Making a marketing plan
Marketing plans are usually vast documents that contain performance statistics for competitors, SWOT analyses (strengths, weaknesses, opportunities and threats), spreadsheets and so on. All too often they are left on the shelf and forgotten.
Marketing plans have to be working documents that make it easy to identify what needs to be done at any given moment. They need to be reviewed regularly. The format of the plan would be 12 monthly lists of things to do. So, for example, if you are making the plan in June, put the mailing that you want for Valentines' Day under the list of things to do in January.
When deciding which markets to tackle, the trouble is that there are too many clients. In developing your plan, where do you start? What are your priorities? Who is available to do the work?
Bringing back the old business
Protect the business you have got. You don't want the new business to just replace the old business you have lost. So how are you going to get the old group business back?
The minimum you need to know about any business that you want back is:
- the name of the organisation
- the decision-maker
- the type of business it was
- the date they are going to start thinking about it again
- the telephone number.
You need to have a system to remind you when it's time to talk to the client again. Either make a file with papers in date order or set up a computer to give you a list of organisations you should be tracing (chasing up) for the month.
This takes care of the group business you had. But what if the old correspondence hasn't been touched for years? Get in temporary help to put it together for you. Contact the organisation and ask them three questions:
- does the business still exist?
- who is the decision-maker now?
- when do they make up their minds?
Make sure that the records are kept in the future, so you don't have to repeat the exercise.
You can move on from there. Does the organisation have any other business you could quote for? This is an easier market to approach than people who have never used you before.
Getting more business through existing customers
After protecting the old group business, you need to apply the most important four words in improving your business: "Why? And who else?" If one cricket club has their annual party with you, who else plays in their league? It's a matter of research.
Whatever business is available to you, there is a crucial question before you go after it - do you want it? What is the point of going after 25 companies who have parties on Friday nights in December? Concentrate on the rare kinds of business.
Filling the gaps
Marketing is about filling the gaps that won't fill themselves. It isn't about getting business for any time at any rate. Yet many hotels offer companies special corporate rates without having any idea whether the bednights they get will improve their occupancy. The corporate rates are based on promises to provide bednights, not on promises to provide valuable bednights.
Who has the valuable bednights? Suppose, for example, your hotel has a problem with occupancy at weekends and is in a dull, uninteresting town. One source of weekend business is conferences by charities. Who could tackle that market? Suppose that you hire an employee just for that. How do you justify the expense?
Say you have 50 unoccupied bedrooms on an average of 30 weekends a year and you would like £50 a bedroom for each night. If you achieved that, you would get £50 x 50 bedrooms x 2 nights x 30 weekends = £150,000.
And say that you make 50% profit = £75,000. And say that the employee costs you £15,000. If you fill 20% of the gap, you will get your money back. Fill six weekends and the expense has been self-liquidating. Anything over six and you are in profit.
Your marketing budget should never be an expense. It should be a question of feeding geese who lay golden eggs. That's why it is stupid to cut the marketing budget when business goes sour. If the sales effort is professional, you can hardly avoid making a profit.
Correspondence research
How do you find the business to fill the gaps? You can look at letters from guests for ideas. For example, a letter from Dr Smith saying "I'm attending a conference at the hospital and would like a twin-bed room" means that you can investigate who else is coming and how many people will be attending the conference. If you get a letter from a sales manager, there may well be a sales conference somewhere. Examine, investigate and research. Part of your marketing plan must always be to learn more about the market.
Yield management
Yield management means getting as much revenue from selling the product as you can. You need to assess what percentage of the product will be sold at full rate, what needs to be sold at a reduction, and what is the lowest price you can accept that still contributes towards your fixed costs - for example, rent and salaries - after you have taken out the marginal costs such as food and soap. Look at everything from this point of view.
Forecasting the future
Hotels often complain about the lack of business in the weeks before and after Easter. So the marketing plan should set out what to do about it. For example, company pension clubs don't mind when they have a social outing, as long as the price is right, so try getting their business.
To some extent, forecasting the future based on previous trends will be out of your hands. For example, if the Japanese stock market crashes, you will have fewer Japanese tourists. The important thing is to recognise that what you read in the newspapers can affect your business.
The timetable
Your marketing plan needs to say how it is going to happen, who is going to do what, by when and at what cost. Then you need to monitor it regularly.
It is seldom possible to correct a revenue disaster if it comes without warning. With planning, the disaster doesn't have to happen in the first place. Suppose your hotel is normally quiet in January. If you start worrying about it in December, it's too late. You should have planned for it months ago.
Looking for improvements
There are certain marketing areas that benefit from careful monitoring:
- what percentage of the banqueting enquiries are converted into definite bookings?
- what percentage of the reception enquiries about bedrooms are converted into definite bookings?
- what percentage of brochure and tariff enquiries result in definite bookings?
- what percentage of the old group business comes back?
- is the sleeper to diner ratio improving?
- how do the restaurant covers change when you advertise locally?
These are ways in which you know that the marketing is working. Plus, there's the accommodation revenue and the restaurant and banqueting turnover. Note that it's accommodation revenue that counts and not average room rate or average occupancy.
How much should you spend a year on marketing?
The answer won't be a percentage of your annual turnover. Sometimes your restaurant or hotel will fill without any effort. On the other hand, you may have had poor Sunday nights for years. If you can build on a profitable market, it may be necessary, originally, to spend between 30% and 40% of the additional turnover that results on the marketing.
What's included in a marketing budget?
The most profitable item on your list is entertaining clients. First, because it isn't very expensive. Second, the value appears much greater to the clients. Third, because you get at least an hour of the client's time, which you can spend on selling your product and on research.
Items you need to consider when you create your marketing budget are:
- entertaining
- staff costs
- print production
- photography
- origination costs - layouts, graphics, cartoons etc
- advertising media
- public relations - including press relations
- mailing costs
- stationery
- travel
- entertaining
- buying research
- contingency - in case you think of something new.
How do you decide what to spend your money on?
Never let any part of the budget be absolute. Every part of your spending competes with other ways of spending. If money can be used profitably for something else, then that's where it should go.
Some companies will agree to a big budget, but won't take on extra staff. Of course, head count does matter when staff are used to service customers. But marketing can't be judged by head counts. Money is spent to make more profit than the marketing costs.
This implies that the hospitality industry expects a one-year payback, but few industries look at marketing in this way. You will find that markets need building over a long period of time.
Wherever it is possible to do a profit and loss account, you should attempt it. For example, with a telesales campaign, you can identify the cost and results. But don't use this to decide whether your expenditure on sales personnel was wise. In general, worry about the turnover, not about who brought it in.
Where is the time going to come from?
If the kind of marketing plan described here is more complex than your usual plan, extra time has to be found somewhere. You need to look at what is taking up your employees' time and drop anything that is not necessary.
Is the team qualified to carry out the marketing plan?
Consider whether your staff are suitably qualified. If not, there are many books you can consult in the libraries.
If there are areas of the marketing plan that don't work, the reasons could be beyond your control. It should never be because you have carried out your plan inefficiently.
This is an edited version of The marketing plan by Derek Taylor from his book Hospitality Sales and Promotion published by Butterworth-Heinemann.
To buy this book online, click here.
