Personalized Offers—They’re Not Just Discounts for Guests

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Personalization isn’t a fringe benefit anymore; it’s expected. So, why do we crave it? Simply put, it eliminates barriers to make it easier for all of us as consumers to engage with content that’s relevant and tailored to us.

In a doctoral study at the University of Texas, research revealed that the attraction to personalization boils down to two main elements: the desire for control of what’s holding our attention and the minimizing of feeling overloaded by information. But let’s go a step further.

One function of our reticular activating system (RAS) in the brain stem is to be the passageway where information enters and is filtered for relevance and worth. That makes the personalization of your hotel prices and offers even more valuable. The more pertinent, meaningful, and usable they are to your targeted segments of guests, the greater the chance you’ll receive the desired results.

Let’s take a look at how you can make an impression on future guests with your hotel’s personalized offers.

Start gathering the data

Every interaction that potential and future guests have with your property is a data point along the guest journey, from social media to your website to check-in. These data points are nuggets of information that reveal likes and dislikes, preferences, and even choices repeat guests made during their last stay.

One go-to source to check what data you already have is to look in your hotel-tech toolkit: the customer relationship management system (CRM). The insights you gain will guide you on how to ensure that engagement is purposeful and valuable at each touchpoint of the customer journey.

Though there are already strict privacy regulations to protect consumer data, there are also morals and ethics to heed. 83% of consumers say they’re willing to share their data to enable a personalized experience, but the last thing you want to do is to turn them off by crossing the line from cool to creepy. Your CRM allows you to be transparent about how you use and store guest data, be aware of who has access to it, and know who controls it.

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Use the data at the right moment

The guest portrait that your CRM paints will provide you with the details you need to target the right product to the right guest at the right touchpoint through the right channel for the right price.

Here’s how you can apply these five rights of revenue management to the customer journey:

During the planning stage, the posting of a personalized offer on your social media platforms can help future travelers decide on when they want to go and where they want to stay. You can also use this tactic to steer them towards booking a time frame with foreseeably low occupancy.

Another effective approach to capture attention (and direct bookings) is the promotion of your special website rates on metasearch. For example, hoteliers can get free exposure of theirs on trivago by advertising them with Rate Connect. As soon as interested travelers click on those rates, they’re redirected to the hotel’s booking page to complete the booking process.

When your future guests reach the booking stage, you’ll want to make them feel better off than from where they started. Your goal here is to increase the perceived value of the personalized offer on your hotel’s website in exchange for what the incremental price may be (e.g., a longer stay or a higher room category that may not get booked).

By the time you send your pre-arrival email, you’ll already have a good overview of how demand is going to meet your available inventory. To generate additional revenue, why not tempt future guests with an invitation to upgrade? Don’t forget to add the guest’s name to the email to catch their attention. After all, you want to make it through the brain’s passageway that filters for relevance.

And finally, at check-in, don’t be shy to suggest appealing options that guests can experience during their stay (e.g., food and wine tastings, wellness sessions, a tour). This also goes for repeat guests who may be keen to enjoy previous activities again. Even if guests don’t take you up on the offer, you’re still making an impression by presenting recommendations that could interest them.

Price fair and square

Consumer behavioral research shows that people want a fair price, but they also believe that a company is entitled to a fair profit. At the same token, this principle of dual entitlement reveals that they’ll punish a company that they believe is acting unfairly. A popular example of this case would be a hardware store raising the price on snow shovels when there’s a winter storm. You can imagine the negative reviews and word of mouth that would come of that.

So, it’s crucial to avoid creating the impression of price gouging or price discrimination. You want to set a price on a product and service correctly to match the demand for that price plus the value guests will place on it.

Here are two techniques you can follow to maintain the perception of fairness:

When you use price framing to present a personalized offer to guests, you want them to see the value of their choice, so that it becomes the most important focal point of consideration rather than the price itself. A study conducted by Salesforce shows that 67% of consumers will pay more for a great experience.

In terms of fencing, you establish the qualifications for guests to get the personalized offer. What’s more, they have to believe that it’s fair and reasonable. For example, it’s reasonable that a person has to be a senior citizen in order to get the senior citizen discount.

By integrating both framing and fencing into your personalization strategy, you’ll have a greater chance of boosting your conversion rate.

Get out of the discount mindset

Another finding from consumer behavioral research reveals that people will evaluate price fairness by establishing a reference price in relation to their past purchases. As a result, they’ll compare that reference price to the current one.

According to Kelly McGuire, PhD, a leading voice in revenue management, “the more experience guests have with discounts and lower prices, the more likely they’ll make the discounted price their reference price. That’s why we’re sometimes challenged to raise prices after slow periods of time or excessive discounting. In case you have to discount, then do so relative to the real price you want that reference price to be. For example, book three nights, get the fourth free. When your guests pay full price for the three nights, they’ve seen what you want them to see as the reference price. This is much better than a 25% discount for a longer stay because they see the discounted price and pay it. Therefore, consider setting the right reference price, so that you don’t risk violating the perception of fairness.”

Though guests love getting a great deal, they’re also willing to spend more on something they value. So, if you extend a discount on a service or product that they’re happy to pay full price for, you can run the risk of reducing your bottom line. What’s more, any point on a discount that you don’t recuperate in volume or from another means of revenue, is a point you’re removing from your profit.

Therefore, don’t think you have to give a discount to entice guests to buy. Apply it only when you have to usher in the kind of demand you need. And, most importantly, be careful not to dilute your property’s main driver of value: your rooms.

Now more than ever, people expect pricing and offers that are more favorable than anything else they can see online. Equipped with the right data and attractive messaging to target them along the customer journey, you’ll not only meet their expectations of personalization but also maximize the opportunity for your hotel.

Photo by Chelsea Gates from Unsplash