Strategy in Hospitality
|By Jason Price and Max Starkov, September 2004
Email marketing has changed significantly since our first article on the subject appeared a few years ago. Savvy hoteliers who embraced the use of email marketing as a direct distribution tool have another potent weapon in their arsenal against the need for online intermediaries. We have revisited email because this eMarketing format has developed remarkably in hospitality over these few years. As well as highlight important changes, we share examples of the collective spirit of hotel marketers who have been able to overcome spam and Internet marketing challenges by introducing great solutions for promoting their hotels in a cluttered email box world.
This year over 20% of all revenues in hospitality will be generated from the Internet (15% in 2003). Another 20% of hotel bookings will be influenced by the Internet, but done offline (call center, walk-ins). In 2004, for the first time Internet hotel bookings will surpass GDS hotel bookings. Two years from now the Internet will contribute over 27% of all hotel bookings (PhoCusWright). 53% of all Internet bookings in hospitality will be direct to consumer (i.e. via hotel-owned websites).
Direct online distribution cuts costs, attracts affluent customers and lessens the dependency on intermediaries and more traditional and expensive channels. Over 205 million Americans are active Internet users (Nielsen) and close to 50 million of them will purchase travel online this year. Many hotel clients already generate 30%-40% of their bookings from the Direct Internet Channel.
This new dramatic channel shift raises a very important question: Who “owns the customer” in this new online environment? Is it the online intermediary, which made the booking, or the hotel where the guest stayed? Online intermediaries like Expedia have perfected the “interactive relationship game” with customers who book hotel stays:
Developing a robust and effective Internet marketing strategy requires not only establishing ongoing interactive relationships with your customers (hotel guests, meeting planners, corporate travel managers, and travel professionals), gaining extensive knowledge of your customers and performing precise customer segmentation. It requires shifting marketing funds from offline to online channels, and deciding what your marketing objectives will be.
Here is a quick review of the four most popular eMarketing formats:
Since our previous email report in 2002 we have seen email marketing achieve unprecedented growth from creative messages to creative methods of delivery. We have also seen an assault on our email boxes by spammers, a rise of anti-spam software tools, and the need for federal laws to protect consumers from unsolicited and misleading email. A new study by IDC reports that spam will continue to be a major problem in 2005, accounting for 12 billion daily emails, compared to 13 billion person-to-person daily emails.
Yet in spite of all the spam, Internet users like receiving their travel related emails. By category, travel email marketing retains a loyal audience, especially if it offers the recipient value, accurate communication, relevance, and familiarity. Forrester Research notes 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 online.
Email Marketing - a Powerful Direct-to-Consumer Distribution Tool
In the context of explosive growth in Internet distribution and marketing in hospitality, email marketing is a powerful direct-to-consumer distribution and marketing tool. It allows hoteliers to engage customers in strong, personalized and mutually beneficial interactive relationships, increases conversions, and sells more efficiently. Email marketing is an important aspect of today’s multi-channel marketing model that requires hoteliers to communicate a single brand image across all channels.
Email marketing spending will triple from $2.1 billion in 2003 to $6.1 billion in 2008, according to Jupiter Research forecast. By segment expenses are committed to newsletter sponsorships, outsourced email delivery, and the email list rental, which will continue to outpace the other two combined.
In hospitality, email marketing continues to receive marketers’ attention because costs remain relatively low, it is easy and fun to create and to implement and the results can be measured practically in real time. Intuitively, email marketing makes sense—email creates direct revenue opportunities with past, present, and future customers.
Why email marketing in hospitality makes competitive sense:
Trends in Emails Usability
Email marketing’s ease of use also means more email clutter. According to DoubleClick, in the past year delivery rates have increased by 1.5% while open and click-through rates have declined by 5.6%. Growing competition for attention makes all our jobs more difficult. Click through rates for travel remains steady and equal to the industry average of 8.4%. Your campaigns should equal or exceed the CTR of 8.4%.
Permission-based email remains strongest for consumer readership, general satisfaction, and likelihood to purchase, according to a study by NOP World Research, 2004. Response rates to satisfaction, likelihood to purchase, and recommend to others were 10 percentage points higher for recipients of permission based email than unsolicited emails. As described in our previous article, our tips on growing your own organic database are one of the smartest and most effective ways to build an email marketing and direct distribution strategy.
So the fight is to build your organic database, construct effective email campaign messages, win the right to be recognized and accepted into the email box, and convert the reader into a customer now and into the future. So how can all this achieved?
Here are some important considerations when designing your Email Marketing Strategy:
Know Your Customer
Knowing your customers is an extremely important consideration when conceptualizing and designing your hotel email marketing strategy. Addressing your key audiences and providing them with relevant information is one of the key aspects of any successful email marketing campaign.
It is a matter of perspective on what is truly important to the customer. Different characteristics of the property and its product can appeal to different customer segments. For example, to the business traveler, choosing a hotel may be influenced by the availability of a function room, high-speed Internet access or proximity to an area corporation, while a leisure traveler may find the same hotel attractive because of its great location near local area attractions and family friendly entertainment. Same hotel, same destination, but different appeal requiring differentiated email marketing message.
Create a Single-View Email List
Are all customer emails and relevant guest data from POS, PMS, CRS, call center and Web channeled into a single email database? A single-view customer database has obvious benefits:
The hotel is in a unique position to build a robust email list from existing customers. When using your own email list to market the hotel, the conversion rates can be 15-20 times greater than any stand-alone rented mailing list because the targeted group already knows and has experienced your 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 who may even anticipate these messages.
The property should also consider additional means to capture emails at the property level: at the front desk and the PMS level, by introducing free promotions, customer surveys, and email data cards to name a few. With the right capture strategy and a coordinated and combined effort by the front desk and sales staff, the email customer list can grow rapidly into a robust direct distribution channel.
For the actual email capture and email list functionality, consider using any of the many third party email vendor that provides low cost tools to capture, maintain, secure, and enforce the recent CAN- SPAM laws. These vendors provide templates and reporting tools to track and measure email campaigns.
Testing Your Email Campaign
As with any marketing campaign you want to be certain your message is clear and effective. For email, the subject line is critical as it serves a dual purpose of summarizing the content of the email and entices the recipient to open and read more. As email clutter grows the subject line becomes even more important. Once there was a time when the email simply dropped into the email box. Now you have to contend with spam screeners, virus protectors, and skeptical consumers (we will discuss spam at length later). Assume the email gets passed these filters and drops into the email box, now subject line prominently appears to the reader.
The subject line will determine the success of the entire campaign.
It serves as the hook for the reader to bite on. To measure the validity
of the campaign before a full launch, conduct your very own focus group.
Take a sampling of customers from your database and test the sales message
as it appears in the subject line. Narrow your choice to three different
versions of the message and use the click-to-view and click-through rates
to determine which sales message drew the greatest response. As described
in the case study, read how some HeBS clients are using email as a focus
group to test entire online and offline marketing.
Setting Goals in Email Marketing
Internet marketing and email marketing in particular can be used successfully as a direct response vehicle (short-term, results-oriented) or as a branding tool (long-term and strategic goals).
The best measure of any hotel marketing campaign – email or other – is the number of new reservations generated by the campaign. With a special rate code embedded in the email-only offer or use of a special 1-800 number can provide the means to track the results. Since the science of marketing is also to influence purchasing habits and create future demand, a more realistic measure is the general impact created in the campaign not just immediate reservations.
The analytics to measure the success of an email campaign should include: open or view rates, click through rates, the number of pages viewed, the duration of the site visit, the number of contact forms submitted, the number of phone calls received, revenues and roomnights from special rate code bookings or packages purchased, and the long term sustainability of the campaign. Do people print out the email and present it by mail or at the front desk when making a reservation? Have you received inquires referencing the special rate announcement? As mentioned, there are many ways to measure your email campaign besides the number of reservations.
Here are goals to consider with Email Marketing:
Email as Direct-Response Vehicle
A marketing promotion is a call to action. You create the sales message for the consumer to react soon if not immediately. The challenge through email is to solicit a response amidst competing solicitations from other travel and non travel related products.
Once the campaign is launched the buzz around the message already begins the fade. It is that simple. The buzz tapers off the further we get from the date of the message announcement. At least with direct mail a postcard or brochure may sit on the kitchen table in clear view for weeks before the recipient acts. The influence of an email decays based on the rate of new email arrivals. After 72 hours studies have shown the email becomes completely forgotten.
Timing has become an important issue for email, not just for the best time to launch a campaign but the window of opportunity to act on the sale. According to a study by eMail Labs in coordination with eMarketer, an Internet marketing research group, email campaigns enjoy the best view and click-through rates, as high as 22.8 percent, on Wednesday and Thursday. So intuitively launch the campaign in the late morning or early afternoon, after the overnight junk mail has been cleared, if you are trying to reach people at their work desk. Considering time zones is important if you wish to reach a west coast audience from the east coast. Schedule the campaign for 1 pm in order to reach the west coast after 10 am.
The time factor to act on the sales message is also important because
you have to contend with a reader’s short attention span and the loss of
priority as the email box gets filled up. Consider placing a time constraint
on the sales message. A real or artificial expiration date motivates the
recipient to act. The timeliness of your appeal also turns a simple promotion
from common to premium and ordinary into unique and special in the recipient’s
mind. It prompts them to act. An entire industry of last-minute, 11th hour
services now live off the exclusivity of your perishable inventory. Nothing
stops the hotelier from doing the same by using email marketing.
Back to the Future with eFaxing
With complaints of spam and email clutter, fax marketing presents an interesting opportunity for the hotel marketer. It is an excellent option, particularly with a robust fax database. Through faxes you can distribute your sales message to the intended audience. Some of the better third party email vendors offer the eFax functionality as part of their total email toolkit and are keen to help adhere to any fax spam rules. In fact, such vendors allow you to send either a fax or email as back up if the first delivery method fails. Or, better yet, get the recipient from both ends with a fax and email.
Since faxing is a phone based system, expect a phone delivery charge of around 8-12 cents in the U.S. and higher for international calls. Fax reporting capabilities are limited to the delivery rate since there is no other automated tracking mechanism like with email. However, a unique rate in the sales message can help measure the campaign’s efficacy.
Personalization is more than providing the right information to the right person at the right time. Personalizing of the eMarketing message is a powerful conversion and retention tool. Customizing your interaction with your most valuable customers (those 20% that generate 80% of your business) will provide significant long-term rewards.
Personalization on the property level should start by identifying all “electronic touch points” with your customers (hotel guests, meeting planners, travel professionals, etc) and creating an action plan.
Personalize all electronic communications with your customers. Every email guru expounds on the importance of personalization. If you have the name, use it and use it wherever possible, in the greeting and in the subject line. True, such personalization smells like the work of spammers because they are the most adept at using technology, but the name coupled with a recognizable hotel name and enticing subject line can boost your open and click-through dramatically.
Synergy: Message and Landing Page
A landing page is a web page that was linkable from an email message. Too often, however, the email message and the landing page are not synergistic. Too often the home page serves as the landing page for all promotional messages in the email. This creates as much confusion as it does frustration to the reader.
The message and landing page must be synergistic. With a content management
system (CMS), the hotel marketer can create new pages in real time as the
email gets created. By matching each sales promotion in the email message
to a relevant link for more information, you have streamlined the reading
process for the recipient. The user can now go directly to the site for
more information specific about the package or special in the email and
complete the transaction.
A Word about Spam and Spam Filters
No article on email marketing would be complete without addressing the subject of spam. Federal laws protect consumers from unwanted emails while technology has introduced spam filters to sift the good from the bad. Thought leaders, including Bill Gates, have suggested a number of archaic initiatives to curb spam. These include a charge per email similar to a postage stamp, a bond in escrow drawn down based on email sender violations, and the blacklisting of IP addresses. The Sender Policy Framework (SPF), an anti-spam approach which authenticates the sender before mailing, has drawn both successes and mailers in test markets.
The CAN SPAM Laws of 2003 (Controlling the Assault of Non-solicited Pornography and Marketing Act) plus state laws make certain violations criminal with severe financial penalties, confiscation of equipment, and even jail time. The Coalition for Unwanted Emails www.cauce.org and Spam Haus www.spamhaus.org are two excellent organizations offering consumer and marketer guidance on spam issues.
Summary of Email Requirements:
Email Marketing is here to stay. It is an important aspect of the hotelier’s Direct Online Distribution and eMarketing Strategy. Email and eMarketing in general can be used both as a direct response vehicle (short-term, results-oriented) and as a branding tool (long-term and strategic goals). Email marketing allows hoteliers to engage the customer in a strong, personalized and mutually beneficial interactive relationship at a fraction of the cost of traditional marketing. And most importantly, email marketing allows the hotelier to “own the customer” in this new online distribution and marketing environment.
There has never been a better time to embrace email marketing as part of your Direct Online Distribution and Marketing Strategy. You have already realized that the Web can be either your best ally or your worst enemy. Consider retaining an experienced consultancy to help you navigate the often confusing Internet “Dos” and “Don’ts” and provide you with the “best practices” tools needed to utilize email marketing to its fullest potential.
About Hospitality eBusiness Strategies
|Also See||2004 the Year of Direct Online Distribution; Now is the Time to Fight Back with a Smart Direct-to-Consumer Internet Strategy / Max Starkov & Jason Price / February 2004|
2004 Top Ten Internet Strategy Resolutions / Max Starkov & Jason
Price / January
|New Hospitality Intelligence Report Tracks User Satisfaction and Website Performance / January 2004|
|Hospitality eBusiness Strategies to Help Historic Hotels of America Enhance Internet Reservations / October 2003|
|Hospitality eBusiness Strategies to Expand Joie De Vivre Hospitality Online Presence / September 2003|
|Building a Destination Web Strategy in Hospitality / Max Starkov & Jason Price / September 2003|
|Lowest Price Guarantees in Hospitality; Age Old Wisdom to Beat the Intermediaries at Their Own Game! / Max Starkov / July 2003|
|Brand Erosion, or How Not to Market Your Hotel on the Web / Critical Online Distribution Issues Revisited a Year Later / Max Starkov / June 2003|
|In Search of the Internet Intelligence Report That Makes Sense - Growing online distribution drives demand for new intelligence tools / Max Starkov and Jason Price / January 2003|
|Hotelier’s 2003 Top Ten Internet Resolutions / Max Starkov and Jason Price / January 2003|
|The Internet: Hotelier's Best Ally or Worst Enemy? What Went Wrong with Direct Web Distribution in Hospitality? / Max Starkov / October 2002|
|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|