Customer Experience is top-of-mind for executives in many industries today. In the increasingly competitive hospitality industry, where the guest’s experience is front and center, improving and innovating CX is key to meeting customer acquisition and retention targets and sustaining long-term growth.
Developing a competitive and distinctive customer experience strategy in the hospitality industry requires conducting several key exercises:
- Using data to identify specific needs-based customer segments
- Understanding the customer journey for each customer segment
- Prioritizing and testing programs
Together these exercises will allow hotels to identify the right business opportunities to improve the customer experience.
Using Data to Identify Needs-Based Customer Segments
The most meaningful customer segments to target for unique experiences are needs-based. According to Forrester Research, Customer Experience is a like pyramid, and meeting customer needs is at the base, where CX must begin.
Hotels should use existing customer data to start the process of identifying key behavioral and needs-based differences among their customers in order to identify their important customer groups to target. At first pass, factors to search for and consider in customer data include:
- Travel purposes (business vs. leisure vs. extended stay)
- Travel occasions (conferences, weddings, visiting relatives, pursuing hobbies, tourism, client meetings, etc.)
- Life stages (single professional, family with kids, retirees)
- Customer stay-frequency and volume (time between stays and total number of stays)
If insufficient data currently exists to identify these differences between customers, hotels may need to consider investment in getting such data. Some research methodologies for hotels to consider:
- Opt-in programs targeted at specific customer groups to collect data about customers who choose to opt-in
- Direct customer research, like surveys and interviews
- Developing better data capture processes at booking, check-in, check-out, and beyond
Over time, further research and pilot testing may be necessary to develop a long-term customer experience strategy around well-defined segments.
Understanding the Customer Journey for Each Customer Segment
Once needs-based customer groups have begun to be defined, it’s important to consider how these different groups experience the hospitality customer journey differently. The Forrester Research Customer Experience Pyramid places ease of doing business with a company at the middle of the pyramid, and enjoyability at the very top. Once a strategy for meeting customer needs is in place, companies must ensure that customers find the process easy and enjoyable, at every stage of their interaction with a brand. Customer journey mapping provides the additional customer insight necessary to provide easy solutions for needs-based customer segments at the right moments.
For hotels, it’s important to remember that a guest’s experience begins long before they actually interact directly with a brand, when they begin to research and explore their stay options for an upcoming trip.
Planning ways to make every stage of this complex journey easier and more enjoyable for each unique needs-based segment is crucial to delivering a great Customer Experience. For instance, customers exploring their next trip may find very different programs improve their experience than do customers in the planning stage that are getting ready to travel. And customers who are traveling for business will go through a much different travel exploration process than those planning a vacation.
Prioritizing Actionable Business Opportunities to Improve the Customer Experience
Many hotels have already begun to improve the experiences that bring guests into their pipeline, thus increasing customer acquisition. For example, trending improvements include:
- Streamlining the digital booking process
- Launching apps offering mobile booking, check-in and room keys
- Adding new benefits to loyalty membership programs
However, customer experience innovations designed to improve customer retention are less common.
Loyalty membership programs often form the bulk of a hotel’s customer retention strategy. However, they represent just one part of the guest’s experience, leaving many untapped options for increasing a guest’s emotional and financial loyalty to their preferred hotel brand.
Lenati’s 80/20 rule in integrated loyalty marketing states that 80% of customer loyalty is driven via the experience of the core product or service offering, and only 20% can be achieved through traditional loyalty marketing tactics (programs, communications, messaging, etc.). For hotels, this means that 80% of a guest’s choice to return is influenced by factors like the quality of their room, customer service, and the ease, simplicity, and speed of every element of their stay (from search and booking, to food, fitness centers, transportation, local options, and personalized amenities). Put another way, every level of the Forrester Customer Experience Pyramid needs to be fulfilled to drive long-term loyalty, and hotels have a lot to optimize in order to make that happen.
To create a good experience at every stage in the customer journey, hotels have a number of business levers under their control, which they can adjust, target, and personalize to better influence the customer experience. These levers include:
- Properties, services, amenities and features available
- Packages, product offerings, and personalization
- Membership programs for different customer groups
- Marketing and outreach
- Booking processes and channels
- Partner programs
- Staff training and enablement
As hotels gain a better understanding of their important customer groups and the behaviors and need-states that define these groups, they are poised to develop targeted experiences for each group – and give staff the training and tools to empathize with these different types of customers. Through a test-and-learn approach to piloting programs, hotels can further refine what best improves the experience and results for each customer group.
Over time, this process will enable development of a strong customer experience strategy designed to target the right customers in the right way at each stage of the journey. Along the way, hotels will develop a thorough understanding of key customer behaviors and needs – and the kind of services, packages, programs, benefits, marketing, and personal services that make a difference.
For more information about using customer experience to improve customer loyalty and retention, download this detailed presentation on Customer Journey Mapping.