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Developing a Total Email Marketing Strategy |
June 2002
By Jason Price and Max Starkov
Boston Consulting Group describes the marketing power of the Internet in terms of reach and frequency. Nowhere is this better illustrated than through email marketing. Following the lead of the airlines, many hospitality managers are evaluating email marketing for its low cost, rapid dissemination, and measurability. As many marketers have demonstrated, a well-executed email strategy can produce results. It can strengthen existing market share while at the same time reach new markets to boost revenues, particularly online-generated revenues. Email marketing - a powerful marketing tool Email marketing is a crucial component of the hotel eMarketing and online distribution strategy. The shift toward online purchasing suggests that the website is becoming a key point of entry to establish interactive relationship with your customers and capture client email profiles. Over 192 million North Americans are active Internet users (Nielsen) and 37 million of them have already purchased travel online. The Internet offers a vast, interactive, content-rich media and most importantly, a growing distribution channel for the hospitality market. It is estimated that 8%-10% of all hotel bookings will originate on the Internet in 2002. In fact, some hotels already generate 20%-30% of their total bookings from the Internet. Email gets the most attention of any hospitality eMarketing effort because intuitively it makes sense�since email can create direct revenue opportunities with past, present, and future customers. Email marketing increases revenue opportunities throughout each customer's purchasing life cycle. The reason this is effective is because a total email marketing strategy addresses the entire buying process from initial email capture to message evaluation and everything in between including copy creation, type of messaging, follow-up, and vendor partnership, all components of a comprehensive communications strategy Once the strategy is built, an effective email campaign serves as a powerful sales force and marketing channel. Why a total email marketing strategy in hospitality makes competitive sense:
You bet! Everyone uses email. We read, forward, file, and print email. We send email to friends, family, and clients. Furthermore, almost everybody has at one time or another actively signed up to receive travel related information from a travel supplier or third-party collection service. Travel is a sought after product and a top information category chosen by most Internet users. The Aberdeen Group indicates that email marketing has grown more than 270% from 1999 to 2000 and rapid growth is expected to continue well into 2005. An estimated 30 billion permission-based email messages were sent in 2001; a number that will grow to 150 billion in 2005 (Winterberry Group). By category, travel related email marketing retains a loyal audience, especially if it offers the recipient value, accurate communication, relevance, and familiarity. Forrester Research points out that on average, only 5 percent of recipients have ever unsubscribed from any travel related list. Indeed, some travel-related email campaigns report response rates as high as 25%. Let�s face it; consumers want to learn about travel specials and promotions. Even travel agents serve as a viable audience as they too seek bookable opportunities. But isn�t email marketing junk mail and spamming? Wrong! Thanks to technology and the law, filtering agents and anti-spam laws have begun reigning-in annoying junk email. Filtering products such as Spamex and Spamcop, which cost less than $30 off the shelf, delete messages sent by anonymous senders to group lists and can filter by key words in the message itself. The laws are getting tougher. Go to www.spamlaw.com and read the anti-spam laws in your state. Third-party email messaging vendors, also called service bureaus, and marketers are increasingly wary of these laws and are leading the charge to protect the privacy and protection of email recipients. Permission-based and Precision email marketing Permission-based email marketing is the second-generation email approach that goes well beyond guerilla email marketing, known as email spam. A permission-based customer list is one in which you asked the customer permission to enter personal information voluntarily including an email address for the purpose of marketing, i.e. you obtain "permission" to send promotional emails. Opt-in or opt-out options enable the user to sign up or be removed from a marketing list. Growth in permission-based, 100% opt-in, opt-out practices consistently cleanse the customer lists to produce the most robust client lists possible. Once a firm starts an email collection process, it should include these features resulting in email that will be opened and read time and again without concern of violating email privacy norms. Precision e-mail marketing is the next, third generation email approach that dynamically "reads" customer profiles, purchasing habits and history to create highly personalized emails. Over the past year airlines have used this type of marketing extensively to promote special offers in order to sell seats. Actually, permission based email and precision email marketing have become the airlines' preferred marketing tool. Why? It is cheap and it works! For example, precision e-mail marketing has generated up to a fivefold increase in response rates and tenfold lower conversion costs than direct mail (IMT Strategies). Why does email marketing make sense for hoteliers?
Great idea! Group cancellations and overestimations can make empty rooms
the biggest competitor. It is well-known that the September 11th tragedy
left hotels scrambling for solutions. Using email to move distressed inventory
is an effective, practical option. With a well-executed message matched
with a robust customer list, an email campaign can begin producing revenues
within 24 hours without weakening brand integrity. The challenge is in
collecting the right data and stratifying the data list to meet campaign
objectives.
Who are the customers for email marketing? This is an important question. There are three main groups of email audiences: consumers (leisure or business), travel intermediaries (travel agents, wholesalers) and corporate clients. If a significant percentage of reservations come from transient business travelers, or from overseas tour operators, build campaigns that focus on these client segments. How about consumer email marketing? Hoteliers can either buy a broadcast to a permission-based consumer email list from any number of third-party vendors or create their own "home-grown" email capture strategy, or do both. Renting from a third-party is an efficient short-term strategy. It creates an immediate audience and serves as a supplement to your own customer email database. Long-term, starting immediately, it is important to build an in-house customer database as part of a total email strategy. It is critical to capture client data at the property-level for the purpose of creating highly relevant, targeted email marketing campaigns. Hoteliers are in a unique position to build a robust list from existing customers. Using a list built from existing customers, the conversion rates can be ten times greater than any standalone rented mailing list because the targeted group already knows and has experienced the product first-hand. In addition, the hotel can stratify the customer list by specific characteristics, communicate and offer value in the message, and send targeted and relevant mailings frequently to the intended audience, an audience that even anticipates these messages announcing hotel specials. Hoteliers should carefully consider how large and comprehensive a customer list would be from a home grown collection strategy. Anyone who has stayed, inquired, or visited the property, visited the hotel website, or spoken to a receptionist by phone or in person qualifies. An organically grown database of customers can exceed the value of any customer list worth renting. Reasons for building a homegrown customer list:
How big is the potential homegrown customer email list?
Number of rooms:
____
How about capturing email on the hotel website? Does the website offer customer email capture functionality? If so, that website might draw 10,000 visitors per month, if optimized for the search engines. A conservative look to book ratio of 20:1 yields 500 transactions per month. Consider another 5% will sign up for promotions but not book producing, another 500 registrations. The total number annualized from the website could result in an estimated 12,000 new client profiles added to the database. How does a hotel compare to today�s average where 8%-10% of all revenues in hospitality are generated from the Internet? It is estimated that four years from now the Internet will contribute over 18% of all hotel bookings. Hoteliers are beginning to like what they see as online distribution cuts costs, attracts affluent customers and lessens the dependency on more traditional and expensive distribution channels. Hotels must employ new strategies to take advantage of these opportunities to capture this Internet market. What about travel agent email marketing? Why do travel agents represent such an important group for email marketing? Travel agents that use the Internet and email are exactly the travel agents hoteliers must reach. These agents are likely to visit hotel websites, book online, and even boast hotel web-only promotions in their own marketing efforts to preferred clients. Research from the most respected travel organizations, such as ARC, ASTA, IATA and Plog Research, as well as leading travel industry trade publications shows that:
How can hotels know what data to collect? Collecting the right information is essential to not confuse long-term marketing plans. For example, in selling automobiles, single males and females have their own particular tastes and needs as do families and seniors. By asking the right set of questions on the website and at the front desk, the dealer can stratify his database to reach discrete audiences with the appropriate set of messages. It is essential to consider which audiences the hotel wants to reach and with what types of messages. Based on the type of hotel and other variables, one can begin to get an idea of what data is important to build a customer database. It is critical to avoid the 9-deadly sins of email marketing and not appear anxious or aggressive when collecting client information. The hotel must collect with sensitivity resulting in a process that runs on autopilot whether it�s online or through your reservation desk. Start collecting the data! It is important to follow the path of the customer! Exploit every point of entry from the reception desk and corporate sales office, to the reservation operator and website. Create an environment suitable for data collection; client profiles from call-ins, walk-ins, or online lookers regardless if they are patrons, travel agents, or others. At the same time, a central repository will be helpful to avoid repeat inquiries from the same customers. The hotels should always seek permission. It�s been shown that if a hotel asks permission and clearly demonstrates how one can opt-in or out easily and conveniently, chances are the user will sign up and remain a loyal recipient of hotel emails. Such collection tactics include:
Outsourcing the technology support for email marketing makes complete sense. In 2001, an estimated 72% of all email campaigns were outsourced (Forrester Research, 2001). Third-party vendors or �service bureaus� are inexpensive and this is their core competency. These vendors specialize in email messaging including email capture, hosting, managing, stratifying, blasting, and reporting outcomes of the campaign. There are a plethora of third-party vendors ready to serve technology needs and act as guardian of the data. These low cost highly competitive ASP technologists want hotel business and can provide, at minimal cost, features and formats to capture, create, and blast a campaign. Some vendors offer templates to help design an eNewsletter while others support Macro Media for Flash. Hotels should understand the level of customer service each vendor offers. Of course, stick to your budget. Not surprisingly some online booking technology vendors offer email collection and messaging management. Two are iHotelier and SecureRez, each with their own suite of tools to help a hotel build a total email marketing strategy. A reputable service bureau adheres to the strictest rules permitted by law and will maintain client information in a secure environment. They will not rent or barter information to outsiders. However, hoteliers should seek advice on vendor selection, review of campaign, and vendor agreement. How to create the campaign There are a number of guides to email marketing, starting with the marketing objectives? For example, is it to use email as a direct response vehicle? Or as a branding tool? Begin by devising a strategy, and start with these basic questions:
Email marketing is used for a range of purposes. What is the purpose of the campaign? According to Forrester Research these campaigns are used for the following:
A quality campaign would appear in an HTML newsletter. Today�s browsers support viewing many forms of inviting eNewsletters. Information delivered in this fashion reinforces the hotel brand�its logo and colors--and organizes the delivery of content so that a quick glance may be all that�s necessary to draw the user to link to a hotel website and book now. Other suggestions include the need to clearly identify the hotel and intent in the subject line and property insignia. In addition, subject line must be relevant and personalized, if possible. The subject line should not exceed 80 characters. Sample subject lines:
You bet there is! Assume a 10% response rate on 50,000 recipients. Is the hotel prepared to handle 5,000 inquiries over the phone or by email? Has the campaign objectives been communicated internally to the sales team? Is the website optimized for the special rate? Is the network able to withstand such traffic over a short period of time? The entire campaign may come down to preparation for the post launch activities. Recent trends in email technology and services include:
Here is a list of U.S. email users' opinions regarding ways Permission Marketers can improve their email programs (as % of respondents, two choices per respondent allowed, Q1 2002, Quris/Greenfield Online, May 2002): 42% - Less frequent messages
Conclusion A total email strategy addresses every aspect of the email marketing process. It's organized to leverage a hotel�s existing and future client base for ongoing and upselling opportunities. This includes matching the right messages with the intended audiences for ongoing customer relations. In this article we explained the rationale for the need to create a total email marketing strategy and the value of building an �organically grown� hotel-based customer lists. We looked at types of customers that could benefit from email marketing and examined how all this data, put to good use, can turn email marketing into a strategic sales force. It takes work but is achievable with the right message and overall strategy. Implementing this strategy does not have to be an expensive proposition or a lengthy process. For example, Hospitality eBusiness Strategies' highly successful Internet Strategy Consulting Services include special Email Marketing Packages. In conclusion, a total email marketing strategy serves as a springboard to launch various email campaigns, to boost ongoing customer acquisition, relationship management, and increased bookings on and off line. An experienced eBusiness hospitality consultancy can help you navigate and utilize the Internet to its fullest potential. Max Starkov is Chief eBusiness Strategist at Hospitality eBusiness Strategies, Inc. in New York City (www.hospitalityebusiness.com). He advises companies in the Travel and Hospitality verticals on their eBusiness and eDistribution strategies. Max has 19 years experience in pioneering and building successful travel and hospitality businesses and eBusiness strategies for national and multinational leisure and hospitality companies. Max has an extensive eBusiness experience having co-founded and served as CEO and Director of two travel and hospitality related Internet startups. Under his leadership one of these companies won the prestigious 2001 Worldwide Microsoft RAD Award for Web-based technology applications (CRS and booking systems) for hospitality. He also teaches graduate courses on "Hospitality/Tourism eDistribution Systems", "e-CRM" and "e-Travel" at New York University's prestigious Tisch Center for Hospitality, Tourism and Travel Administration. You can reach Max at [email protected]. Jason Price is Vice President of Business Development and Strategic Marketing at Hospitality eBusiness Strategies, Inc. in New York City. Jason advises companies in the Travel and Hospitality verticals. Jason helped build and served as the Vice President of two eBusiness companies and was in the leading team that won the prestigious 2001 Microsoft RAD Award. He frequently guest lecturers on technology and hospitality to university audiences in US, Europe and Asia. Jason has over five years experience in pioneering and building successful travel and hospitality Internet businesses and another four years building critical business units for major Madison Ave marketing companies. You can reach Jason at [email protected] |
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Also See | Brand Erosion or How Not to Market Your Hotel on the Web / Max Starkov / April 2002 |
Do You Know Where Your Hotel is in Cyberspace? / Max Starkov and Jason Price / Jan 2002 | |
Convention and Visitors Bureaus: Ten Action Steps To Soften the Impact / Max Starkov / Oct 2001 | |
How to Turn Lookers into Bookers- Recommendation Engines in Travel and Hospitality / Max Starkov / Aug 2001 |