I'm of the belief that it's going to require unconventional business strategy approach to break through the present economic conditions that the hotel industry finds itself in.
I think the hotel industry has come to the sobering reality that when it comes to developing their business on the physical aspects and product offerings, that they have either run out of areas to spend money on, or they have run out of money to spend, in attempting to improve their revenue growth, brand relevancy, and customers' loyalty in their business.
I also believe out of the past recession that customers have become certainty junkies for their hospitality and travel choices, with a much higher awareness and perspective of what it is going to take to earn their trust, confidence, and wallet. This has made conventional sales formulas less and less effective for achieving sustainable revenue growth and impacting loyalty conversion rates. Your customers have a high desire for certainty when making their buying decisions, more so than any other time in the history of the hospitality industry, which only adds to the importance for creating a customer driven value proposition that is focused around the entire customer experience of the business, as a way to competing for customers preferences, advocacy, and loyalty.
Is your businesses sales formula approach, stuck in 20th century methodology .
So a conventional sales formula approach might be considered obsolete in the 21st century, as we move out of the information age and into, the age of the customer. The age of the customer is more focused on conceptualizing the non-tangible elements of the business with the tangible attributes of the brand experience in its sales formula design and strategies. The industry may be utilizing 19th and 20th century sales formula approaches that have been passed down from one business generation to another. It's one thing to do this with your operational equations for managing cost, but it's a whole other conversation when it comes to your business model that influences your sales and revenue performance.
If 20th century sales formulas do not evolve into 21st century thinking with more of a focus around the customer experience as the value proposition in the business offering, this will only continue to provide your customer with more leverage, since the hospitality industry insists on competing as a commodity driven business segment that's focused primarily product and services, as well as pricing. This in turn can continue creating a sale culture mentality in the organization, based more on a sense of scarcity for getting the sale, with a primary focus on selling the commodity aspect of the business, rather than delivering a great customer experience as the value proposition to your customer segments. The endgame is focused on achieving higher loyalty conversion rates, versus just trying to fill the space weather that be hotel room or meeting space.
Conventional sales formula approach will have little impact on creating brand relevancy.
The days of providing a great conventional sales formula that resembles this equation {Product + services & amenities + customer service = long-term loyalty, advocacy, and referral benefits} for achieving sustainable business results, I'm sorry to say, but those days are far behind the hospitality industry. I think that's becoming apparent to everyone in the hospitality industry. Great has become the new good/average. Your customers expect great as the baseline expectation for even considering doing business with you in the first place. It will now be acquired to take everything into account in your business when creating your sales formula strategy to have an impact on the preference factors with your customer segments.
Business models and the sales formula alignment must have primary focus on creating exceptional experiences that build towards achieving experiential value for your customers. Exceptional can become memorable. Great will only create satisfactory results, and satisfactory will not convert into sustainable customer loyalty conversion percentages or achieve consistent strong revenue performance.(JD Power has a tremendous amount of data to substantiate this claim.) The hotel industry is now in the business of playing for memorable when it comes to winning the hearts and minds of their customers. It's not just about winning the wallet anymore or the product and service race. I have written an article titled; From Which Century Are You Operating Your Hotel, that will help create an understanding around the customer perspective on how they make their buying decisions.
Welcome to the 21st century sales formula strategy.
Now, a customer experience design sales formula strategy approach for the hotel would go in this direction. First of all your organization and operational focus would always be on building or maintaining the total customer experience. It would not leave anything up to chance; it would manage every aspect of the acquisition cycle and the total customer journey, with a very high commitment around the execution of your experience management systems for delivering service/SDS, within the customer experience. Basically, the organization is more focused on how the business is making the customer feel about themselves from the overall experience, rather than just relying on the brand identity, the hotels ranking position, physical aspects and product offerings in creating the emotional connection or bond with the customer. It's more important to make your customers feel good about themselves from the hotel experience, than making them feel good about the hotel brand from the hotel.
A customer experience design sales formula in the 21st century would look more like this: it takes everything into account for achieving the total customer experience as the value proposition within the sales formula model, i.e. more conceptual in design and thought. {Customers needs-expectations-wants, x, your people x service excellence culture x the business environment x product and service offerings = exceptional experiential value that represents a positive and memorable experience. That has a very high probability of translating into a strong loyalty conversion rate.}
Put the focus more on people for generating experiential value for achieving customer loyalty. The physical product aspect would only account for 25 to 50% % of the formula focus at best. Because customer experience design sales formulas would take everything into account and knowing there is a compounding effect on achieving experiential value with the customer, and not just trying to achieve a brand equity position or a brand value position which focuses on addition and subtraction sales formula approach. Your customers are using multiplication to value their experience of your business, so this means you can't have any zero values in your value proposition to your customers.
Now you're working from the same playbook of some of the more iconic brands in the world.
The other half of the formula would focus on the environment aspects and cultural feelings of the business as well as your people level of engagement, with the ultimate intention of making the customer feel good about themselves from the hotel experience they received from the total customer experience. I have written an article series on this which is called, A New Business Model Strategy For Enhancing The Hotel Industry, which expands on the business models sales formula approach from both the customer and the business perspective.
When you shift the value proposition in your sales formula to the total customer experience of being more conceptual, it helps move the focus away from the monetary value driver of the customer relationship. There's a shift from selling to buying culture in the business experience for the customer, as well as emotionally connecting to the customer's needs, expectations and wants by the organization for generating a positive and memorable experience as the product offering, like you have seen take place in an Apple Computer store, Starbucks and Whole Foods. Nordstrom is another good example. Yes, there is a commodity at play here, but the focus is on environment, culture and people connections for achieving experiential value. Not just relying on the product and services as the workhorse in the sales formula. It becomes less about price when an emotional bond is created with a high level of integrity and trust established. It's all about buying the experience, not selling the commodity or product and services. Customers want to know that you care about them and that you are empathetic to their needs and expectations, that you are committed to building value that impacts their life and makes them feel good about themselves while they are doing business with you. As far as an example of exceptional hospitality brand that achieves this, I would say the Ritz-Carlton does an excellent job at focusing their entire business enterprise externally onto the customer coming into the business, rather than internally selling them on the commodity aspect of the business.
Moving your customer from head to heart.
Buying decisions become more emotionally engaging for the customer when the business’s sale formula is built around the total customer experience. This can have inspirational effect on your customer’s attitude for generating a positive perspective about all the aspects of the business. Everything hinges on creating an emotional connection with the customer that has the ability to temper the logical aspects of the buying relationship. Basically, this moves the customer from head to heart. When the customers is in their head/a logical mindset, there is a lot of focus on certainty of, will I like this, can I trust them, does this make sense for my life, do they really care about my needs? That's why at the beginning of this article, I spent some time on the subject of certainty which of course is an emotion. Since the great recession certainty has become a very powerful one in the marketplace, the level of certainty that is required for generating confidence, trust, and value with your customer segments as you know has quadrupled. This is why a good percentage of hotel businesses who have made substantial investments in renovations, don't see the type of increase in their customer loyalty conversion rates. They only focused on half of the business equation and didn't take the other 50% or so percentages of the business model equation into consideration. Perhaps they didn't feel it represented a legitimate competitive advantage or a true business differentiator with their customers. Maybe in the 20th century it wasn't that significant, but in the 21st century, it's how you tell the real players in the hospitality industry from the wannabes.
Your hotel physical product offerings will only go so far in creating viable customer loyalty, or being considered a legitimate business differentiator for generating sustainable customer loyalty and sustainable revenue growth. Because if everything is equal in the marketplace, the functional physical aspects of your hotel, products, services, amenities, location, and price are how you compete for customers. Before you answer that question it's important, to please keep this in mind, your competition can always match and exceed all the physical innovations that you add or create in the business, but it's very difficult to match a well-orchestrated and executed customer experience value proposition that adds experiential value in creating a strong emotional connection/bond with your customer segments.
Moving your hotel from my selling experience to a buying culture for your customers.
Your sales formula must make your customers feel good about themselves from their experience with your hotel and move away from the transactional business culture nature from the 20th century approach around selling the hotel commodities, products and services. If you want to build sustainable loyalty, trust, confidence, and advocacy as well as increase your customer capital position for forgiveness in the future, you are going to have to connect with your customers on an emotionally engaging level through the sales acquisition experience process. This can be achieved through creating an enrolling buying experience of the total customer experience of the business.
When you think about some of the business as I've mentioned in this article, you'll notice that they create a buying experience. I don't think I've ever had the staff in the Apple Store ever try and sell me anything. They are almost like butlers rushing around to get customers’ expectations needs and wants taken care of. If anything, they're not up selling me, they are down selling me and saying I don't need that many gigabytes. They want me to have a great experience through and through. It's not about them, it's about me.
The hotel business cannot be a making and selling business entity. The competition is too stiff for one thing, with lots of choices on the customer’s side. Your customers are getting exposed to businesses that utilize customer experience business strategies more and more each day, shifting the value proposition around the experiential value for the customer through the total customer experience as the product offering. The hospitality industry can ill afford to continue to be last in line in utilizing this business approach for differentiating themselves in the marketplace.
Please send me an email and tell me what you think about your sales formula and the value proposition within your business model for your hotel. I would love to talk shop with you.
About the author
For over thirty years, Brett Patten has worked in the hospitality industry. He spent those years accumulating invaluable insight, knowledge and experience through his various positions, and studies, from when he starting out has a front line employee at the age of 15, with a four-star hotel in the 1980s', to recently completing his education as an executive leadership and engagement coach. Brett's unique management style consistently transformed his work environments by focusing on his people and customers for creating a engaging hospitality experience which generated strong sales and operational performance results. In 2007, Brett launched Fire and Vine of Virginia Beach, a new world wood fire cuisine restaurant built on a hospitality business strategy process that he trademarked and now calls "five-star customer experience design." Within the first two years under Brett's strategic business approach, Fire and Vine was recognized nationally for its hospitality management, design elements, employee development, customer service excellence, culinary cuisine, and wine program.
Today, after spending the last 15 years researching, studying and developing customer experience design best practices and strategy implementation for the hospitality and tourism industries. Brett has created an innovative Hospitality Business leadership and management Program. Which aligns all the business disciplines and strategies through a customer experience design approach, for creating a customer driven brand connection, as well as elevating the engagement dynamics of the business culture for establishing positive customer loyalty and sustainable financial performance results through the generating of exceptional and memorable brand and customer experiences.
