New York Hospitality by Vijay Dandapani
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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 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"!

Reviewing online reviews

December 02, 2014

For well over a decade online reviews have been a topic of contention in businesses across industries. Yet, far from fading away, the desire to get to an ideal where only genuine customer reactions populate forums is being taken up with renewed vigor both by consumer advocates and government agencies with even many businesses ending up as forceful advoates.

Colloquy a magazine put out by an organization at the forefront of issues pertaining to customer loyalty notes in its latest issue that a mere 13 percent of customers trust online reviews. And yet, paradoxically, "more than three quarters of Americans read reviews before making purchase decisions". The findings were the result of a recent survey by online market research agency YouGov. The survey also found that consumers "use reviews primarily to ensure good quality"; 3/4ths of respondents said they "try to read equal numbers positive and negative opinions"; more Americans write positive than negative reviews and do so with altruistic reasons "to help others make better purchasing decisions. Only a small handful (12%) write reviews to "expose poor brands".

A Harvard Business Review earlier this year on online reviews elaborates on what it terms as "the influence mix" for marketers. Noting that buyers today have options beyond what is put out by marketers they are able to quickly drill down to "what’s known as absolute value—a rich, specific sense of what it’s like to own or use the goods they’re considering". HBR breaks out the influence mix as being comprised of consumers' "prior preferences"  (P), information from marketers (M), and input from other people and services (O) and suggest that it is a zero-sum game with products and services increasingly more dependant on O than the other two and lying at various points on the "O" continuum. O, of course, is increasingly driven by what is available online.

HBR's research suggests that marketers need to focus more on consumers' dependence on the O factor as prior experiences diminish in terms of influence on purchasing power. That is true for a number of reasons including the fact that even if a consumer had a prior experience in an airline or hotel it likely is not recent and other more recent reviews are likely to be meaningful pointers for the purchase decision.

While the foregoing comports with the direction marketers are taking it does not address reviews that are not on an open platform like tripadvisor or yelp or even Amazon.  Mis-labeled disruptor Airbnb had a review system that allowed both the "host" and the guest review each other often resulting in more positive reviews than not as neither wanted to be tarred with a bad review. The (largely illegal) hotel company has recently revamped its review system and now requires both parties (host and guest) to submit their reviews before it is published. Hopefully that will lead to more honest reviews that show up the company, warts and all.

TV ad spending: back to the future?

November 22, 2014

Reams have been written about the steady decline if not eventual demise of advertising spending on television. Just earlier this month Forrester Research reported on how internet ad spending will overtake TV buys in little over a year.

While acknowledging that TV remains the biggest advertising platform in terms of money spent, Forrester's report noted that "online marketing is expected to reach $103 billion in 2019 thanks to a 13 percent average annual growth, compared with $86 billion for TV. In all, digital ads by 2019 will account for 36 percent of all ad spending, above 30 percent for TV. 

Forrester's report also  pointed out that "audiences now want more on-demand options for watching videos and listening to music, helping newer services like YouTube and Spotify grow.  Furthermore, "adults in the US already spend 52 percent of their total media time on the Internet during a typical week (including personal and work), up from 45 percent in 2009. Comparatively, TV time is down to 32 percent this year from 34 percent five years ago."

If the foregoing sounds like settled wisdom a new report in the Wall Street Journal on how targeted Television ads are not only possible but are actually being used by a number of companies including Choice Hotels seeks to upend that line of thinking.

The Journal notes how Choice used to consider "ABC’s “Good Morning America” as the prime spot for advertising to would-be travelers. Whereas, the company now also likes to advertise on reruns of “Big Cat Diary” on Animal Planet, where they can reach a similar audience for a lot less. In the former a 30 second ad typically costs $43,000 as compared to a mere $650 for the latter.

The shift back to TV spending, albeit of a different kind, is based on changes on tap from rating company Nielsen and its merger with digital media company Catalina and is called Nielsen Catalina Solutions. By merging shopper loyalty-card data with TV viewership sample, Nielsen is able to "give clients a better picture of what kind of viewer is buying; that is, an improvement on the past where age-and-gender formed the basis of the data on offer.

Nevetheless, the effort seems more like one directed at staving off an eventual mass migration to digital than one that is going to keep TV ads at the top of ad spending budgets. As the Journal article notes "advertisers aren’t using the tools to change how much money they spend, but rather to help decide which shows certain ads should run on." 

It is unclear that TV advertising can ever can reach the depths of knowledge of consumer behaviour that digital can plumb which apart from including their precise geographic location can supply eerily precise and prescient messages to consumers using near-field-communications and biometrics; something which Apple Pay is likely to only enhance once they get past some of their present hurdles with regard to retail acceptance.

The bottom line on customer engagement

November 09, 2014

The bottom line benefits of customer engagement has been settled wisdom for some time with the possible exception of Ryan Air, known for decades for its borderline surly and decidely uncompromising attitudes to customers. However, the airline's CEO with Fawlty Towers like notions of customer service decided to change tack and adopted a "be nice" strategy a year ago. That seems to have paid off with  the airline reporting a 5% increase in passenger loads and finally admitting it has  "historically failed to view customer service as a priority".  

Gallup, the US research-based, global performance-management consulting company in numerous studies over the years has promoted the benefits of customer engagement.  It reiterates that idea in its 2014 Hospitality Industry Gallup Study where it notes that "taking care of guests' well-being can lead to a healthier balance sheet if hotels do it right" while underscoring that "there's a strong link between guests' feelings of well-being and customer engagement.

Guests who strongly agree that the hotel they visit most frequently takes care of their well-being, 79% are fully engaged, compared with 20% who are indifferent and 1% who are actively disengaged. Among those who strongly disagree with this statement, a mere 6% are fully engaged.  The more salient finding is that there is "a strong link between customers' engagement levels with a hotel and the amount of money they spend per visit. Guests spent an average of $457 per stay at the hotel they visited most frequently in the past 12 months, but fully engaged guests spent $588 per stay compared with $403 per stay for actively disengaged guests -- a difference of $185 per customer.

The benefits of engagement transcends all segments of the hotel industry. However, of the six distinct segments of the hotel market analyzed (luxury, upper upscale, upscale, upper midscale, midscale, and economy)  somewhat excpectedly Gallup found that "higher-end hotels do a better job of taking care of their guests' well-being".  Also expectedly,  "Economy (hotel) customers are least likely to strongly agree that the hotel they visit most frequently cares for their well-being (15%)."

While engagement, particularly in the hospitality arena, almost always requires the provision of "premium service as well as a responsive and helpful staff that anticipates guest needs and customizes services" in today's data and technology driven world it can be achieved via smart algorithms that anticpate customer/client needs and preferences.

A prime example of the foregoing is the recently concluded Dublin Web Summit 2014.  The tech conclave that brings in experts from a range of fields including hospitality saw attendance go from a less than 500 at its first conference four years ago to over 22,000 at this month's event. A principal reason was the summit founder's use of an algorithm to maximize networking possibilties resulting in attendees finding like minded individuals with similar needs.  Hotels, particularly conference hotels, could benefit from some Dublin's insights. That could extend to even regular hotels where an electronic "social forum" could be set up for guests to mingle on a voluntary basis and discover shared interests and business opportunities leading to a potential monetization of the effort for the hospitality enterprise.

Sound track: Using audio to enhance customers' perception

October 22, 2014

The Financial Times has  a review of The Sonic Boom, a book that examines "How sound transforms the way we think, we think, feel and buy. The article points out that "the power of a song to transform emotional texture is what Joel Beckerman, a composer who founded Man Made Music, a sonic branding consultancy, calls a “boom moment”: when the right sound played at the right time creates an emotional connection with the listener".  Beckerman explains how marketers and businesses can use sound to influence consumers’ perceptions and behaviour" while noting that "sound is really the emotional engine for any story.”

How music affects for the better productivity in the work place has been acknowledged for some time. A scholarly examination of that was done nearly a decade ago by a Canadian professor, Dr. Teresa Lesiuk who found that those who listened to music completed their tasks more quickly and came up with better ideas than those who didn’t, because the music improved their mood.

Recently, Fast Company ran a story  headlined "How Music Affects Your Productivity". The article mentions a series of experiments that investigated the relationship between the playing of background music during the performance of repetitive work and efficiency in performing such a task. The results give strong support to the contention that economic benefits can accure from the use of music in industry. Yet, a visit to the core operating of areas of many service industries reveal little if any evidence of the lesson being learnt.  Kitchens, with kitchen stewarding in paticular, and other prep areas frequently have a clamor coming from work and the processes therein that are utterly repetitive. The same holds true for most front office operations of hotels which could benefit at two levels where the front desk associates have a fair number of repetitive actions and for the customer as she/he awaits the check-in process.

A hotel company that is considerably ahead of the curve in tuning into the audio needs of customers is the W chain which has a "Global Music Director" whose job includes the  compilation of a collection of songs that is "extremely upbeat, with a relaxing vibe that transitions from bed time to spa time". As the W chain's website notes the "music playing in the background of hotel lobbies, elevators, spas and gyms contributes in a major way to the ambiance of the entire property". 

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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.



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