Fight the Economic Storm with Marketing and Sales Strategies: Part 3

As consumers spend less, hospitality companies are faced with the challenge of cutting costs while finding ways to increase demand. In the first two parts of this report, Deloitte examined the circumstances surrounding the state of the U.S. economy with the suggestion that operators can implement four key sales and marketing initiatives in an effort to increase room demand while decreasing costs. Part one looked at optimizing performance capabilities; part two examined how to improve spending effectiveness across sales and marketing channels and how to re-evaluate customer segments and touchpoints. This final installment will focus on brand loyalty programs, which when effectively utilized, will yield a strong base of customers resulting in more room reservations.

4. Focusing loyalty programs on value

The most effective brand loyalty programs can often contribute significantly to a hotel's total paid lodging room nights. Many hospitality providers are improving their loyalty program effectiveness though a combination of rewards (e.g., points, miles, and merchandise) and awards recognition (e.g., identifying needs, making sure guests are called by name, delivering personalized services). As an example, one company has had very positive results with its enhanced guest relations program, which emphasizes personal dialogue from all staff members with guests, to make them feel welcome in a distinctive way. These types of loyalty programs can help build a strong current customer base and can also attract prospective customers to help combat future economic downturns. Some actions that help an organization build customer loyalty during rough times include:

• Connect on an emotional level with customers. As economic pressures change customer's behaviors, it is increasingly important for companies to understand consumers' concerns and fears. For example, customers may not value free hotel stays because they cannot afford the other costs associated with traveling (e.g., gas, airfare, food). Instead, customers may value gift cards or other items that can increase their disposable income or be redeemed at a future time. Many hotels have already begun to make this transition and are offering items such as gas cards to attract prospective customers and retain current customers.
• Keep pace with your competitors. Economic hardships usually encourage customers to research loyalty programs and join the ones that offer the greatest rewards. Companies should continue to keep pace with the other competing loyalty programs to help them maintain a competitive position.
• Be innovative. Don't be afraid to think outside the box. Innovative approaches can help companies increase the value of their membership programs and differentiate their brands. One recent innovative approach was instituted by a hotel corporation whereby repeat guests can earn credit toward the purchase of the company's stock.

Conclusion
The sales and marketing disciplines have historically been some of the last departments that organizations focus on when they are looking to ride out an economic storm. Yet, sales and marketing groups in the hospitality industry have an opportunity to make significant contributions in driving profitability.

Since sales and marketing are generally the largest discretionary expense categories on the income statement, these departments will likely be pressured to cut costs and increase sales when budgets tighten. However, by focusing their efforts on financial discipline, better customer targeting, evaluating channels and encouraging loyalty, these departments can often help hospitality companies thrive in a difficult environment.

In the end, firms that can better integrate the objectives and resources of the organization with the needs and opportunities of the marketplace will likely capture more customers and emerge stronger from having weathered the storm.

Fight the Economic Storm with Marketing and Sales Strategies: Part 1

Fight the Economic Storm with Marketing and Sales Strategies: Part 2

To learn more about Deloitte, visit them online at www.deloitte.com/us/thl.