For some hospitality enterprises, the ROE/return on experience can be very weak and to nonexistent for those businesses that don’t strategically prioritize the guest experience. It has been widely talked about that the guest experience is the new amenity differentiator of the 21st century. There is also a general consensus among economists that we’re in an experience driven economy. I’d like to take it one step farther, and state that I believe it’s a legitimate business differentiator for achieving a true competitive advantage and customer loyalty, as well as generating sustainable financial performance for the hospitality industry.
The reason for my proclamation is there has been a major shift in the consumer’s behavior and perceptions of value in the marketplace. Back in the 80’s and 90’s, it was more about what people own, but now with the predominance of social media channels in people’s lives, it has become more about the experience they want to share with others, and the experiences they want to receive in their life that ultimately impacts their decision-making.
If we were to take a moment and ask the Ritz-Carlton, or other business segment leaders, such as Southwest Airlines, Whole Foods Grocers , Starbucks, and Nordstrom’s department stores, they would all say unequivocally that the customer experience is the centerpiece of their business model, and that it transcends through every business discipline and strategic initiative in their company for ensuring a strong ROE. Each one of these businesses that has made this conscious decision and commitment has experienced tremendous growth and financial strength, as well as ridiculously loyal customers.
Their customers are inspired to share their devotion and experiences every opportunity they get. These advocacy rewards drive the business’s popularity, brand relevance, and online rankings as well. This in turn dramatically impacts the hotel’s occupancy and ADR performance, not to mention revenue and sales streams on a more sustainable basis.
So let me expand a little bit more on these ridiculously loyal customers. When it comes to generating return on the guest experience, all these businesses enjoy excellent ROI on their marketing efforts, spending one-third to two-thirds less than their competitors in most cases. As a matter of fact it, has been well documented and publicized that Starbucks spends only $20 to $25 million a year company-wide on their marketing. Their next closest company comparison to Starbucks revenue performance and number of stores spends a minimum of $265 million annually. As you can imagine, this also creates a very favorable customer acquisition cost for these companies.
Hospitality enterprises that experience excellent ROE performance, also experience outstanding management and employee retention rates. There is a high level of employee engagement in delivering the guest experience narrative, initiative and brand promise, which also has a positive impact on recruiting expenses and talent management.
Let me give you a quick tip for helping your business on its path to a stronger ROE performance. In my program Achieving Customer Happiness, I talk about the importance of creating a personalized hospitality experience that makes the guest feel recognized, special and good about themselves from the experience with your business. It is critical in generating strong ROE performance.
One of the best ways to achieve this is to personalize the guest interaction with the business. Managing the guest experience when and wherever possible is the key. Creating strategies and tactics that have the ability to generate unexpected surprises, value and special attention from the staff, will generate strong returns.
One approach you can adopt is to personalize the pre-arrival-arrival- guest stay and departure with personally signed communications from general manager or other staff members to the guests. These messages should be strategically designed to connect the guest to the business on multiple levels, for generating memorable, and that inspire positive advocacy and loyalty to the business location and brand.
To achieve stronger ROI and financial strength in your hospitality enterprise, it’s going to come through your ROE efforts.
About the author
Brett Patten has 35 years in the hospitality industry where he has spent those years accumulating invaluable education and experience in a variety of leadership positions, and business enterprises. Brett has become known as one of the top executive leadership and organizational business coach on the subject of hospitality intelligence, and customer/guest experience design. Brett is also a feature writer for global hospitality, a national and international publication on the subject of guest experience design.
Brett’s unique management and business approach consistently transformed hospitality enterprises with sustainable growth results from his days with the prestigious four and five-star hotel brands, such as the Stouffer’s hotels, Pan Pacific Hotels, and Le Meridien hotels, as well as working with prestigious five-star club resort enterprises like the very prestigious Longboat Key, to the launching of a nationally award-winning hospitality brand in 2007.
Brett then turned this business processes into a company called “Five-Star Customer Experience Design.” Today, after spending the last 15 years researching, studying and developing customer experience design strategies and business platform for the hospitality and tourism industries, he has become an industry pioneer and the foremost authority on the subject of customer and guest experience development, through his signature approach titled, Achieving Customer Happiness. Brett’s company engages with some of the top hotel brands, hospitality management groups, and tourism bureaus both nationally and internationally in the industry.