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Expert view: why data neglect is losing you customers

Expert view

Failing to uncover those crucial, profit-boosting insights from your customer data?  Here’s an expert to explain what’s going wrong.

Data insight expert Steve Farquhar, Analysis Director, Aquila Insight, explains why Hospitality operators are failing to make the most of their guest data to bolster profits.  From a lack of understanding about how customers engage with your brand to the very specific types of insights that lead to profit-boosting marketing and loyalty improvements, Steve uncovers how you can capitalize on these hidden data gems to keep you one step ahead of the competition.

What is the biggest mistake Hospitality operators such as restaurants, hotels and casinos are making when it comes to data collection and analysis?
Of all industries, hospitality businesses are perhaps the ones you’d expect to be the most customer focused. Although this is often true at the front end in terms of how they service known loyal customers in their physical outlets this is often not backed up by a considered customer value management strategy and appropriate data capture. Many hospitality businesses are still driven primarily by product –  rooms, covers, games etc. – and their associated profit margins rather than understanding customer engagement with their brand and shaping their business around that insight.

What types of insights can operators hope to capitalize on from their data that would make the most impact on revenues?
As a customer focused but profit motivated business it’s important to get the balance right between prioritising services for valuable customers and keeping operating costs to a minimum. These days, particularly within the hospitality space, high value, loyal customers are looking for efficiency and convenience to make the most of their valuable time – in my view this area of focus represents a significant opportunity for hospitality businesses. Building processes which reduce ongoing operating costs whilst servicing customers in a way which drives loyalty and repurchase is key to long term profitability. Examples might be:

  • What is the demographic and behavioural profile of our high and low value customers? How can we use that knowledge to our advantage?
  • What services can we offer our VIPs to motivate repeat business? E.g. fast check-in/ordering/payment, preferential cancellation terms, special offers etc.
  • Which seasons, days and times of day generate the majority of profit and why? Can we increase the lower value periods by using this insight or should our proposition differ at different times?
  • Would joint offerings/partnerships with other brands attract more of the customers we want to target?

By answering some of these questions and many more, service businesses can find ways of achieving that balance between attracting valuable customers and keeping them, generating ongoing revenue and controlling operating costs

What advice would you give to operators regarding their systems and infrastructure when it comes to drawing usable conclusions about customers from data analysis?
Data integration is key and this ability differs between businesses. Some will have disparate systems and data structures which makes it challenging to integrate whilst others may have all the data they need but just need to format it for analytical purposes. Ultimately, to generate powerful business insight the analytical desire is to interrogate all customer interactions across all business touchpoints.

Each business should ask itself, ‘if we want to get a full view of how each customer interacts with the brands and products available in our organisation is this possible?’. If the answer is ‘no’ there is work to be done!

What practical steps can hospitality operators take to get more out of their data planning?
A good starting point would be:

  • Articulate a customer focused strategy with aspirational targets – this should consider elements such as customer volumes, engagement, value experience and retention
  • Define and build associated trended metrics which will highlight progress against achieving these strategic customer goals

The end result should look quite simple but getting there may be harder than it seems

What is the most important customer touch point that operators can obtain the most insightful data?
That’s a difficult question to answer as it will differ by business. I tend to think understanding and acting on dissatisfaction is key because only a handful of people actually express dissatisfaction but many more may be subject to the same experiences. If negative feedback from existing customers isn’t taken seriously then many more potentially valuable customers will be walking away. So the question is perhaps “how can operators invite feedback, without being intrusive at as many touchpoints as possible?”

How important is the use of social media in insight gathering?
Social media is very powerful. It’s a great mechanism to receive and respond to customer feedback and is also a great viral tool (free marketing/word of mouth). In the previous section I talked about taking negative feedback seriously, this is key as bad news travels very fast in social media too!

Another aspect of its usefulness is the cost effectiveness of attracting business e.g. via last minute offers. No other channel offers the direct reach to engaged customers quite so simply.

If businesses these days don’t have a social media strategy beyond posting a few updates on Facebook, they should have – this is a channel that has much more potential.

Can you provide an example of a business that significantly increased their revenues as a direct result of implementing a data planning strategy, analyzing existing customer data and making changes to the business from gained insights?

A global mobile phone company wanted to understand what drives satisfaction and how it relates to customer retention.  With the focus on launching ten or more new handsets each year, our client lacked insight into the consumer experience over the product lifecycle.  While they tracked issues and collected feedback, there was no single view of the scale or impact. It was unclear which issues were most important to the user experience – the scratched case or the software that wouldn’t allow the sharing of photos.

We worked with individual data sources and a broad cross section of the business to prove an initial hypothesis that could link customer satisfaction with the likelihood of repurchase and to champion the business.  By bringing together internal and external teams we built a process that made it possible to get customer feedback with a survey at different points in the lifecycle, to capture, measure, understand and act on that customer feedback.  We used the resulting data to quantify customer satisfaction and put a financial value on it.

The business achieved an end-to-end view of the customer lifecycle, with improved insight into the drivers of satisfaction from customer behaviour.  Acting on the resulting data, they rationalised the range to launch as few as five new handsets a year.  By making changes to the way software is updated, new products are designed and the ongoing support is provided, the business has seen major cost savings, a significant increase in retention rates, consumer satisfaction and loyalty.

Aquila Insight is a data analytics company focused on extracting the maximum value from data, translating it into decisions which empower our clients to take better actions. We use data, advanced analytical techniques and cutting edge technology to create insight and ideas that help you make the perfect connection with each and every one of your customers.

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