NB: This is a guest article by Janet Gerhard, a former hotel executive and now founder of Hospitality Gal.
The hotel industry has a long history in customer experience measurement.
Just as distribution systems have grown more complex in the last decade, the breadth of feedback available to hotel managers is increasingly complicated, swelling well beyond the comment card left on guests’ pillows.
Today, there is an avalanche of data provided to hotel managers, with the four basic tenets of performance including RevPAR (revenue per available room), customer loyalty data, social media monitoring, and quality assurance audits.
In October 2012, Market Metrix and ReviewPro, a more traditional customer satisfaction firm and social media monitoring company respectively, announced they would be joining forces on services.
The news wasn’t met with much fanfare given their market share here. But, the merger does beg the question: who is next? And, ultimately, who will be the winner as customer experience measurement firms consolidate?
To understand the likely winners in today's war for dominance in customer experience measurement you must start by examining the battles that got us here.
Round 1: Marketing research VS Enterprise feedback
The aforementioned comment cards ushered in a gamut of online, proprietary guest feedback surveys managed by well-established marketing research firms.
These traditional guest survey programs have gone through several metamorphoses over the years. In time, marketing research firms were replaced by technology providers touting turnkey enterprise feedback measurement systems (EFMs) with far superior reporting capabilities.
EFMs successfully pushed out marketing research firms in all but three of the largest hotel companies.
- Round 1 winner is the EFMs.
Round 2: New Entrants Divide the WorldThe explosion of consumer generated media created a new competitor for customer experience measurement dollars: social media monitoring platforms.
Big marketing research firms jumped in trying to partner with these listening platforms to bring greater value to their clients. Unfortunately, the initial offering of listening platforms provided brand sentiment, but had little to no ability to get down to the unit level.
Market research firms struggled to integrate and the EFMs appeared to ignore it.
The stutter start allowed social media companies specifically designed for the hospitality industry to proliferate, a move that has turned the tables on both marketing research firms and EFMs in a variety of ways.
Some of the social media monitoring platforms are more marketing driven; others tout insights. Most are hoping to become the go-to measure of customer experience.
In an isolated case, it is anticipated one multi-branded hotel company will replace its traditional survey and use social media as the main customer measure of experience. A first scrimmage won by the new entrant.
Marketing research firms and EFMs stood on the sidelines as social media monitoring companies divided the world. In the U.S., there has been a rapid movement to one or two of these companies.
One is a stand-alone social media monitoring firm; the other is a similar service provided through what began as a pure EFM. Outside the US, one firm appears to own Europe and the other is dominant in Asia Pacific.
Neither, however, has been able to substantially penetrate the US market.
- Round 2 goes to the new entrants serving new needs in the industry.
Round 3: Change the rulesTo elevate themselves from simply “read and respond” platforms, most social media firms have been working to develop a key measure of return on investment, specifically assessing how online reputation impacts hotel revenue.
There is some irony in social media monitoring firms using market research's linkage analysis to position themselves against them.
In a recent webinar, one such social media monitoring firm highlighted that a "1 point increase in review score increases the odds of being booked by 13.5%."
- Round 3 is still in flux, but where this truly gets interesting is when you can start actively driving rate based your social media standings. And, given our industry's love affair with benchmarking, the firm that develops a reliable competitive comparison or social media index will significantly impact how hotels measure their customer experience performance moving forward.
Round 4: Consolidation persistsBecause several hotel companies continue to evaluate their options on this new form of customer experience measurement, the social media monitoring firms that have been shut out of the industry thus far are scrambling to partner with traditional survey companies and/or EFMs hoping to break in.
Utopia for many would be the consolidation of Smith Travel Research (STR) data, customer experience measures and social media monitoring capabilities.
The promise of Round 4 is thoughtful synthesis of data (AKA dashboarding) which is more important than integration. To date, dashboarding has only been available in mockups or PowerPoints.
- No single company has all the pieces...yet. So, more joint ventures and partnerships are eminent as the battle rages on.
Winnner... Losers...We've talked about the winners and losers from the perspective of the vendors, but what about the hotels themselves, the brands or the management companies?
Round 1...
- ... brought hotels greater efficiencies in their online customer experience surveys. Innovative reporting, which included workflow streams, was quickly deployed at a multitude of levels, bringing greater access and dissemination of data for hotel operators.
Round 2...
- ...also helped hotel operators. They were now able to quickly and easily access the onslaught of consumer generated media and reviews in a single portal that tracks responses, general themes and sentiment about their hotels. As the new entrants divided the world, their competition sped the development of language capabilities allowing them to serve multi-national hotel companies that require consistency of delivery across the portfolio.
Round 3...
- ... gets trickier for identifying clear winners or losers. The "black box" of proprietary algorithms is open to interpretation ---- much like the “largest hotel brand in the world” differs if it is measured by the number of hotels, number of rooms, the portfolio, etc. An index for the largest hotel markets will need to be widely accepted across the brands to be a compelling competitive comparison. And even then, the data has to support a business outcome versus being an interesting soundbite. Clearly, having the data to support the right pricing strategy and drive rate is a win for any hotel.
Round 4...
- ...addresses the increasing demands for a single dashboard to provide holistic insight on a hotel's customer experience performance. Moving forward, I believe the reporting needs for the corporate brand managers and insights teams will have to play second fiddle to the needs of the individual hotels. Power users in the brands should have access to the rollups and roll across data available through current reporting tools, but it is unreasonable to expect this system to also serve insights teams using the identical system for overburdened and busy hotel operators. Given this situation, I see the bifurcation of these tools to serve operators separately from insights teams. It will require additional investment by the brands.
And where to next?Even with the partnerships forthcoming, obstacles remain. Most of the conversations break down when discussing who will own the reporting or dashboard.
Several hotel companies are trying to build an umbrella over their separate experience measures. Others are looking to vendors to come in with a canned solution addressing the most important of the performance measures. Here, convenience eclipses innovation.
Another danger sits on the horizon if integration is taken too far. Simplicity cannot trump good science. The widely popular Net Promoter Score, though easy to digest, cannot be universally applied across the customer experience performance measures.
Net Promoter Score + Social Media Index + Quality Assurance = something so watered down that we've missed the point on providing performance improvement directives. However, isolating the right achievement number for your hotel in your market with your competitors on each of those dimensions is critical.
The short-term winners have already been determined if you look purely at marketshare. What remains to be seen is if they can retain their dominance.
When these firms arrived on the scene they brought thought provoking and innovative offerings to a universal need. As their focus shifts to secondary revenue streams and cobbling together non-core services, what made them great may be diluted. Examples about the pains and failures of integration are too many to list.
Competition in customer experience measurement is good for the hotel industry. We're better off pushing these firms individually to evolve organically with us.
Competition, not consolidation, breeds excellence.
NB: This is a guest article by Janet Gerhard, a former hotel executive and now founder of Hospitality Gal.
NB2:Magnifying glass image via Shutterstock.