It's a well-known business rule of thumb that 80% of your income comes from 20% of your customers. But how do you find out just who those 20% are?
Today, many companies in the hospitality sector are investing in their database infrastructure to get a better view of their customers and their buying habits, enabling the businesses to market special offers more effectively and provide an improved service.
Most agree that a first step to getting a 360 view of customers is to create a centralised database that pulls in information from all relevant sources, such as reservations, property management and point of sale systems located at various sites. An ideal scenario is where every time a customer interacts or spends money with your business, this information is recorded centrally.
Unless this happens, information on a particular customer will be situated in numerous locations, making it impossible to build up an accurate profile.
"If you are serious about customer relationship management (CRM), you must consolidate your data," says Steve Clarke, account director at marketing database company CDMS. "If not, customers will end up receiving the same correspondence several times, and no full view of their movements can be generated."
Hit and miss Without all the information, any attempt to use it in a meaningful way, say for loyalty schemes or marketing campaigns, becomes a hit-and-miss exercise. As the Americans say: if you put garbage in a database, you'll get garbage out.
There are many firms out there offering technological solutions for integrating all these different data feeds into one centralised database. One such company is Amateo, a CRM company focused on the hotel industry. According to sales and marketing director Noel Dooley, Amateo has developed adapters that will connect up to 25 different databases, from simple Microsoft Access files to high-end Oracle databases.
Amateo also offers a hosting service, whereby it looks after all the IT equipment and data on a company's behalf, allowing the client to focus on its core business.
The Dorchester Group uses Amateo to consolidate customer information from property management and reservations systems on all five of its sites. But further to this, says director of IT Luke Mellors, information from the point of sale systems in restaurants and spa facilities is also fed in.
"We want to know what our guests eat and drink, what treatments they take and how often, to better understand them," he says.
Manhattan-based chain Affinia Hotels gives its staff writing pads to jot down useful details about guests which are later added to the customer database and used to personalise their stay.
Standardisation A fundamental element of consolidating information from various sources is the standardisation of that data. Different databases may have different ways of recording customer addresses, for example. Mellors says this issue is a real barrier to effective CRM in the hospitality sector.
One solution is offered by Group 1 Software, which specialises in "cleaning" data and has developed software to validate names and addresses and to check for duplicate entries on databases. European director of marketing Andrew Greenyer says the process is relatively cheap, with the cost of eliminating a duplicate address being equivalent to the price of a postage stamp.
Jane Waterworth, marketing director at Shire Hotels, says that standardising data is a process companies should take seriously. "You can't spend enough time making sure you have the right data going in," she says.
But as companies build up a detailed picture of customers in a central database, what kind of things are they doing with this information? Well, for a start, all acknowledge that structuring their data in this way allows them to target their marketing more effectively.
As Le Meridien's head of customer intelligence, Ivor Tyndall, explains: "We can segment our consumer base and target different sectors with different offers."
Sniper gun Weekend break offers or spa treatment discounts, can, for example, be aimed at certain customers whose history shows them to be interested in these specific areas. "Rather than use a scatter-gun approach, we can now use a sniper gun," says Waterworth.
With e-mail and now mobile phones established as effective mediums for marketing, the whole process can be automated and last-minute offers sent out at the press of a button, with links taking recipients back to an online booking form.
Further guest information from follow-up customer satisfaction e-mails can also be fed back into the database, creating a virtuous circle.
Loyalty card schemes become more effective because more information on guests is available. Customer databases can also be integrated with other external schemes. Guests booking into properties run by Rotana Hotels across the Middle East, for example, have frequent-flyer points automatically awarded at the swipe of a microchipped card.
Customer frustration at filling out check-in forms could also be a thing of the past. If a guest has stayed at a hotel in that chain before, their details should be in the system. All they need to do is prove their identity.
Hilton is looking to streamline this process and, according to vice-president of management services Mark Selawry, is planning to introduce check-in kiosks in the near future.
And while there is a cost to having a central database, according to Tyndall at Le Meridien, "It's better to have a proper, productive database that is central to the company's functions than a partial database that can be used only for limited marketing activities."
The Shire Hotel Group
As part of a marketing push to celebrate being named the RAC's hotel group of the year for 2004-05, the Shire Hotel Group recently installed a centralised customer database from Amateo.
Before the implementation the group had separate property management and reservations systems at each of its nine properties.
Shire realised it needed to pull all this information together and selected Amateo, as it also supplied a points-based customer-loyalty programme that the company wanted to install.
As Shire marketing director Jane Waterworth explains: "We now know which hotels our guests stayed in, the reason and frequencies of their stays, and how much they spend and where. It enables us to evalutate the lifetime value of a customer - something we've never been able to do before."
It also means Shire can be more specific when marketing to its customer base.
A recent example followed a £1.3m refurbishment of Shire's North Lakes hotel in Penrith, Cumbria. The company wanted to send postcards to people who had not followed up with a second reservation.
"We simply ran a query and came up with the names. We can now drill down into our customers data and target groups with small mail-shots," says Waterworth.
Shire now also sends out targeted e-newsletters to guests who have shown a preference for short breaks and spa treatments.
With the Amateo software in place, Waterworth has also overseen the training of hotel staff so they are aware of the importance of keeping data up-to-date and understand the need to send information back to the centre.
"It's vital that if you are building a database, you can segment it in a meaningful way - it's not just about amassing a load of names," she said.