You’re traveling to Asia on business. You check into the Peninsula Hotel in Hong Kong. When you get there, the hotel clerk knows you only speak Spanish; since Spanish is not a common language in Asia, you are surprised an employee is on hand to speak to you in your native tongue. A bottle of Bordeaux is waiting in your room because the management knows you love Cheval Blanc. A list of restaurants with a wide selection of low carb items is on the desk because the hotel knows you’re an avid Atkins eater.
How did they know? Because when you stayed at the Hotel Bel-Air in Los Angeles you learned about the Leaders Club, a new loyalty program for hotels who are members of a consortium called Leading Hotels of the World LTD. Leading Hotels collects 250 data points to make sure its guests get a five-star experience.
Leading Hotels is a luxury hotel brand that unites 430 hotels under one marketing banner. The company doesn’t own or manage the hotels; rather, it provides marketing and reservation services for its independent, five-star properties.
Last July the company decided to create its Leaders Club, a loyalty program that went beyond collecting points and instead attempted to create a remarkable experience for its tony guests. “Our average booking is $1,000. So we have a lot at stake,” says Allison Cripps, Director of Loyalty Marketing for Leading Hotels of the World.
And this loyalty program was only possible through outsourcing.
The Loyalty Program: How Outsourcing Helping the Hospitality Industry
“Outsourcing marketing is common in the hospitality industry,” says Eric Schmitt, a Senior Analyst at Forrester. He says their marketing departments need a “blend of expertise that is difficult to find: technology, analytics, and direct marketing.”
Outsourcing is a quick, cost-effective way to gain that expertise. A supplier helps a hospitality company organize its customer data and then understand it. Analytics tell them who their best customers are and who they might be. Then the marketing expert helps them develop programs and offers based on past behavior.
Schmitt says in this industry “a small number of customers disproportionately contribute to the total revenue.” Companies like Leading Hotels have a huge economic advantage if they can identify these individuals. “Segmenting your customer base is easier said than done,” he says from experience.
Schmitt says Harrah’s Entertainment is one of the most sophisticated hospitality companies when it comes to building statistical models for segmenting and marketing to customers. The company’s financial success allowed it to buy Caesar’s Entertainment this month.
Disparate Databases Become One Global Database
One of the challenges of the hospitality industry is it has such disparate data,” says Don White, Executive Vice President and Managing Director of Quaero’s outsourcing business. That was exactly the challenge at Leading Hotels. “We have very complex data. We deal with a lot of channels and have a lot of bookers,” reports Cripps. She says each regional office had its own customer database and collected only the information it was interested in. In many offices everything was done manually.
The company realized it needed a single, integrated database that would allow regional offices to enter data that other members of the consortium could access anywhere on the planet. “We needed a solution that could deliver information to 22 regional offices around the world. Our challenge was not just setting up a collection of data. It was getting the right data to the right person at the right time,” she says.
And the supplier had to keep the data clean. Cripps found inaccurate data in the manual records because guests changed jobs or got married.
Outsourcing was the best way to make that happen. The size of the hospitality company played a major role in its decision to outsource. “We didn’t have the internal expertise, and the cost of building that expertise was prohibitive,” Cripps recalls.
Leading Hotels selected Quaero SpringBoardSM, a hosted customer relationship marketing system, after talking to a large CRM loyalty player and another supplier with deep hospitality expertise. Quaero, a marketing technology services company that focuses on helping companies accelerate marketing performance, has significant hospitality experience; Marriott and Starwood Resorts are also Quaero clients.
Getting Exactly What They Wanted
But the deciding factor was Quaero’s agreement to customize its solution. White says most Quaero customers want the supplier to customize up to 40 percent of its standard solution. Cripps says her company ruled out one supplier because it was “totally inflexible” in how it would store her data. “Quaero was a great balance between needing a customized application and enjoying the benefits of an ASP: a solution that was within our budget and one we could deploy in a quick time frame,” she notes.
White says when many middle market CRM buyers outsource they have to compromise by flexing to the supplier’s solution. He says Quaero attempts to provide a middle ground.
The first step was to get the Leaders Club in place. Cripps worked with Quaero’s team for 90 days to determine the parameters of the data model. “We had to truly understand the data they needed and how they were going to use it. This was really the first time they asked themselves these questions,” says White. Once they determined the parameters, Cripps says, “Quaero was up immediately.”
Now Quaero is mining the data so Leading Hotels can send specific offers to its members. Currently the software notifies a hotel about a guest’s preferences 72 hours before their arrival so everything is just so by the time they arrive.
Cripps believes the Leaders Club is a success because of its outsourcing partnership. “Quaero had the ability to be part of our vision. They taught us how to maximize the use of their system. They are not just our technical arm. They have truly created business value for us,” she says.
White says Quaero does all its software development work in the US. “Every six months we look at offshoring. But so far we’ve decided its best to do the work here,” he explains. Quaero actually formed partnerships with other software companies whose products it liked. Then it wrote its own application to sell a single solution to the marketplace.
Such is how outsourcing empowered this hotel’s growth. The success of the loyalty program underscores the impact of strategic collaboration.