May 19, 2003
Case Study
SUMMARY:
Find out how a NY hotel chain went from having email addresses for just 3% of their customers to getting emails from 30%.
Includes invaluable tips on how to persuade people who say, "I get too much mail already," and how to get around the whole handwriting problem (handwritten email addresses are so hard to decipher they can be almost worthless).
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CHALLENGE
Within a few weeks of starting work as Director of Business Intelligence & Database Management, Menka Uttamchandani was ready with a slew of new plans for her company. It was summer 2001.
That company, Affinia (formerly Manhattan East Suite Hotels), is New York's largest all-suite hotel chain. We all know what happened next; Uttamchandani's budget went the way of the post-Sept 11 travel market.
She remembers, "It forced us to look at smarter measures that wouldn't cost as much."
Email marketing was an obvious choice. It was low-cost and, more importantly, a perfect vehicle for customized marketing based on the vast amount of customer information Uttamchandani had on file.
Looking through the guest history records, only about 3% included an email address plus permission to use it. Uttamchandani and her colleagues needed more addresses. Here is how they got them.
CAMPAIGN
The Affinia team chose not to focus just on online tactics, but to engage the whole company in collecting addresses, particularly front office staff who, by definition, collect data from each guest on arrival and departure anyway.
In essence, Uttamchandani wanted desk staff to encourage guests to put their email address on their registration cards and give permission to be mailed further communications. That is easier said than done.
Task #1: Get company-wide buy-in
Uttamchandani knew there was no point asking staff to collect emails and data if senior management did not believe in the value.
She also needed the active cooperation of operations, sales, marketing and (especially) IT to make the whole system of data gathering, processing, and email marketing work.
She says, "There was a huge team push - nothing flies successfully without teamwork. Getting everybody to first believe how critical it is is key. Then it becomes second nature. And then the challenges are different; it's about the practicalities."
Task #2: Get frontline staff to start collecting
Together with the Marketing Information Manager, Uttamchandani then visited the front office staff at each hotel in the chain to discuss the initiative.
The initial reaction from front office managers was positive but tinged with understandable skepticism, given the amount of work they already had and the need to process guests quickly and efficiently.
On each visit, the team gave a PowerPoint presentation covering:
o The importance of accurate customer data and email addresses
o What they do with the information and how this benefits that particular hotel
Uttamchandani says, "We had a slide saying what the big deal about email is. There's a slope you have to go through with new things. You have to stay consistent and share with them the whys, instead of just saying 'do it.'"
The main concern voiced was how this might irritate guests. A common comment was, "we say to guests we want your email and they're like, 'no, no, no I get enough junk mail already.'"
The team trained staff to make four points clear when asking guests for their email address:
a. we do not rent or sell email addresses
b. the email address is purely for the hotel's use
c. the guest receives a preview of hotel specials (i.e. there is value for you)
d. mailings are only periodic (i.e. you will not get a lot of emails from us).
Task #3: Give feedback & foster intramural competition
The marketing team then followed up after each visit with phone calls to check on progress, remind staff of the initiative, and give feedback on the results.
Each month, for example, they send out a bar chart showing the percent of emails collected from guests that have checked out. There is a bar for each hotel and one for the company as a whole.
Uttamchandani says, "It's amazing how that kind of clear-to-see graph generates competition to a point where it's really hot and healthy."
Email address acquisition was also a topic at leadership team meetings, to make sure top management believed in it and talked about it once in a while with their staff.
The most effective feedback, though, says Uttamchandani was to share email marketing success stories with both corporate and hotel teams, showing how email broadcasts produce incremental revenue for the hotel.
She says, "We sit down with [each hotel] general manager and give him a vision of the marketing future. They can see how more email addresses translates directly into money."
Task #4: Review and address practical problems
Once front office staff started collecting email addresses, a few practical problems started appearing, such as a relatively high number of bad addresses. Here is what the team learnt and/or changed:
o Uttamchandani says initially they would get addresses like @yahoo.co, which sounds easy to correct manually, but not when you have got thousands of addresses to work through. They taught staff to recognize typical domain names and extensions (.com, .org, and .net etc.) and make the corrections at data entry.
o This did not solve the problem with usernames though (the bit before the @). Often, handwritten email addresses on registration cards were, says Uttamchandani, "a matter of interpretation, and if you get one letter wrong, your email's not going anywhere."
On the suggestion of one front office manager, the team changed the guest registration card design to include boxes (one box per letter) for the email address entry, which cut down on errors enormously.
o The team also noticed that reservation desks sometimes entered the wrong email address into a guest's record; by taking the email of the person making the reservation, rather than the guest themselves. They encouraged them to only input an email address if it really comes from the guest.
o Some guests gave out their email address, but did not want to opt-in to further communication (or unsubscribed later). These addresses are marked in a guest's records to ensure the address is locked out of all future mailings.
o Some guests did not have an email address or did not want to give it out. Initially, this meant front desk staff would keep seeing a gap in the record and irritate the guest with repeated requests. Now there is a special code in each guest record, so that front office staff know not to ask the question again.
o Some addresses went bad with time (the old churn issue), but staff would not ask for an email address if one was already listed in the guest's record. Bad addresses are now eliminated from the records system, so staff know to ask for a new email address next time the guest stays.
Task #5: Use incentives to rekindle enthusiasm
After initial euphoria, email address acquisition started to level off in mid-2002. The team decided to reinvigorate efforts by introducing an incentive plan through the operations team.
For several months, any hotel that reached a pre-defined number of emails (expressed as a percentage of guests checking out) entered a prize draw. The winning hotel team then got a no-cost flight to anywhere in the USA to give to one of their front office staff, plus other rewards like a pizza party or written recognition from senior managers.
Uttamchandani says the hotels are now operating their own informal incentive systems, with, for example, pizza parties for staff when internal targets are met.
Task #6: Do not just rely on front office staff
Although the main focus was on getting room guests to join at check-in or check-out, Uttamchandani and her colleagues did not neglect other address sources either. Here are a sample:
o At the website, visitors can opt-in to get promotions from Affinia when signing up for a no-cost weekend sweepstakes promotion, when registering as a member, when booking a room or when viewing the "specials" page.
o The team gather prospect email addresses by renting double opt-in lists and through co-registrations at third-party travel sites.
Uttamchandani says it is hard to find the right rental demographics, she is restricted to using income, travel frequency and travel destination, when what she really wants is to select addresses who travel to Manhattan X times per year, spending Y dollars per night at hotels.
o Other hotel and chain staff are encouraged to collect email addresses, too. For example, restaurant and spa staff are starting to collect email addresses from non-residents, and sales staff collect addresses from the corporate travel managers they visit.
Each email address that comes in is tagged according to source (guest, travel agent, prospect, corporate travel manager, food/drink/spa guest) so that subsequent messaging can be made more appropriate.
Each address is also tagged with the source hotel (where relevant). While generic chain promotions might come from Affinia, Uttamchandani can also do hotel-specific promotions, which get better open rates.
For example, the team recently sent out an email promotion for free high-speed internet access for guests at the chain's Affinia Dumont hotel. It went only to ex-Dumont guests and had the hotel's name in the from field. Uttamchandani says, "We don't want to cannibalize guests from one hotel to another. The emphasis is always on incremental revenue."
This source/hotel segmentation is, of course, in addition to all the traditional data segments built into each guest record, such as distance between home and hotel, most popular days of week for stays, etc.
RESULTS
From a starting point of around 12,000 email addresses in early 2002, Affinia now has more than 10 times that number today. The best-performing hotel is consistently capturing permissioned email addresses from more than 80% of its guests.
Uttamchandani says address collection has become second nature for staff and part of the corporate culture.
Has the effort translated into revenues?
Well, Affinia's still rolling out their email marketing strategy, but Uttamchandani says iti's already bringing substantially more incremental business from existing guests, particularly on the leisure side of things.
They are also converting 2% of email leads (i.e. people who signed up for more email communication following a pop-up or list rental promotion) into recurring guests. She says, "It might sound small, but it's an incredible amount of money. It's purely incremental business and the ROI on acquisition campaigns is fabulous."
Another positive impact is that outgoing email promotions encourage recipients to use the website for bookings, rather than, for example, the phone. As a result, the percentage of first-time-only bookings coming through the website has fallen from the high 90s to a lower (albeit still impressive) number, even though the actual *number* of first-time bookings through the website has risen.
Last but not least, overall revenues booked through the Web site in Q1 2003 were 125% higher than in the same quarter the year before.
Affinia
http://www.affinia.com
