The bottom line on customer engagement

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.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.