While everyone in the hospitality industry is intuitively aware of the importance of “driving customer value” some may find the concept itself a bit elusive.
Not Jeffrey Berry.
Director, Database Marketing at Fairmont Hotels and Resorts, Berry is very clear about what “customer value” means for his company. “It involves a meaningful interaction with our diverse customer base, learning about guests’ varied needs and interests, and designing appropriate products to meet those.”
Berry ought to know.
His key responsibilities at Fairmont centre around customer relationship management-type projects. “I’m focused on bringing in the capabilities…the tools that foster better customer interaction,” he says.
Accomplishing this can be quite a challenge for the global hotel and leisure conglomerate with multiple brands that operate under the Fairmont Raffles Hotels International umbrella – including Fairmont, Raffles, Swissotel and Delta – as well as ownership properties managed by Fairmont Heritage Place.
The quest for ‘value’
By building an end-to-end business intelligence (BI) system based on technology from analytics software vendor Cary, NC-based SAS Institute, Berry is convinced his company will effectively come to grips with the “customer value” proposition.
During an interview with IT World Canada at SAS Global Forum 2007 in Orlando, Berry outlined how Fairmont would be using SAS technology to better understand guests’ needs, optimize customer marketing, and improve campaign-management capabilities.
Fairmont’s story reflects the fresh awareness of the power of analytics that we’re beginning to witness in the hospitality and leisure sector.
Recent research suggests the use of BI technologies can make a huge difference to revenues and profitability in this industry.
For instance, a report titled Hospitality 2010 – A Five Year Wakeup Call by Deloitte Consulting LLP shows a definite link between initiatives to drive customer value and long-term profitability. The report is based on Deloitte research conduced in conjunction with InterContinental Hotel Groups and Marriott International.
“We advocate use of technologies that [help you] to segment your customer base,” said Scott Rosenberger, principal, tourism, hospitality and leisure with Deloitte Consulting in a Web cast.
He said analytics can help companies in the hospitality sector to identify areas of opportunity – for instance, potential to apply a price premium, driving discounting down, or increasing revenue power. “[These tools] could also be used to pin point ‘displacement factors’ that cause you to lose yield or revenue opportunities.”
While, in the past, Fairmont has relied on analytics for some of these very tasks, until now it has used a very heterogeneous bunch of technologies.
For instance, over the past six years, it has depended on an Oracle data warehouse, along with BI software from San Jose, Calif.–based Business Objects SA, and standard extraction-transformation-loading (ETL) tools from vendors such as Informatica and Trillium Software.
Fairmont also used Chordiant Marketing Director, a campaign-management tool from Cupertino, Calif.-based Chordiant Software Inc.
“We had a number of SQL coders and were doing things piecemeal,” said Berry. The reason was the company had opted for a best-of-breed strategy at the time. “We picked the BI tools that sat on top of the warehouse based on our needs, as well as the success other companies had with [those] tools.”
However, he said now that Fairmont is “poised for growth internationally across all the brands”, it needs a more centralized view of guests and their touch points with the company.
Ergo – the company decided to deploy a common BI system “and add all the standard tools needed to maximize the value of [the] warehouse.”
Berry said five variables influenced Fairmont’s selection of SAS as the BI platform:
Overall costs – Implementation expenses as well as ongoing costs to re-architect the warehouse and bring right tools into the mix;
Functionality/usability – As the tools were to be offered to employees across the company, it was vital that the applications be logical and intuitive, and not require extensitve training to master;
Manageability – Berry said Fairmont wanted to minimize resources deployed against managing and maintaining software tools given that it is “in the hotel business and creating guest experiences.”
Scalability – “We need to be able to scale our system to incorporate brands we have today, as well as any that may come in the future.”
Interoperability – To achieve a centralized view of guests, it was important that all pieces of the new system work harmoniously and take advantage of common metadata. Berry contrasted this with the situation until now. “Today, the pieces are really siloed and don’t work very well together. We need a system that works seamlessly end to end.”
The goal of the new implementation, said Berry, is “to integrate several data sources, while harnessing the value of that data for stakeholders across all properties.”
A key pre-requisite, he said, is using various touch-points with guests – pre-stay, stay and post-stay – and capturing information that can be used to enhance their experience.
The power of segmentation
According to the Fairmont exec, a big part of this initiative is effectively segmenting customers, understanding interests of specific sets of guests and communicating with each segment appropriately. “We will use SAS analytics for that and try to tailor our messages to customers.”
Berry says by sharing information and insights garnered about guests through the hotel chain’s intranet, the value of this information is optimized. “The idea is to give all of the groups accessing this data the ability to slice and dice it the way they need to and blend in some of their own analysis.”
While Berry focused on the value of customer segmentation for driving targeted marketing, Deloitte’s Rosenberger points to other benefits of this strategy.
In the leisure industry, he said, customer segmentation can be used as a means of “identifying areas where there’s a lift – such as potential for applying a price premium, or driving discounting down, or increasing rev power.”
Effective customer segmentation can uncover a host of opportunities that would otherwise be missed, says Rosenberger, who has more than 20 years experience within hospitality business segments.
The Deloitte analyst notes that segmentation can be done in broad buckets as well as in very sm