New York Hospitality by Vijay Dandapani
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Empowering consumers: Social media supplants brand standards

February 13, 2015

For decades the near sole arbiter of standards in hotels and restaurants has the franchisor at a branded location.  Ratings from Mobil (now Forbes Travel) and Michelin served to underscore quality as it was the franchisor who drove business to establishments that adhered to standards laid down at headquarters. 

Although much of the above remains largely true even today that model is continually being tested in the digital age from the two leviathans of user-generated sites: Tripadvisor and Yelp.In the decade plus period since  their establishment businesses have learned that more so than the directives and SOPs from brand central it is the searing and often spontaneous assessment of customers that can make or break most hostelries. 

Picking up on the foregoing are some municipalities. A Harvard Business Review blog article points out that "cities are beginning to see the value of using consumer-feedback sites to improve efficiency, provide citizens with important health data, and put pressure on unhygienic restaurants to clean up their acts". While noting that "local governments are not known for being at the forefront of innovation and technology" the article says that the algorithms developed by the authors have been used in "tech-friendly cities such as San Francisco and Raleigh, North Carolina" to demonstrate that digital and social technologies have the power to transform what used to be that most analog of processes, the disclosure and enforcement of public-health regulations".

By embracing social media for enforcement, governments not only serve current and prospective customers better but also cut down government waste. Heretofore, the inspection process was random with compliant and high quality establishments being subjected to the same inspection process as those that are on the wrong side of the issue.  With social-media driven technology, inspectors' time is better spent on likely offenders.

The HBR piece sums up the many benefits.  Per the "Centers for Disease Control, more than 48 million Americans per year become sick from food, and an estimated 75% of the outbreaks came from food prepared by caterers, delis, and restaurants. By partnering with social-media sites to provide digital disclosure, municipal officials can improve these numbers. They can also reduce costs and display information in ways that are easier for citizens to find and absorb".

Privacy and the here and now consumer

January 15, 2015

The Financial Times of January 15th 2015 has an intriguing story with somewhat frightening overtones from a privacy standpoint. The UK broadsheet's article's points to how the Internet of Things may be going too far at least in the opinion of luxury car maker, BMW. The German auto company says that "technology companies and advertisers are putting pressure on carmakers to pass on data collected by connected cars" and highlights the concerns the automotive industry faces as it treads a fine line between performance and privacy.

BMW as well as rivals like Mercedes-Benz feature cars that come with a wireless network that could yield information about location, speed, acceleration and even the occupants of a car including how many adults and children. Marketers from a variety of industries are salivating for a peek at all that data so as to be able to formulate programs to target willing and perhaps even unwilling drivers with information on products and services that likely are relevant to both parties. An example of that, as noted in the FT article, is suggesting, for example, the proximity of a McDonald's outlet if a child is in  (and presumably) hungry. Apart from being tremendously insightful it is arguably insidious at least in privacy terms.

If allowed to proliferate, it could prove a bonanze to the hospitality industry, for example, by suggesting to drivers - after the car has "sensed" driver fatigue - the presence of nearby hostelries. If there is a willing customer driving the car then hotel preferences could be programmed so as to take the car to the nearest compatible lodging accommodation.  There are already several GPS based accommodation sites that offer deals but with the added benefit of having information beyond merely the profile of the customer such as recent travel and even physical state, a new and more precise lodestar could be in the offing.

Somewhat apropos the preceding line Wired.com reports that Booking Now an app from Booking.com seeks to capitalize on a recent report which found that nearly 25% of searches on hotels’ mobile sites are for same-day or next-day check-in. Instant gratification (and satisfaction?) could be on the anvil with data from BMW and others.

Corporate Mea Culpas and the Consumer

January 07, 2015

A recent blog piece in the Harvard Business Review points to the merits and modalities of a timely apology. It suggests a (quick) public and written apology is a good start followed by seeking out as many as possible (of those offended) for a private apology. However, for an enduring positive aftermath the article suggests plenty of introspection and inspection to determine whether it was a one-off slip or part of an ongoing or potentially recurring problem.

While HBR's article focuses on regaining respect an equally important if not greater aspect is restoring customer confidence in the firm. Missteps and even blunders are as much a part of life for corporations as it is for humans given that those missteps are consequence of human actions. But just as in ordinary human life the willingness to own-up is a rare commodity which often results in the original sin being compounded by many more leading to a justified consumer perception of an organization being untrustworthy if not deceitful.

An inartful choice of words can sometimes lead to repercussions that can be as bad as a deliberate campaign. An example of the former is the new Microsoft CEO's statement about women being better off if they did not ask for a raise raised a storm leading to a quick retraction and an apology for a poor choice of words. The quick apology allowed Microsoft to move past and does not appear to have hurt the software giant at a meaningful level. 

More on the wilful part of the blunder continuum is UK supermarket chain Sainsbury's outed campaign urging staff to get consumers to spend an extra 50p while shopping. An outraged consumer tweeted a photo of the poster that had been inadvertently put on a shop window. The company's response of contacting the tweeting customer probably did it no good and a weak response of it being only for "internal consumption" did even less for Sainsbury.

The hotel industry has had more than its share but many have not been particularly nimble in offering mea-culpas  with varying reasons. In the early 90's the Las Vegas Hilton was the venue for a grotesque rite-of-passage for naval officers where they groped women sailors. The company fought the multi-million dollar damage award to the plaintiff but at no stage put out a mea-culpa regardless of its role, which court documents point to. Latterly, in an ongoing dispute with customers, the Marriott Corporation is looking to be able to thwart guests at its conference centers for bringing in their own WiFi. When the story broke it appeared as if all areas of Marriott hotels were off-limit to customers' WiFi equipment but after some negative press the company has clarified that it is only for conference areas with a view to preventing hackers.  Regardless, the company is better served by withdrawing its efforts in that area and issuing a "customer is right" statement rather than prolonging what surely is a losing proposition at all levels.

While it is clear that mea-culpas always work there are some who are teflon bound. None more so than the maverick leaders of the taxi-disrupter company, Uber. From rapes to murders to extortionate pricing the company lacks for nothing when it comes to a public-relations disasters but yet nothing seems to stick, at least thus far. Perhaps, the consumers' attraction for the service beats all the negatives but more likely the jury is still out on them.

Non-disparagement clauses:Why nixing negative reviews may be a net negative

December 26, 2014

Tripadvisor's recent travails in Italy made headlines around the travel world with a not insignificant release of schadenfreude amongst many in the trade. The company was slammed by Italy's competition authority for  "unfair business practices through the dissemination of misleading information" and added insult to injury with a fine of €500K.

However, businesses reveling in TA's legal troubles ought to pause before escalating the war against allegedly fake reviews on sites and worse, embark on customer-centered punitive actions such as non-disparagement clauses which seek to deter customers from posting negative reviews. As noted in an earlier column on this site, a very low percentage of customers  "trust" online reviews and yet an overwhelming majority rely on them prior to making purchase decisions. Having a plurality of viewpoints about a product or service instead of mostly positive reviews due to a culling of negative contributions can only lead to even less trust on the part of customers, both current and future.

Non-disparagement clauses that seek to penalize customers who post negative reviews are increasingly prevalent including in hotels with some such as a hotel in the UK going so far as to fine customers.  Somewhat surprisingly given California's general fondness for regulation, the state recently put in place a law that bans these clauses.  What is unsurprising is that these clauses have no restriction on praise, warranted or not, for businesses.

Seeking a remedy at a national level in the US, two congressmen from California have introduced a bill to make "non-disparagement clauses in consumer contracts unenforceable, in addition to providing authority to the Federal Trade Commission and state attorneys general to take action against businesses that include them". The proposed bill underscores the fact that firms do not need non-disparagement clauses to sue folks who post false reviews as that right already exists; the clause principally seeks to freeze out real negative reviews. That  can only lead to an echo chamber that eventually costs businesses far more than real negative reviews which if used for corrective action can lead to more not less customers.

 

 

Combining big and small data for coherent marketing outcomes

December 17, 2014

The past couple of years have witnessed a tussle between proponents of big and small data with advocates for the larger playing an outsize role in promoting its usefulness, real and imagined, for marketing in a variety of industries.  But they aren't mutually exclusive although budgets appear to determine which companies lean  towards big data as it almost always requires "big" resources and expertise.

Definitions for Big Data are fairly broad but in regular business parlance it has come to mean vast terabytes of data requiring analytical capabilities that exceed commonly used computational assets.  Small data on the other hand usually can be computed if not entirely by humans, by more conventional means including a simple Excel spreadsheet. That said, in practice the dichotomy is less clear with a variant of Moore's law enabling increasingly affordable computerized applications of algorithms to identify and monitor key performance indicators and stats thereby leading to more effective marketing outcomes.

Apropos the foregoing a Harvard Business Review article earlier this week on big data and algorithms points out that there is a pressing need for an algorithm based effort that relies on automation rather than expensive data scientists that most firms cannot employ. HBR cites the example of a usually imperceptibly slow movement of a firm's consumer profile that is more likely to be detected manually even by the best data scientists. Automated algorithms on the other hand "are faster, more accurate, more scalable, and more adaptive than manually analyzed data". Underscoring the point is the fact that stock trading that is algorithmically driven routines beats its analog human version.

A recent Forbes article written by IHG's CRM head details how hotels are using big data to improve the customer experience while consequently driving revenue. It is a tilt at "small" rather than big data using the "vast amounts of data that our customers have shared with us" and is somewhat akin to "closed loop marketing" as big data usually requires analyzing macro trends that by harnessing data beyond what is gathered within a firm. 

As the IHG chief points out most of their "guests book their hotel room through our direct channels such as on our IHG App, or through our IHG.com website, so we have a tremendous opportunity to further amplify this personalization (of guest experience)". However, like other large hotel companies that continue to grow their footprint and customer base they can soon aspire to be like Wal-Mart or Amazon which are totally customer-centric making them very amenable to "big-data" solutions.

A welcome corollary to big-data analysis has been predictive analytics which is increasingly being used not only to drive marketing resources but also revenue management including in hotels where an ostensibly "perfect" room rate can be had. Revenue-management start up Duetto purports to offer just that and claims to use data from "web shopping regrets and denials, the most popular days search for on booking sites, social review, air traffic into a hotel's city, weather forecasts (even forecasts for surrounding cities)" to arrive at that perfect room rate.

But perhaps, a cautionary note is in order for data big or small. Many of the former's proponents fail to note inherent biases that are not easy to overcome. Social media based data still tends to leave out a significant demographic while the correlation-is-not-causation exception adherents would have us believe that there is a link between "women who were interested in exotic travel and those who bought Kashi cereal"!

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  • President of Apple Core Hotels, a chain of 5 midtown Manhattan hotels offering value and comfort in the heart of the city.

    Member of the board of Directors - Hotel Association of New York.


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  • The views expressed in this blog are my own and not that of any company, association or organization.

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