Title image for article The customer's data is king
TEXT Anke Pedersen

The customer's data is king

It's been official since August: following the merger of the loyalty schemes of Marriott and Starwood, the over 110 million members of the two schemes can now obtain goodies in 6,700 hotels around the world. Does that mean that private hotels might as well give up now? Not at all! Incentives won't encourage loyalty – good service will. You just need to know how.

Until recently, Ben Meyer had always refused to get a Payback card. As if he would voluntarily hand over all his customer data – never! But when Meyer found out that you can transfer your points balance to Miles & More accounts, he decided to sign up. Since then he's looked forward to hearing the notorious question "Do you have a Payback card?" every time he goes to the check-out.

Meyer hasn't yet heard this question in a hotel. It's not just Lufthansa that's a partner of Payback; Best Western is too. But, as is presumably also the case with the airline, Best Western Hotels (BW) hasn't just entered into this cooperation because it's hoping for an increase in bookings. The company also wants specific information about the behaviour of customers like Meyer. "Customer data is what matters," says Best Western CEO Carmen Dücker. "It allows us to learn more about customers and what they want, so that we can offer them increasingly individual services and products tailored to their wishes, following the same successful principle as personalised recommendations from Amazon or Netflix."

These show users after they have placed a few orders what buyers with similar interests have purchased, and which products are particularly popular at the moment in their peer group. Users also receive suggestions for products that they might be interested in, along with special conditions. It's all extremely convenient and easy. But above all, it ties customers to the company. Because compared with an order from Amazon, which learns by the second, virtually any other shopping experience outside the platform is likely to prove fairly disappointing – as there is no personal added value. 

We can learn from customer data what the customer wants, and offer him more individual services.

Marriott: Technology is enabling closer connections to guests

Marriott has also recognised this principle. That's why members of Marriott's and Starwood's bonus schemes, which merged in the summer, won't just enjoy more attractive rewards and a bigger selection of hotels. Marriott plans to make on-site experiences more individual too. "Our loyalty schemes are the backbone of our relationship with our best customers," says Andrew Watson, Vice President for Digital, Loyalty and Portfolio Marketing Europe. By combining them, he explains, the company is opening up more opportunities for customers "to stay with us, which in turn creates more growth opportunities for us." In addition, the harmonisation of his chain helps to "drive forward technological advances, so that we can offer personalised stays and build closer relationships with our most loyal guests."

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Carmen Dücker: "Customer data is what matters."

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Andrew Watson: A closer connection to 110 million registered guests

Given the 110 million members registered with Marriott and the technology park that the chain has at its disposal, you could easily start to wonder whether smaller hotel chains – and individual hotels in particular – shouldn't just throw in the towel now. However, the latest studies show that there's no need for resignation. For example, market researchers at Google launched a survey of frequent flyers in the summer together with the research consultancy Greenberg, to find out how loyal today's frequent flyers are. The result was "not particularly".

In view of the wide range of loyalty schemes currently in existence and the fact that there is now almost unlimited access to market information, frequent travellers often base booking decisions first and foremost on "customer service" these days (60 per cent). This is followed in second and third place by "a user-friendly website" (55 per cent) and "online reviews" (50 per cent). "Loyalty schemes", on the other hand, are unable to motivate even half of frequent travellers to make a booking decision (46 per cent).

"Customer service is more important than any rewards scheme"

The US researchers concluded that customer service is now considered much more important than any rewards scheme. Accordingly, the service that a provider can offer across all points of contact on the "customer journey" – from the search for a hotel, flight or travel operator to booking and customer satisfaction surveys – is "more memorable than all the bonus miles".

A small private hotel operator might well ask what frequent flyers have got to do with its establishment, but above all with heavyweights such as Marriott. The answer is simple. "If we look at the two types of loyalty, we see that loyalty to airlines is stronger than loyalty to hotels," Google says. That means that if loyalty schemes no longer have the power to retain customers in the airline sector, which – compared with the hotel trade – involves more manageable figures, then it's better for hotels to focus on what they do best: service for guests.

Best Western CEO Carmen Dücker is convinced that this is precisely where hotels will come into their own. "I don't believe that the results of the study in any way suggest that we shouldn't have loyalty schemes. The best customer service can only be offered by those who best understand what the customer wants. And a customer loyalty scheme is the best way to find that out."

The marketing expert readily admits that the blanket coverage offered by a loyalty scheme with a wide reach naturally provides an enormous competitive advantage. However, she says there's one thing we mustn't forget, irrespective of size and technology: "There's nowhere you can find out more about the customer than during his stay on site. And that's where private hotels have a chance: once a guest has checked in, a small private hotel has the same opportunities as a giant like Marriott to communicate with the guest and provide him with a service that is tailored to him personally."

"Sometimes it's about very banal things, but the guest notices them!"

For example, Dücker suggests, "I can simply ask a guest when he's checking out: 'Did you like room 125?'" Depending on the answer, you can then reserve a room in line with the preferences he has expressed the next time he books, thereby demonstrating your appreciation. "And if we have a guest who I know has a fear of heights, then naturally I won't give him a room on the eleventh floor." Dücker adds, "So sometimes it's about very banal things, but the guest notices them!" Nevertheless, she points out, it won't work without appropriate communication. "It's up to us to tell him, the guest, that we're doing something good for him."

Google's research backs up Dücker's theory. "For travellers, the option to choose their seat is one of the most important elements of the airline experience," the Google market researchers report. This "experience" does not apply to the hotel trade, however, as guests do not generally know whereabouts in a hotel they will sleep. It's a real gap in the market, as demonstrated not least by the example of Hilton Hotels: according to Google, Hilton has reprogrammed its app so that its Honors members can now choose their preferred room in advance. Since then, Google says, over 90 per cent of users have saved their data in the app.

Christian Buer, a professor of tourism at Heilbronn University, believes that this is precisely where the key to success lies for the hotel industry in the digital age. With society becoming increasingly individualised, guests will "take over more of the services traditionally provided by a hotelier in future," he predicts. He says this will initially involve "the booking processes we already know, going through guests' own booking structures and those of the service providers, known as 'channel managers' and/or 'online travel agents'," but that it will expand to include "guests checking themselves in, opening the door with an instrument they control themselves and issuing and paying an individualised bill on their own device." 

It's up to the hotel industry to tell the guest that it's doing something good for him.

Real-time customer loyalty with guest experiences

However, Buer says the main point is not just that all these processes will take the pressure off hotel employees in future, but that guests will find this "outsourcing of services to the guest" to be "extremely convenient". Because as the example of the Hilton app shows, individualised guests want to decide for themselves when, whether and how they make use of the available services and which services they use. Buer says, "The convenience described here will be investment in a brand, in a hotel. The guest will see this 'guest experience' as a 'digital guest experience' and an 'investment in the sense of paying into' the hotel's brand." And he'll come back.