Circos Brand Karma

Will social media go from a cultural phenomenon to a commercial force?  Yes, I believe so.  If last decade’s new new thing for marketers was SEM, I believe this decade’s new new thing will be SMM (social media marketing).

However, for SMM to become legitimate its efficacy must be measurable, otherwise it’s tough to justify devoting any resources to it, particularly because in the last decade marketers learned how to calculate ROI by looking at conversion revenue from CPC traffic referred by their Google (and subsequently, other online) campaigns.  Not only did ad budgets shift, discipline was instilled.

We advise our clients to think about ROI of SMM in 4 major categories:

Brand satisfaction – how do operational improvements and investments increase your overall guest satisfaction over time?  In Brand Karma it’s the Guest Satisfaction Index, which is a composite index of your perception from various public sources, but if you don’t have Brand Karma you can also use something simple like your ranking or ratings on a review site.  When your guests post reviews about you, they’re giving you feedback on their stay.  Because their reviews are public, their words also shape how favorably viewed your brand will be for consumers researching your property.

Brand loyalty – related to overall brand satisfaction, the loyalty measurement lets you know if the guest stay experience is compelling enough that it moves your guests to recommend your brand.  Like satisfaction, this is a measurement that needs to be trended over time as well.  In Brand Karma it’s the Loyalty Index, but again, if you don’t have Brand Karma you can look at the “recommendation” rate on reviews that are written about your brand.  Different sites do this differently, but most have a way for their reviewers to recommend a property.  This index and the Guest Satisfaction Index gives you a good idea of how favorably the public perceives your brand.

Many internal guest surveys also measure satisfaction and loyalty.  Just keep in mind that the surveys guests 1) give you solicited feedback — i.e. questions you ask, not necessarily what the guests want to evaluate, and 2) aren’t viewable by the general public — so they don’t give you insights into how public perceptions may be impacted.

Guest Satisfaction Analysis in Brand Karma

Brand awareness – how do sites with social media increase the awareness of your brand?  In the social media world, in addition to the traditional metrics having to do with volume, awareness metrics must take into account the idea of relative frequency.  Relative frequency lets you know how recent is the content about your brand vs. your competitors.  This is important because if people haven’t been talking about your brand recently, then either you’re not interesting or your competitors are more interesting than you, neither of which is good.

Campaign performance – the ultimate metric that measures ROI.  Suppose you run an ad on Facebook, you’ll want to see what is your ROI for every dollar spent.  This means that you must have a way to measure what you’re advertising.  For example, to execute you can set up a landing page on your ecommerce site so that you can track the referrals and conversion rate from that specific campaign.  Use the traditional ROI formula to calculate what your return is (should be no different than your calculation for search engine marketing).  As you get more advanced, try to establish a link between your brand satisfaction, loyalty, and awareness to your campaign performance.  For instance, how much better does your campaign perform after your brand satisfaction has increased by 10 points?  If you have lower brand awareness than before, do you have fewer click-throughs?  Is there a correlation between guest loyalty to your campaign responses?

In a way, the above points are the fundamentals of marketing, and that’s precisely the point.  Brands wanting to leverage social media for marketing should measure what they’re getting out of their investments in it.  However, like traditional and other online marketing tactics, SMM takes a bit of trial and error to perfect into a strategy, particularly because the ability to micro-target is superb, and so brand owners should consider developing an expertise over a few marketing campaigns.

Some progressive brands are considering hiring a marketing manager to focus on social media in 2010.  Once again, this person’s salary minimally should be considered an investment to improve brand satisfaction, loyalty, and awareness.  List the activities that your social media manager engages in with your fans, followers, and friends, and see how much time they take.  From there, you can calculate the dollar investment (percent of time to salary).  Over time, see what activities lead to gains in satisfaction, loyalty, or awareness, and what activities don’t make a difference.  If you’ve established a link between increases in satisfaction, loyalty, and awareness to increased campaign ROI, then you’ll know how much your social media manager can help you improve your bottom line and guide him/her to engage in activities that increases your key metrics.

Thanks to an invitation from Giancarlo Carniani, I recently had the pleasure of presenting social media for hoteliers with Laura Valerio at the Buy Tourism Online Conference in Florence.  Laura, who is Expedia’s Director of Market Management for Northern Italy, is highly knowledgeable about the Italian travel market.  This post is an epilogue to our presentation, and given that the great majority of Italian hotels are independents, this post is dedicated especially to them.

Independent hoteliers need to truly understand their differentiators, because it’s the differentiators that will enable hotels to attract the right guests who are willing to pay a premium for what you offer.  Differentiators must meet the following 2 criteria:

1. It’s absolutely good by your own standards (however measured, either through internal guest satisfaction surveys, word-of-mouth feedback on the web, or because your guests tell you when they check out)
2. It’s relatively better when compared with your competitors (from looking at social media feedback and editorial reviews)

Given this framework, location is rarely a differentiator if your competitors all face the same piazza.  While it may satisfy criteria 1 (the location is absolutely good), it fails criteria 2 (it isn’t relatively better — at least not discernible to most guests evaluating where to stay when all hotels are in the same piazza).

Design, however, can be a differentiator.  For example, let’s say you’ve recently renovated, “modern rooms in a classic building” could be a differentiator, and an especially strong one if other hotels in the piazza haven’t renovated in the last 10 years.  Service can also be a differentiator.  For example, “fresh-picked fruit from own garden” or “regional cooking lessons” can all be differentiators.

And herein lies the absolute beauty as it comes to the Italian hotels: it’s easy to spot the differentiators in independent hotels once you move away from the “obvious” criteria that often appear on guest satisfaction surveys.  In most cases, you can find the answer in social media about your hotel.

Spotting Design as Potential Differentiators

According to the Italian State Tourism Board, Italy is consistently one of the of the world’s top 5 destinations (the other four being USA, France, Spain, and China).  In 2007, for example, 42.8M visitors contributed to 163.5M bednights, with cities of historical and artistic interests contributing to nearly 1/3 of the bednights.  The rest is primarily made up by visits to sea, mountain, and lake locations.

This information suggests that travelers to Italy are naturally inclined to seek out picturesque things (artistic, sea, mountain, and lake).  To find out what are the picturesque things that guests find exciting about your hotel (and want to share with their friends and strangers), go to Google (or Flickr and Picasa), type your hotel name in, and look at the “Image” search results to see the pictures that are available about you.  And then follow the pictorial links to sites that have user-generated content to see what pictures your guests are sharing and how they are describing your property.

You might find pictures of your amenities, rooms, certain design elements, or you might find pictures of nearby attractions, or you might find pictures of the outside of the hotel, or the view from the balcony at sunset.  Whatever it is that you find will tell you precisely what guests found to be interesting about your hotel — and took the time to download the pictures from their camera into their computer, uploaded it from their computer to their account on the social media site (assuming that they’ve already created an account), and then told their friends that they’ve uploaded these wonderful photos about you.  These photos give you a pretty good idea for what in the design of your property (either internal or external) could be differentiators.

Leveraging History as a Potential Differentiator

Secondly, travelers to Italy who are interested in historical cities might also be interested in the history of your property.  For example, what did the building used to be?  How did it become a hotel?  Is it a family business?  Did anything interesting happen on premise?  Hotels in Italy (and many other countries around the world) have built-in stories that make the stay experience even more special.  Why not share them?

Even though it may be more relevant if the property’s history is connected to the historical attraction in the city, sometimes it’s the people that own the building or run the property who have the interesting history.  For inspiration from a familiar source, think of the wineries that are all over Italy.  Many of them are run by families who have owned the same winery for generations.  Behind each of these wineries are stories of colorful characters overcoming (or facing!) problems.  Even most wine labels have a story behind them.  Can you relate this to your hotel?

The great thing about the history of your hotel is that it’s always unique to your property.  If you share your history and your guests begin to write about it in their reviews about your property, then that history might very well be a differentiator — one that you don’t have to spend any more money on improving.

However, you won’t know until you share and see how your guests respond.

Getting People to Talk About Your Service

I have a third tip on differentiators.  In the past 12 months I’ve sat on more planes crisscrossing the globe than I can remember.  On a recent KLM flight the safety video projection was not working, so the flight attendants had to demonstrate in person.  I saw that most people actually stopped what they were doing to watch the flight attendants demonstrate how to buckle and fasten a seat belt.

This is because people pay attention to people.  Extended to hotels, especially good service will not be ignored, and can become a differentiator that is not easily replicable by your competitors.  Whether it’s in the way of a welcoming attitude, or thoughtful anticipation, or speed to solution, or personal recognition, or something else quirky but wonderful, what you and your staff create in terms of the human experience can often be your strongest differentiator if you construct the experience with empathy in mind.  For Italian hoteliers, empathy can solve guests’ language obstacles, dietary needs, lack of familiarity with local culture, attractions and customs, bad/long transportation experience, etc. and win your guests’ loyalty.  If they are so moved as to recommend you to their friends, they also become your best marketers.

4.5 years ago I stayed at Villa La Favorita in Alba which was up in the hills.  I had bought some wine and needed to get to Turin, but this would have required me to get down the hill with a bulky box, take a train from Alba to another town, and then switch trains to get to Turin.  Roberta, the owner, after helping me decipher the train schedule, voluntarily offered to take me to the train station.  At first I thought it was nice of her to take me to the Alba train station, but she ended up driving me right past it and on to the 2nd train station.  To this day, I’m still referring people to her 6 room property, and look forward to going back.  On TripAdvisor, Villa La Favorita has a 100% recommendation rate and is ranked #1 of the B&Bs in Alba.  Roberta is mentioned by name in several reviews.  The most recent one reads:

Last but not least the owner Roberta goes out of her way to make each guest feel special and welcome. She provides for most anything you could ask for and will arrange for special tours or activities in the area if you wish. She will definitely succeed with Villa La Favorita.

An Example from an Independent Hotel in Italy

To summarize, let me use Villa La Favorita as an example.  If you go to the Villa La Favorita website, you’ll see the following description amidst beautiful pictures of the property and Roberta.  My analysis of why this is so effective is in parentheses below each paragraph:

Welcome!  It gives me great pleasure to present my country home.  Dating back to the early 1900′s, it is officially recognized as a historic residence, and has been meticulously refurbished in recent years.  Set amidst a 10,000 m² estate of vineyards and fruit orchards, it is located on a hillside just 1 1/2 kms outside Alba.

(Roberta displays her pride of ownership and introduces the historical significance of her property)

The farm produces fine doc-status wines – Nebbiolo d’Alba and Grignolino Piemonte – which can be tasted free-of-charge, as well as a large variety of organically-grown fruit (cherries, apples, pears, apricots, plums, persimmons, figs, mulberries, peaches and pomegranates), some of which are used to make delicious jams.

(introduces potential differentiators: tasting of fruits, jams, and wines made from on-premise orchard and vineyard)

The villa’s four highly original, en-suite bedrooms are tastefully furnished with period family pieces, and have satellite TV, air-conditioning, bath with shower and hair-dryer.  Each “room with a view” brings guests into close contact with the hills.and the towers and roofs of ALBA‘s old town centre.  A stroll along the path leading through the vineyards to enjoy the picturesque view of the sunset from on high is warmly recommended before the sun disappears behind the rooftops and bell-towers.

(with the pictures available on the site, introduces design as potential differentiators of the guest experience, both internal and external)

Every morning a plentiful breakfast offering a wide choice is served outdoors in the large garden, on the terrace or in the bright lemon-house. I will recommend the best restaurants in the Langhe and Roero, and visits can be arranged during your stay to the countless castles in the area, as well as to wine cellars – famous estates or family-run concerns just waiting to be discovered.

(service as the strong differentiator, addressing convenience and access to local knowledge backed by her personally )

Alba is a lively town, standing at the feet of the celebrated “Langhe” hills. It is famous for its mediaeval towers, “Via Maestra” (the main street, animated by plenty of shops and a busy Saturday morning market), and cultural and food & wine events. It is also the starting point for many interesting outings, on foot or by bicycle, motorbike or car.

(sells Alba.  Note that she isn’t selling her proximity to the town center — those may be strong differentiators for other B&Bs that are competing with her)

What is effective about this simply laid-out page is that the description presents the property’s strong differentiators and sets guest expectations on the location.  The property is exactly where it is, and not only is the description transparent and upfront about it, it moves the value proposition to design, history, and service.  These differentiators are then further backed up by social media.

All in all, a consistently great story, which makes for a great business.

Like swing voters, swing travelers could hold the key to your hotel beating this economy.

Most hoteliers’ performance is measured not only by absolute revenue, but also market share.  Swing travelers can make all the difference in market share.

Let me use a simple example to illustrate the importance of swing travelers.  Let’s say there are 10 travelers making a reservation today and 2 hotels in your city, yours and your competitor’s, and normally you’d get 5 travelers each.  That means you and your competitor each have 50% market share.

If your hotel wins 1 traveler from the other hotel, then your market share would be 60% and your competitor at 40%.  That’s a 20% difference in your favor.  Now let’s calculate RevPAR.  Assume that both hotels have 10 rooms, all travelers stay 1 night, and the ADR for is $100/night.  Your hotel would achieve a $60 RevPAR vs. your competitor’s $40 RevPAR.  In fact, for your competitor to achieve the same RevPAR as you they would have to increase their ADR by 50% — to $150/night to achieve the same RevPAR as yours just to make up for the loss of 1 swing traveler.

Now, let’s suppose that your competitor manages to attract 1 new customer to the market, the market share would be 6/11 vs. 5/11, which is 55% vs. 45% in your favor.  To achieve the same RevPAR as you they’d still have to raise their ADR to $120/night vs. your $100/night.  In fact, your competitor would have to attract 3 new customers to the 1 that you swung over originally to win market share back.  In other words, in this simple example your competitor would have to grow the market by 30% (increase the number of travelers from 10 to 13) as a result of 1 swing traveler, in order to win against your hotel.

No wonder brands like Holiday Inn and Hyatt are not slowing down to win share despite the downturn.

How many swing travelers are there?  According to loyalty research and consulting firm, Colloquy, the total number of memberships from US travelers in hotel loyalty programs increased 26% to 161.9M memberships from 2007 to 2008.  This increase happened despite a sharp drop in demand in the second half of 2008.  While I believe first-ever loyalty memberships might account for some of that increase, the remainder comes from travelers that registered for their 2nd, 3rd… nth membership, making them swing travelers.  And remember, this is just amongst the segment already considered to be most loyal.

Carroll Rheem, Director of Research at PhoCusWright, recently said,

“The era of transparency ushered in by the Internet evangelizes faith in content, not faith in brands.  Companies need to understand the Long Tail of travelers and how its disloyal constituents make decisions: they don’t care about miles or points, can easily find another flight and don’t need a hotel flag to tell them what their experience is going to be like.”

Swing travelers are looking for stay experiences that fit their personal needs.  Because most hotels are using pricing as a strategy, impressive discounts are now the norm, not the exception.  What swing travelers are looking for then are the differentiators that give them the value they seek within a comparable price range.  Do you know what your differentiators are and are you communicating them loudly and clearly where travelers are researching where to stay?

Just for fun, I pretended to be a swing traveler looking for “hotels san francisco” on Google to see the ads that come up from hotel suppliers (I excluded the OTAs because they all uniformly tout discounts).  Removing identifiable info, below is the text of the first 8 hotelier ads I found:

1. There’s more to enjoy! Book unique offer. Instant Service 800-XXX-XXXX
2. Official Site. Book Now for Great Rates & Our Exclusive Packages!
3. Official Site. [brand name] San Francisco Hotel. Book Online.
4. Stay at [brand name] in San Francisco. Best rates online. Book online now!
5. Boutique [brand name] Hotel in Downtown San Francisco. Book online now!
6. Book a luxury hotel in the heart of San Francisco & enjoy access to all
7. Why pay high prices downtown? Free hot breakfast & airport shuttle!
8. San Francisco. Great locations. Free internet & breakfast bar.

What’s remarkable to me is that half of them (1-4) are virtually indistinguishable because they don’t offer anything meaningful other than to let the consumer know they can book online.  But the fact is these ads come from 3 different hotel suppliers (2 and 3 are different brands from the same hotel management company).  The other half offers some differentiation, but boutique and luxury are much less specific than free breakfast, free internet, and free airport shuttle.  Incidentally, 7 & 8 are actually from the same brand, 7 is an individual property where 8 is the brand ad.

I don’t think swing travelers would be convinced by the non-specific ads.  The way consumers think about the total price isn’t just the room, but all the costs associated with a stay.  Breakfast, internet, and transportation all make the value greater because it means less additional money out of a traveler’s pocket.  In recognizing their short attention span, those ads clearly communicate the differentiations that really matter in a direct and concrete way.

A swing traveler would almost always follow-up by reading reviews about the quality of the breakfast, the speed and reliability of the internet, and the timeliness of the airport shuttle.  Hence communicating the differentiations is only half of it, hoteliers need to make sure they’re backed up by solid reviews from previous guests.  Or alternatively, communicate in these ads what their guests have already complimented them on.

We’ve looked at one channel to win the swing traveler’s attention, and hopefully, their business.  But there are other ways.  The biggest paradigm shift that hoteliers must undergo is to market to and win the swing travelers one at a time by focusing on their specific needs.  Massive blocks of reservations and contracts with corporate clients, both fundamental business drivers in the past, are becoming increasingly rare and don’t deliver like they used to.  Like the swing voters that determined many elections in the past… swing travelers will be the group that determines who wins in many markets.