.  Not to belabor a point – well, actually, yes, I will belabor this point! As you think through the business problems you are trying to solve, the opportunity to include social data as inputs becomes much more clear.

To close, I think we still have a lot to learn about this valuable data source.  In addition to exploring how we can use social data (responsibly) across the enterprise, as a revenue manager by background, I’m very interested in how the availability of UGC has changed consumer purchase behavior.  Breffni and I, along with some of our colleagues, will continue to research this problem, and hope to bring you some interesting insights in the months to come.  You can hear Breffni talking about one of our more recent studies in this audio clip.

Access the on demand- webcast “Drive Profits and Improve Decisions with Social Media Analytics”, which was recorded from a live webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

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Expanding social media analytics beyond hospitality marketing

Natalie Osborn
Natalie Osborn|March 16, 2012

This week I spoke with Breffni Noone, PhD, assistant professor of hospitality management at Pennsylvania State University.  Breffni’s chief research interests include revenue management, particularly the effect of revenue management practices on customer satisfaction and approach-avoidance behaviors relating to customer relationship management. She has also published research with our own Kelly McGuire - “Social media meets hotel revenue management: Opportunities, issues and unanswered questions”. We chatted about the framework for evaluating social media-related revenue management opportunities, which Kelly introduced in her last post, and why social media data represents such a great opportunity for revenue managers.  

Why should revenue managers care about social media data – isn’t it solely a marketing function?

Breffni has never understood why marketing and revenue management work in siloes in so many organizations. She reasons that even though the revenue management has predominantly looked at price and demand when calculating their strategies, customers look at many additional factors when making their purchasing decisions. Social media data represents a huge opportunity for revenue managers to really understand what influences the purchasing decisions of their customers.

Unlike revenue managers, who look at their own price, their competitor’s price and their own demand, customers evaluate your price, your competitor’s prices and the value provided for each price. Where social media plays a key role is that it has been shown in research that people use user-generated content (UGC), whether it is online reviews or ratings, to inform those value perceptions, so when customers are looking at a choice between Brand A and Brand B, they are not just looking at price but they look at the value they are getting for that price.

If one of the goals for revenue managers is to manage pricing, and to evaluate whether prices are correct or not in context of their market, then revenue managers have to evaluate their own value proposition vs. their competitor’s value proposition. If the competitor’s value proposition is better, it follows that the competitor will win the business. If marketing do not share what they are finding out from the customer via all of the analytical tools that they are using, and if the revenue manager doesn’t use this information to make informed pricing decisions then it will be impossible to gain an optimal market-share.  

With social media data – the enhanced view you gain can also be of your competition

One of the most exciting things for revenue management in terms of social media and the information it generates, is the greater visibility to what their competition is doing. Breffni recalled the excitement for revenue managers when price transparency via internet first came along. Revenue managers could finally see their competitor’s prices. As a result, revenue managers became adept at tracking and benchmarking competitors published prices against their own published prices.

By analyzing social media data, in particular review information, a revenue manager can see what customers are saying about their competition and the value the customer perceives they get from the competitor for the price they paid.  This provides revenue managers with a tremendous opportunity, not just to benchmark on price, but to benchmark on the value perception that a customer has about their hotel versus their competition. From this comes a more comprehensive understanding of their unique selling points, and how these can be leveraged in promotional packages and messaging to help win the customer.

Let’s say a revenue manager decided to price slightly below their competition, to gain a little market share from their competition. If the customer goes to an online review site, such as TripAdvisor or Expedia, and sees negative reviews about your property, it will probably not matter that your price is lower as you will likely not be successful in winning the business from customers who are influenced by negative reviews. If revenue management only looks at price and price-positioning when evaluating competitive positioning, they are not looking at the whole picture, because a customer is taking more than price into account when they are deciding how you stack up against the competition.

What social media data should a revenue manager look at?

I asked Breffni which social media data a revenue manager might use. In her answer she referenced the framework for evaluating social media-related revenue management opportunities. The two key quadrants where a revenue manager can introduce social media data is in the inbound short term informing promotions and pricing decisions and the inbound long term informing strategy development.

In the short term, Breffni explained, you should look at review information to inform pricing and promotional decisions. For example, when developing a package, you can look at reviews for your property to see what kinds of add-ons and benefits will influence a customer’s perception of value. You can also use review information to understand what the customer values, what they expect and what they would like for the price that they are paying.

One of the examples Breffni cited was HKHotels. HKHotels took review information from TripAdvisor and used the data to enhance their value proposition for their customers.  They found by analyzing reviews that their customers were looking for additional items on the breakfast buffet and an upgraded wine and cheese service in the evening. HKHotels took what the customer said about their product and augmented their products with what the customer said they wanted.

In the inbound long term quadrant of the framework, Breffni says social media related customer content can be used to impact long term revenue management strategy development including pricing, customer relationships and distribution channel management. In terms of pricing strategy, user-generated content provides an opportunity to supplement the published price data with user-generated content that can help provide insight into your competitor’s value proposition. This data can be leveraged to identify product differentiators so that you are no longer competing on price alone.

Review activity and reviewer sentiment, when combined with booking information, can help inform the overall distribution strategy and provide insight into which channels to focus on and how much inventory to allocate to each of those channels. It can also work to identify targeted messaging to drive traffic to an organizations own website or booking channel.

What is next in terms of your research?

One area that Breffni is interested in exploring is thetype of information thatcustomers use at the point that they are making a purchase decision. 

For example, if a customer is looking for a 4-star hotel at a given destination and is faced with many 4-star hotels from which to choose, what information will she be most reliant on when narrowing  her options down to a more manageable choice set- price, reviews, TripAdvisor rankings, or even the images that she sees? In other words, what criteria do customers use to qualify hotels for that filtered-down choice set? Will a customer disregard an option if the most recent reviews for the property are negative, regardless of how much lower that property is priced than the competition? Or, will a hotel be eliminated if the TripAdvisor ranking is not sufficiently high? Similarly,  in the filtered down set, what are the criteria that are most prominent when people are making purchase decisions? In the end, what is it that makes a customer chose one hotel over another – is it price, reviews, or some combination of available information that sways the customer? Breffni doesn’t know the answers as yet, but intends to find out.

Wouldn’t EVERY marketer and revenue manager like the answers to THOSE questions?

Access the on demand- webcast Getting in on the Conversation: The Power of Social Media in Hospitality and Gaming which was recorded from a live webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

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Demystifying social media analytics for hospitality

Kelly McGuire
Kelly McGuire|March 7, 2012

This month the Analytic Hospitality Executive blog is all about social media.  Being the data lovers and analytics geeks that we are, we are particularly interested in social media not as a marketing tool, but rather as a new and exciting source of data that can be leveraged across the enterprise to augment and enhance your existing analytics efforts.  I have been giving a lot of thought to this topic, and it has become a particular passion of mine.  In fact, later this month you’ll hear from an academic colleague of mine about some research we’ve been doing into how revenue managers could take advantage of social media, and the challenges and opportunities associated with developing pricing strategies in a social world.  We’ll also talk to operators who have started incorporating social media analytics into their business strategy development.  However, before we get started with that, I thought I’d take a step back and provide some definitions that will put this month’s posts in context.  Despite the attention that social media has received in the popular press, at conferences and by consultants, it can still be a bit of a mystery – particularly from an analytics perspective.

 A Definition

Starting from the very beginning, for the purposes of our research, we define social media as a group of internet-based applications that allow the creation and exchange of user-generated content[i].  These applications are designed to facilitate conversation, allowing the consumer to participate in the development and dissemination of content. Examples include review sites (TripAdvisor and Yelp), news sites (Digg), social sharing (Flikr, YouTube), social bookmarking (Delicious, Faves) and purchase/review sites (Amazon, Travelocity).  There is a myriad of these types of applications, which means that conversations about your brand are taking place in many places in many languages across the globe.  While this can be intimidating, it also represents a huge opportunity for hospitality companies to not only to engage with customers, but also to turn all of this social activity into meaningful, actionable information.

 The Data

We are all familiar with the volumes of unstructured text data generated by these sites, but there are also many other types of data in social sites.  Basic quantitative data like number of reviews, number of fans, number of friends or followers or aggregate consumer ratings is available.  Social sites also contain images (How many of you have been hearing about Pinterest lately?), video and audio.  Demographic information can be mined either through site-mandated entry (e.g. age range, gender, purpose of travel, location) or through the comments themselves (e.g. my wife ordered the fish; we don’t have a place like this in Chicago).   Finally, the connections among users within the networks and the impact of their social media activity can provide an interesting source of information.

 Analysis Options

I generally separate social media analytics into three basic categories: descriptive statistics, social network analysis and text analysis.  Descriptive statistics provide a snapshot of historical and current performance.  They answer questions like:  how many fans do I have? How many reviews have been posted over the last six months? What is my average rating on each of the Online Travel Agents (OTA)?  Social network analysis (SNA) is an advanced analytic technique that uses the connections among users, and the impact of their social activity, to determine the degree of influence each participant has within these social networks, and who they are influencing.  Once you have this information, targeted marketing efforts can be directed at the most influential users such that they spread your message for you.  For example, you could use SNA to identify the influencers in a cruise community and invite them to preview a new ship or a new itinerary with the hopes that they will rave about it within their community.

 Text analysis, which is used to quantify unstructured text data, includes: content categorization, text mining, and sentiment analysis.  Content categorization automates the process of categorizing text documents according to their content and tagging them to optimize search.  This time-saving technique keeps organizations from having to read through every document and manually tag them.  Content categorization could help hotels and casinos to automatically categorize open ended responses on guest surveys so they could be routed to the appropriate department, whether it is housekeeping, front desk or maintenance.  Text mining, similar to data mining, uncovers related concepts in large volumes of conversations, and surfaces key topics that can be used to understand or predict guest behavior.  For example, text mining could tell you that the most frequent topic of conversation among your customers relates to the loyalty program, and when guests mention the loyalty program, they also talk about earning and redeeming points.  The final technique is sentiment analysis, which uses natural language processing to determine how guests feel about attributes of your brand, product or service.  Sentiment analysis will tell you that guests are relatively positive about your beds, but they have negative feelings about the service at the restaurant.  Best of all, social data is public data, so you can grab your competitor’s data and perform the exact same analysis on it that you do on your own.

 Once you have quantified unstructured text and collected descriptive statistics, traditional advanced analysis like forecasting, predictive modeling and optimization can be used on this data to gain additional insight.  For example, you can track trends in sentiment analysis to predict where service problems may occur, to target training efforts or to help understand where to invest in refurbishments.  Volume of chatter after a promotion can be used to predict success of future promotional activity.  Results of text mining can be incorporated into behavioral analysis to enhance acquisition, retention and attrition modeling.  Influencer scores can be incorporated into the customer value calculation to place a dollar value on a particular guest’s network.

 Where do you start?

With so many options, it can be overwhelming to determine where and how to get started.  To help with this, some colleagues and I developed a framework[ii] (below) that places the direction of social media communication (inbound – or consumer generated and outbound - or firm generated) against the scope of the decisions must make (short term – tactical and long term – strategic).  Inbound information flow is the data generated in social networks by the consumers, and outbound represents the firm’s communications through social media channels.  Most hospitality managers, particularly analytic hospitality managers, are used to working with data and with channels, so social media simply adds another data source and another channel.  My co-author, Dr. Noone, will place this framework in the context of revenue management later this month (which is where the quadrant examples come from), but I propose that it can be used by any department that is struggling to find a way to take advantage of social media.

  What you will realize as you begin to apply this framework, and what I think is key to successful social media analytics, is that the right approach is to start by identifying a business problem you need to solve, and then to determine how social media analysis could be used to improve the solution.  Instead of letting social media drive you, think of incorporating it as another data source and channel to augment your existing tool basket.  This approach makes it much easier to envision how social media can be leveraged across the organization (and will probably give you more ammunition to justify your investment in Social Media!).

[i] Kaplan, A.M and Haenlein, M. (2010) Users of the world, unite! The challenges and opportunities of social media Business Horizons 53 (1) 59-63.

[ii]  Adapted from Noone, B.M, McGuire, K.A. and Rohlfs, K.V (2011) Social media meets hotel revenue management: Opportunities, issues and unanswered questions, Journal of Revenue and Pricing Management 10, 293-505.

 

How and when hotels and casinos should participate in social media conversations was a topic addressed in the conclusions paper, Getting in on the Conversation: The Power of Social Media in Hospitality and Gaming from a webcast sponsored by SAS and the Center for Hospitality Research at Cornell University’s School of Hotel Administration.

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Customer Lifetime Value Analytics – The Holy Grail for Hotels and Casinos

Kelly McGuire
Kelly McGuire|February 29, 2012

Most managers realize that understanding customer value, and more importantly customer lifetime value (CLV), can help them plan strategies to encourage loyalty behavior, increase revenues, and ultimately drive profits. In fact, as Mike McCall told us earlier this month, companies invest heavily in loyalty and rewards programs primarily to collect customer data that they can ultimately use for initiatives like calculating customer lifetime value (well, those who don't have "me too" programs, anyway).

It’s relatively easy to understand why CLV can be considered a “holy grail” metric.  We all know that all customers are not created equally, and with limited resources, firms simply can’t afford to “roll out the red carpet” so to speak, for everyone.  (Sorry, but it is Oscar time after all!).  Focusing on “best” customers helps firms to maximize revenues while minimizing their investments.  But that’s the trick – what do we mean by “best”?  Is it the high roller who drops tens of thousands of dollars a visit, the weekly slot player at a couple of hundred, or a mediocre gamer who’s spouse is a shop-o-holic addicted to $300 bottles of wine? (Caesar’s bet on the weekly slot player, and has been very successful, but recently some in the industry are going a different direction)  Is it the international traveler who flies long distances every time the fares drop, or the one who buys a last minute, full-fare ticket for their weekly trips from NY to Boston? (Many airlines reward you for both miles and segments, but you earn points with Jet Blue based on dollars spent).  In all of these cases, CLV becomes the great equalizer – but that’s assuming you’re using the right data and the right calculations to derive it.

I spoke with David Ogden, who is a Principal Analytical Consultant at SAS that specializes in the analytics involved in CLV, to get some insight into the opportunities and challenges associated with this important metric.

What is CLV Anyway?

 I asked David how he defines CLV.  David says that CLV is a measure of the economic value of a customer.  It’s easiest, he told me, to think of it as the sum of all profits from a given customer, over the “lifetime” of their relationship with you.  So the basic formula would be to calculate customer-level profitability, project it into the future, adjust for retention probability, discount to present value and sum it all up.  The challenge, he says, is that when you dig into each of the steps, you begin to realize that not only is the right data hard to get (for customer level profitability), but the right answer can involve some fairly complicated analytical techniques like forecasting (for future profitability) and predictive modeling (for retention probability).  Yes, that’s where it gets hard, but in my opinion (and his!), that’s also where it gets fun!

How can I get started?

 David has strong suggestions for those hotels and casinos that want to start using CLV: Plan a phased approach, start simple and improve from there.  Some of the biggest mistakes he sees in this area are firms who try to bite off too much and end up in “analysis paralysis” – they never actually get to implement their plans and realize the benefits because they’re too busy trying to derive the perfect formula.  I’d further suggest that you should start by thinking about where and how you want to actually use CLV, and let that guide you to the plan your phased approach.

Once I have it, what should I do with it?

Many hotels and casinos see CLV as a way to balance the challenge of managing incremental revenue in the short term with more long term and strategic value generation.  For example, incorporating the value of the customer into the revenue management decision theoretically means that you can say “yes” to customers who will be profitable over the long term not just those one-time customers that are willing to pay a high rate today.  Understanding CLV also helps in marketing strategies.  It can ensure you are not over-rewarding or over-incentivizing customers (think comps in casinos) and can also improve targeting and segmentation strategies.

Perhaps more importantly than using CLV as a static value in analytic exercises like revenue optimization or segmentation analysis is to understand and manipulate the drivers of customer value. Once you identify groups of highly profitable customers, you should look at their profiles and identify the behaviors or patterns that make them profitable.  Then you can develop strategies that help you identify unknown customers that are likely to be highly profitable, and determine the right actions to encourage that behavior.  You can also apply that knowledge to cultivate existing customers that seem likely to be more profitable if only they had the right encouragement, and to continue to increase the economic value of your highly profitable customers. David said that one of the more creative uses of CLV along these lines was a client he worked with who profiled zip/postal codes in terms of overall value and then tailored some creative marketing plans to attract customers from the highest value areas.   One of their strategies was to use mobile billboards, essentially driving trucks through the identified neighborhoods with messaging promoting their brand!

[While I’m on my soap box, on the subject of marketing, please also keep in mind that you don’t always have to offer customers a “deal” to encourage them to buy.  It is equally effective to make them aware that you have something you know they really want!]

Another benefit of understanding the drivers of customer value is the opportunity to improve your loyalty program.  David says that a weakness of many loyalty programs is that they often chase revenues and not profits by rewarding frequency and longevity instead of encouraging truly profitable behavior (Mike McCall agrees). The essence of CLV is that it allows you to understand profitability and loyalty in tandem, meaning that you can design your loyalty programs to increase the loyalty of profitable customers instead of paying for the increased loyalty of unprofitable customers.

What does the future look like?

Finally, I asked David if he saw any new or emerging opportunities in the area of CLV.  He said that one of the inherent limitations of the CLV methodology is that you simply cannot quantify every aspect of “value”.  He gave the example of a customer who has a very low or negative value (very few transactions, low in revenue and high in costs), but who is a prominent blogger with thousands of weekly readers.  As an individual they might not be worth much, but given their sphere of influence, and with the possibility of negative press for you, they might be worth much more.  This is a dramatic example, but every customer has the power of word of mouth, positive or negative, to some degree.  It’s just been very difficult to capture and quantify traditionally.  However, with the ever-increasing relevance of social media, the opportunity to include social influence in a CLV calculation has presented itself. David feels that moving forward, a best-in-class CLV implementation will include some measure of social influence.  It is easier said than done – but it’s certainly possible with the right text analytics software.

Which is an excellent segue into next month’s topic!  In March we’ll be talking about social media, and specifically how hotels and casinos can leverage turn the data and information in social channels into meaningful, actionable information.  Stay tuned!

Hear how leading hospitality and gaming companies design effective customer loyalty and rewards programs to differentiate against the competition in this YouTube clip.

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Hospitality industry outlook for 2012

Natalie Osborn
Natalie Osborn|February 23, 2012

We are just putting the finishing touches on our SAS and CHR joint webcast for February. In this webcast, entitled “Hospitality Industry Outlook 2012”, we asked four industry thought leaders about the issues that will most impact the industry in 2012. The webcast will be available for viewing on demand next week.

Featured in the webcast, are: Rohit Verma PhD, Executive Director, Cornell Center for Hospitality Research, Cornell; Neal Fegan, CRME, Executive Director Revenue Management, Fairmont Raffles Hotels & Resorts International; Howard Chong, PhD, Assistant Professor, School of Hotel Administration, Cornell and Alex Dietz, Principal Product Manager, Hospitality and Travel Global Practice, SAS.

In addition, Kelly McGuire, PhD, Executive Director, Hospitality and Travel Global Practice, SAS, will join our host Karin Reed in the studio to comment on the implications of the issues raised by the thought leaders.

Would you like a sneak peek at the topics being covered?

Dr. Rohit Verma writes often on issues affecting the hospitality industry.  Rohit spends some time in the webcast re-visiting some of his past predictions, as well as talking about the trends that he believes will impact the industry in 2012. Hot at the top of the list? How hotels work with travel intermediaries, the movement towards mobile, and the globalization of the hotel industry.

Neal Fegan has developed a unique revenue management leadership development program geared to recent university graduates.  The goal of the program is to generate interest in the subject both inside and outside of hospitality schools in revenue management careers, and to increase the number of highly-qualified revenue management personnel working in the industry.  Neal spoke about the success he has seen so far with the program and why he would like all of his competitors to be doing the same thing.

Dr. Howard Chong discussed sustainability programs and how they affect customer choices when it comes to hotels. He talked about whether hospitality executives can expect higher rates as a result of their sustainability efforts, and the biggest challenges to overcome when implementing sustainability initiatives.

Alex Dietz explored some new advances in pricing technology. He talked about how he is focused on incorporating competitive pricing information into revenue management decisions, in order to increase the adoption of pricing technology and analytics by the hospitality and travel industries.

Great stuff – and I look forward to sharing the details of the webcast next week and answering your questions here in the comments.

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