Wednesday, 30 May 2007

How Hotel Operators Can Win And Retain More Customers

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In a recent article we talked about how the principles of Successful Customer Outcomes (SCO) and Next Practice could be applied to enhance the travelling experience of airline passengers, while enabling increased business success for the airlines themselves. This time it is the turn of the Hotel (or Hospitality) sector to come under the microscope (and hopefully benefit!) from our musings and observations.

As with the airline example, these thoughts and ideas are based on real experience, as you might imagine while flying all those miles we have stayed in quite a few hotels – and as you would expect had some very mixed experiences along the way.

Most amusing is to actually be delivering classes and discussing Successful Customer Outcomes in a hotel while watching things go awry and analyzing how the hotel staffs react to issues and opportunities as they occur.

Before we start to think about how the application of Next Practice might be applied in the hospitality sector, let us first step back and think once more about those Successful Customer Outcomes. The thinking behind it is pretty straightforward, if we focus our business around these then we will delight the customer and they will both buy more and tell more people how good we are (leading to more customers). So great, we win and retain more customers and increase revenues, but what about cost reduction and working out how we can actually deliver on these.

This is where the concepts of "Moments of Truth" (MOT) come in. An MOT occurs every time that a customer interacts with our organization, whether through systems, such as the web or with a person. Each of these MOTs will result in one of two outcomes. Either it will turn into a "Moment of Magic" where the customer goes away at least satisfied but hopefully delighted. Or it becomes a "Moment of Madness", one of those occasions where the customer becomes extremely frustrated and possibly even angry.

It has to be the goal of any company to ensure that every MOT becomes a "Moment of Magic" and there are a number of techniques that can be applied in process analysis and design to ensure that these opportunities are optimized. As any marketer will tell you these happy customers are likely to tell three to five people how good you were and to recommend you to their friends. In the alternative scenario, those same marketers will tell you that those of find the "Moments of Madness" will tell significantly more people not to use you, possibly as many as 8 to 10 people. In both cases the variance in numbers being proportional to how delighted or how angry they were.

So ask yourself, how many Moments of Truth do you have each day with your customers? And how have you organized yourselves to ensure that each one of them becomes a Moment of Magic? And if you should cause a Moment of Madness to occur how will you redress it to the customer's satisfaction.

Frustrated Customers

Few would argue that whatever part of the world we live in, the state is playing an increasing part in acting as a "Nanny" – telling us what we can and can't do and how we should behave etc. Well now it would appear that the corporate world has started to try and tell us how to behave as well.

In Post Offices, Trains, Airline Check in Desks and other places we are seeing a lot of money being spent on a new type of sign, I am sure you will have seen similar examples, if you haven't them look out for them they are there.

These signs read approximately as follows "Our Staff have the right o work in a safe and secure environment and we as a company have a duty to protect those rights. Accordingly, anyone acting in an abusive manner, or using abusive language or physically assaulting our staff will be dealt with/prosecuted." – of course I have paraphrased slightly rather than reproduce all the signs.

Before saying too much more on the subject I would just like to point out that violence to anyone can never be tolerated and as such deserves prosecution. But, what are the causes of this "mindless" verbal abuse that companies are referring too, I confess to having raised my voice on several occasions when told my flight was overbooked, or that there was no longer a room available or in other such situations, but how wrong am I?

As customers we pay for goods and services and surely have a right to expect delivery of the said goods and services? It seems that today that rather than focus and driving out the "Moments of Madness" our corporate "Nanny" has instead told us we have no right to complain, or if we do it has to be quiet and we should accept a non-resolution to the problem!

In most situations (I am sure not all situations) where such friction arises it is due to the fact that the organization in question has failed to deliver on a promise turning what are normally reasonable people into quivering wrecks. Perhaps instead of such "health and safety" signs we should make the obligation on companies to deliver on what they promise, thus eliminating the cause of much such behaviour.

So what SCO-inspired survival tips can we propose that may help the hotel industry, to avoid customer frustration and deliver ever greater value to their guests?

Eight Next Practice Offerings

Here are eight examples of SCO-oriented service offerings that might help the hotel operators to win and retain more customers. As with Steve Tower's list for the airline industry I am sure you could add to my choices. Perhaps you might even like to take the time to email me with your ideas. Most importantly however you should start to consider what type of list your customers might make for you.

1. Loyalty Programs

- Recognize Other Peoples Customers

Several years ago I was staying in a Marriott Hotel in the UK. I was sitting quietly in the bar waiting for a colleague when the manager approached me. "Sir, I see you have a tag on your luggage showing that you are a Hilton Gold Card Holder, have you considered a Marriott Card?" I replied that I had but did not spend enough nights in the Marriott to qualify and so unless I could not find a Hilton I tended not to use Marriott hotels. He took it upon himself to note my details and said he would contact head office and arrange for them to match my current level of membership. Well it comes as no surprise that for that year at least, I switched at least some of my business to Marriott. In the UK at least it is common practice for supermarkets to accept the competitions vouchers, so why then do hotels not take a leaf out of their book. As any frequent traveller knows, once you have accrued Gold or Platinum status with one chain it is very hard to justify using other hotels unless you have to. If the others want our business they will have to work harder to get it.

- Retain the Customer

Many frequent travellers have changing travel habits, one year you travel a lot and the next not so much, before picking up again. How frustrating is it to get great service as a Platinum member during your middle less travelled year, only to find that as your travel picks up you are downgraded again. This I suspect will be the case for me. This year I have been fortunate enough to travel as a Marriott Platinum member, but can see with only 60 nights in their establishments! I will be downgraded again next year. Of course they will downgrade me and like others I will reconsider where to stay next year based on what deals/memberships are available. Why then don't the hotels consider something like airlines do and put in place "lifetime" programs such that should you qualify over a period of years (or they decide they wish to keep your particular business) over you a "lifetime" membership at certain levels.

2. High-Speed Internet Access

Strange isn't it how the lower cost hotels are increasingly providing free high speed internet access, whereas in the same chain their up market brands still assume that it is acceptable to charge you large sums for the privilege. In the world we live in today it is not just the business traveller that relies on such niceties as high speed internet, even leisure travellers are increasingly seeking such service (especially as more and more people switch to using Voice over IP for their telephone calls).

Surely the time has come for the up market brands to realize that if they are to compete, even within their own groups, then this practice has to change. It is no longer acceptable to assume that people will pay a premium price for a hotel and service and then be expected to pay again for something that others at a lower cost provide for free.

3. Breakfast

I guess all travellers are different, but me I tend to eat lightly at breakfast time (yes, I know it is bad for my health, but then so is BPM ), so I find the free buffet breakfast offered at the lower range hotels quite adequate for me. Then of course as mentioned earlier, thanks to my Marriott privileges at the high end of the market they also offer me free breakfast, so why is it then that they (and others I believe) feel that if we stay at a mid-market hotel (In the case of Marriott I mean Courtyard) that they can charge us an extra $15 or $20 for breakfast? Of course this is good news for Coffee Shops who offer free internet access as we can simply leave the hotel and spend nothing and instead go across the road have a decent cup of coffee and a light bite, while checking our emails for free! Over the past few years many hotels have made great strides with their creative use of the "Executive Lounge" concept, but I think there is still some way to go before they truly get it nailed.

I was talking with someone who said the other week that as a Platinum/Gold card holder what they would really like is for the hotel group they are members of to offer free coffee/tea or internet access for the premium members whether they were guests or not. I asked what the point of this would be and they replied that if the hotel group could persuade the business people to meet more often in their hotels rather than competitors then they would increase the chances of selling more food, additional room nights and even more meeting events – what a neat idea.

4. Partnering

Airlines realized many years ago that they could not cover every destination on the globe and that they had to partner. Then later they started to allow their frequent fliers to collect miles and tier points on their partner flights. Yet still we have the frustration of not being able to find a hotel within our chosen chain or group in the location we want and so have to use another, with zero benefit (and usually with lower service because we are not a frequent customer of that chain.). So, how about hotels get in on the act too? They could start to allow us to collect nights and rewards, by them partnering to offer a broader reach. This will surely enhance their business as the one that offers it first will find that international travellers will surely reconsider their hotel habits.

5. Customer Feedback

Ever seen one f those signs saying something like "as requested by our frequent guests" or "in response to customer demand" or some such similar wording, ever wondered who it is they are referring to? I have. Like many who might be reading this, as has been said before I have over the last 15 years been a frequent guest of many hotels, yet not once have they ever contacted me. So who are these mythical guests, that is probably not fair as I am sure the marketing people have it all figured out. I just find it hard to see how not keeping in regular contact with your best customers can lead to your innovating product to cater for them and retain their business. Or do they spend disproportionate amounts of time analysing those guest questionnaires they always leave in your room? Who fills them in? I suggest that they are mainly filled out by infrequent guests who had that one great experience and do it as a thank you. Most of the business guests I have spoken too say they can't be bothered – usually after being asked to do so after getting bad service! So perhaps the surveys are self serving.

Top retailers, frequently run events for their best customers, inviting them to previews, discount nights and other things – to persuade them to keep coming back and also to enable them to talk on a one to one basis with the customers and keep an eye out for changing buying habits. It apparently also affords them a great way to pick up market intelligence on their competitors from the people who really know – the competitors customers!

6. Delivering on the Promise

It is an unfortunate fact that in the hospitality industry as in the airline industry, with the volumes of nights/seats sold, things will go wrong sometimes. As customers we actually do understand this, but it is your ability to resolve the problem speedily and to our satisfaction that will set you apart. I consider this as delivering on the promise, the promise that we said you could have a room and you will have one. We may not have one here but we will organise another locally and will pay toe any additional transport costs or difference in room rate. Or we are sorry that we have let you down and will compensate you with extra points/money or whatever.

Sadly, in most cases where such a secondary promise has been made due to a failure in the primary one, the organization fails to deliver. In fact I suspect that there will be staff at least two hotels in Canada reading this right now and thinking, whoops he means me/us – well I do and I don't. As I say sadly all too often this experience is repeated all over the world.

Again, the places to look at for inspiration on this are top retailers; perhaps a variation on their no quibble returns policy might be applicable?

7. Share Information

Before you say anything, this one can be seen as more of a personal gripe and one that is easily fixable with the right systems! If I have booked a room with your hotel through the web, using whatever booking process or site that I used, the chances are that I have already provided all of my name and address details. So please do not ask me to fill in the details on your registration form! What's worse please do not try to justify it by saying "oh that system does not pass us those details" or worst of all "Due to data protection regulations we are not able to access that information! We know what you mean, you mean the system sucks and we really can't understand why the technical aspects of this weren't fixed months/years ago – we have been telling them about the complaints from guests for ages.

Which raises another key way for hotels to improve their service; pay more attention to the feedback from your front desk staff and less from the hotel or middle managers? The managers see only the small proportion of issues that occur in the process, whereas your front desk staffs see them all. In any situation the best source of pain points will be with front line staff and they will also usually have some good ideas on how to improve the situation, very often at little or no cost.

8. Stop Comparing to Other Hotels

In any business we sometimes find ourselves focussing too much on what our competition are doing. In the case of hotels there are two parts to the case here. In the first instance your guests are your guests and they care about what you do and not about what the competition does – two wrongs do not make a right.

In the second case you should remember that you are not really in the hotel business you are in the service business and as such you should be looking outside the hotel sector at other industries where they are considered to deliver great service. Then armed with those ideas and innovations you can become the one that others need to worry about, rather than the other way around.

In this article I have mentioned the particular brands of Marriott and Hilton, where I stated that I am a frequent guest. The experiences are also borne out stays I have made at Best Western and Six Continent hotels as well.

These examples are taken both from our own experiences and those of people we have travelled with and coached for. The suggestions are not scientifically based, but are the results of people looking from the outside in. In many of the instances where bad service occurred it was put right, rarely though by an employee working within the system, but one who recognized the lifetime value of a customer and attached an importance to that value. Hopefully, if enlightened hotel chains take heed of at least some of the advice and ideas, then all of our future travel experiences might get a little bit better.

Note: This article first appeared in November 2005 on Mark McGregor's series of articles on BPMG.org

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