Use customer data platforms to mine data at a granular level

23 February 2022 by

Hospitality venues can use CRM and CDP systems to understand their customers better, tracking website and social media movement and offering a focused view of guests' wants and needs.

Here's Gareth, crying into his pint and telling the landlady his life story for the hundredth time. Across the street, there's Tony, a smooth young professional, striding into the new boutique hotel where he will not speak to a soul during his entire stay.

Hospitality employees cater to the whole human menagerie in all its splendour and variety, whether they like it or not.

We are all human, so in that respect we are all the same, but we like to be treated as individuals. Receiving a personalised service – even if that is just being addressed by our name – makes us feel happy and valued. Hoteliers and restaurateurs are used to hearing that retailers, supermarkets and e-commerce platforms are streets ahead of them when it comes to offering their customers personalised promotions. Amazon, for instance, claims that one-third of its revenue comes from the algorithm-powered recommendations it makes to customers based on their previous purchases.

One advantage that hospitality businesses have in this area is their abundance of customer data. Marriott, for instance, has 141 million members in its loyalty programme. That's a lot of people – more than double the UK population – and a lot of data.

Hotel technology consultant John Burns says: "Hotels receive a remarkable amount of customer data compared to supermarkets. We've got name, address, email address, number in the party, the time/season of the booking, what they paid… a huge amount of data."

Despite having this wealth of information on existing customers, hotels have tended to focus their efforts on winning new customers, as high occupancy levels are a key measure of success. Where do hotels find new customers? Mostly through B2C and B2B digital channels, such as pay-per-click ads, organic search, metasearch, online travel agents, global distribution systems, travel agents, bed-banks and wholesalers.

A bird's eye view

In recent years, three key developments have impacted how hospitality sales and marketing teams operate. First, there has been an increase in data privacy legislation that has affected digital marketing; second, the pandemic has changed just about everything; and third, new capabilities for operating systems to speak to each other have become widely available.

Looking at data protection first, up until recently it was common for companies to target prospective customers with pop-up adverts on websites other than their own. This type of advertising, achieved by the sharing of cookies, is still possible but more difficult under general data protection regulations (GDPR). Henry Seddon, managing director of technology provider Access Hospitality, says: "Initially, there was concern that GDPR would curtail digital marketing activity as customers had a much clearer right to opt out of marketing. In reality, it provided a challenge to marketers to focus on being more creative and give customers compelling reasons to opt in and then target them with meaningful content."

Second, the pandemic forced sales and marketing teams to re-think their strategies. With travel restricted, there was a greater need to target locals within driving distance of a hospitality establishment. Hospitality owners and operators focused on the value of their existing customers and looked at how much the 80/20 rule (20% of your customers account for 80% of your revenue) applied to their businesses. Numerous studies show that keeping an existing customer costs much less than acquiring a new one.

Thirdly, new technology means it is now much easier to consolidate customer data all in one place. If we return to our characters Gareth, the tearful pub regular, and Tony, the suave young executive, on the surface we might conclude we know everything about Gareth and nothing about Tony. But that's not true. Because Tony booked and conducted his entire hotel stay via his phone, we know that he booked on the hotel's website, used the spa facilities and ordered dinner via room service.

The potential problem, and it's one that many believe has held back hotels for decades, is that Tony's data is scattered across the hotel's different departments and operating systems. In fact, the receptionist may be looking at one profile of Tony while the spa manager is looking at another. As consultant John Burns puts it: "Hotel customer databases have tended to be 1,000 miles wide and an inch deep."

Tony booked the cheapest room category but he spent a significant amount on F&B and spa treatments. Unless a summary of his data, such as RFM (recency, frequency, monetary), is available for all hotel employees to view quickly and easily, he might not be recognised as a valuable guest in the future. Historically, extracting guest data from various operating systems and getting it all into one place was difficult to achieve. Now, cloud computing and a new approach to software design centred around APIs (application programming interfaces) make it much easier.

Vibhu Gaind is the chief information officer at RBH Management, a multi-brand operator of 45 UK hotels. Working with several brand-specific customer relationship management systems, he says: "Guest data flows up from the property management system, reservations and the Epos to the customer relationship management (CRM) system. Once set up it's relatively easy. It just need a light touch and it updates itself automatically."

He adds: "Operating different brands in different markets means we work with a few software companies. A guest at the five-star Westin London City will have different requirements to a guest at a Holiday Inn Express, where the CRM system is good at the basics. At the Westin, that's where a CRM really delivers because it's there that you really have to manage guest expectations."

Tech vendor Superb provides a fully integrated reservation, EPoS and payments system specifically for the restaurant industry. Crucially, the byproduct of having an all-in-one operating system is that restaurateurs can easily collect and access insights on their guests.

Glasgow fine-dining restaurant the Gannet uses Superb's guest experience management platform, as does Henne, an independent 14-cover Cotswolds restaurant. Henne's co-founder Nick Fenton says having advance notice of guest preferences and requirements, as provided via the Superb platform, has been "a game-changer".

Traditionally, operators have used CRM systems to store their guest data and send marketing emails. Now, customer data platforms (CDPs), already widely used in e-commerce, are attracting attention (see panel). Seddon said: "Consumers are creating bigger digital footprints when interfacing with brands. Technology needed to react to the increasing level of data available. Whether it was from emails, mobiles, social media, booking platforms, Wi-Fi, pay-at-table apps, loyalty programmes, websites and aggregators to name just a few. Hence the evolution to CDPs and the single customer view."

The marketing buzzword

There are more than 100 vendors of CDP products, although most are designed for retail, not hospitality. MParticle's customers include Airbnb and Burger King; Wyndham Hotels & Resorts adopted an Amperity CDP in 2020 that took four months to deploy; and Ireckonu provides a hospitality-specific CDP via its middleware products, with clients including Mandarin Oriental and the Student hotel (scheduled to open in Glasgow in 2024).

Another technology firm focusing on guest data and the guest experience is Southampton-based Alliants, with clients including Four Seasons Hotels and Resorts, Nobu Hospitality, Lore Group and Mollie's Motel. "CDP is about understanding the customer before they arrive and it's almost about personalising that guest journey from the moment they look to book," says Alliants business development director Kevin Edwards. "It's showing them you know them. People are looking for experiences and the brands that are really going to differentiate themselves are the ones that can provide personalisation."

While it is naturally beneficial for operators to better understand what their guests want, it is very likely to lead to higher average spend and more accurate and granular financial planning, explains Edwards.

"To a certain degree it's abolishing the 80/20 rule because – yes, you have your high-spending guests – but the reality is the remaining guests could be spending a whole lot more," he reasons.

"This is one of the benefits of CDP: understanding the behaviour of the golden guest, the guest who does everything you want them to do. You can then learn from the CDP to influence the behaviour of others. This comes down to using machine learning and finding what are the next best actions."

For example, analysis of data can pinpoint the best time to ask guests whether they need help arranging transport back to the airport, or other services. Obtaining information about guests pre-arrival, such as dietary requirements and other preferences, can lead to a better and more personalised experience. And seeing which marketing emails are opened and which are not can inform future communications.

CDP has become a marketing buzzword, but Chi Chan, chief commercial officer at Ireckonu, underlines that it is vital for businesses to establish their data strategy first before thinking about buying or building a CDP. To do the reverse, he says, would be "like buying the wallpaper before you've even built the house".

The price tag of a CDP can vary from £73,000 to £220,000 annually, according to advisory group Gartner, while the costs to build and maintain a CDP in-house could be higher.

CDPs are not a silver bullet. Like any data system, they require a lot of integrations with existing infrastructure. While a CDP automatically amasses data on prospective and existing guests it is, essentially, a repository. It does not transform the data into actions by itself. So hoteliers who struggle to find ways to use their data will not gain any value from a CDP without skilled personnel to manage it.

In fact, many hotels are not reaping the full benefits of their existing CRM systems, according to research by Gartner. This is confirmed by Edwards: "We've recently been doing some work with a hotel group around CDP and 90% of what they are looking for they already have. The hotels have already got data. They're just not using it or they don't have a strategy over what they want to do with it."

When considering the need for a CDP, therefore, the first vital steps are to have the necessary API-first connected infrastructure and establish a series of use cases for the customer data. Then, and only then, should owners and operators look at whether a CDP is required or whether their current CRM or existing tech stack can be more fully utilised.

In the end, is all of this focus on customer data really worth it? How about just smiling and calling the guest by name?

At a time when businesses are looking for new strategies to maximise revenue, Edwards thinks not: "E-commerce is now suggesting to customers what they should be doing. Why do we constantly feel in hospitality that we've just got to get to the bare minimum? We never set the bar very high when it comes to technology. But if a hotel really gave you an immersive experience, just because it isn't available today, it doesn't mean we shouldn't aim for it."

CRM & CDP: what's the difference?

  • A CRM (customer relationship management) system helps manage customer relationships, while a CDP (customer data platform) helps manage customer data.
  • A CRM is primarily used by sales and marketing teams to communicate with clients and customers and deploy email and other marketing campaigns.
  • A CDP, on the other hand, should be available to all departments, including finance, operations and HR, and be used to make a variety of strategic decisions.
  • CRM data tends to be contact details, stay history, and interactions on social media or requests. Some data may be gathered manually.
  • With a CDP, most of the data is collected automatically via integrations and code snippets and includes a visitor's movements on websites and social media prior to booking.
  • In short, the aim of a CDP is to capture every direct customer interaction with a business and keep it forever to understand customer lifetime values.
  • Increasingly, medium and large hospitality companies are employing data analysts to help shape business strategies.

Case study: Access Acteol and Ping Pong

Ping Pong, a group of seven Chinese dim sum restaurants in London, worked with Access Acteol to improve its CRM strategy.

Art Sagiryan, chief executive of Ping Pong restaurants, says: "Using the technology from Access Acteol, Ping Pong is able to deliver highly personalised targeted campaigns. This strategy is clearly beneficial as we regularly see email open rates over 40% on automated campaigns and great interaction on monthly newsletters. We can see who comes in again on the back of the comms and see what they spend."

Stephen Powell, director of Access Acteol, part of Access Hospitality, explains: "Firstly, we had to merge, cleanse and de-duplicate Ping Pong's various existing data feeds, including everything from website data to POS transactional data. Having built the single customer view, we implemented a CRM strategy by creating an effective loyalty scheme and automated communications plan for both initial and returning contacts.

"Like any good CRM, it was important to ‘close the loop' on the activity, so all interactions are flagged back to the customer and tracked through a set of dashboards and reports. By using the different data feeds in the single customer view, campaigns can be segmented and targeted. This had a significant impact on Ping Pong's campaign engagement rates, with the birthday communications, for example, averaging an open rate over 40%."

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