RM, digital marketing must converge, not crash
25 NOVEMBER 2014 8:35 AM
Too often, the revenue management and digital marketing disciplines collide. What they should be doing instead is working hand in hand to avoid confusion.
Sometimes I feel I can hear screeching tires in the background. You know that sound just before metal hits metal? We probably all unconsciously hold our breath at that point, almost as if time is being suspended or at least unveiling itself in slow motion. Now I realize describing revenue management and digital marketing as two cars colliding is a bit dramatic, but honestly, sometimes I feel this is an accurate depiction of the relationship.
As a revenue management consultant, I have the privilege every day of working with a diverse portfolio of hotel and resort companies, seeing first-hand the best practices that are literally being created as you read this article. In fact, the discipline of revenue management is still so young and moving so quickly that anyone in this exciting field would be hard pressed to say there exists, somewhere, an established set of best practices upon which we all agree. Not that it hasn’t started to happen or won’t happen some day, but it’s fair to concede this is a “work in progress.” And so is the evolving relationship between revenue management and digital marketing.
But for a moment, let’s step away from the tactical nitty-gritty of a revenue manager’s or digital marketer’s job. Let’s take our conversation up to the 30,000-foot level and survey the landscape. And this landscape is different depending on the perspective. Are we looking at a branded city-center hotel, a large independent resort, or a small boutique hotel in a unique market? Do the revenue manager and digital marketer rely heavily on brand initiatives and complex technological infrastructure? Does the independent resort have to fend for itself relying more heavily on its own ability to be innovative? The answer to all is yes. But what is often missing, no matter the landscape, is the ability and willingness of the revenue manager and the digital marketer to put themselves in the other person’s shoes.
Consider this: I had a long series of discussions recently with a director of revenue, a digital marketer, and a spa consultant on the subject of spa packages. The marketer and the spa specialist were keen to create a series of packages to promote the spa. The director of revenue was a reluctant collaborator. Now, why would that be? Maybe because out of 100 packages created, only three actually ever produce roomnights. OK, I’m exaggerating, but let’s face it, when most revenue managers run package production reports the handful of packages at the top of the page produce all the revenue, while the remaining laundry list takes up the balance.
But in addition to this, packages take up valuable real estate on the website and other channels. In the words of an online marketer, they add a heavy “word load.” Does the revenue manager consider this variable? Does the marketer understand the amount of work involved to create the package, route the inclusions to please accounting, create the rate, the rate plan, and stay patterns; then ensure that umpteen different links and paths and interfaces are working to get the product to market? For the marketer it may be “word load”; for the revenue manager it is workload. At the same time, has the revenue manager carefully, professionally and respectfully relayed that information to the marketer? What we have here, in the immortal words of Paul Newman, is a “failure to communicate!”
The marketer’s perspective
For the marketer the process of creating demand takes on many different forms and the effort inevitably involves an “all-of-the-above approach.” What do I mean by this? Well, think about it. A marketer might be trying to create brand awareness. They might be trying to create direct action. To achieve this, he or she must think about multiple points of entry and visibility, multiple attribution points, the user’s experience, and of course content and content development. Is this largely a PR effort, a social media campaign, or an effort to influence a consumer looking on TripAdvisor? The marketer’s efforts impact the purchase funnel at many different points of contact. There’s no absolute straight line to the consumer, but rather a path that ultimately zigs and zags.
So how do these two important disciplines converge? Well, traditional approaches have in many cases been less than successful. Let’s say the digital marketer attends the weekly revenue meeting. I’ve talked to marketers about their experience with RevMax meetings. Many say they are a waste of time. I ask why? Often it is because the subject matter covered is too granular, i.e., the meeting itself is not sufficiently strategic. The revenue manager provides some type of recap The marketer wants to be able to step back, understand the need periods, then have the proper time to plan, implement and impact those very dates, often using niche digital marketing efforts that represent surgical strikes, not shotgun approaches.
So what types of best practices help to bring these two disciplines together to avoid collision? I’ve seen several in recent months that impressed me. And they are all surprisingly simple.
The first was the use of a Gantt chart. You may know this better as a bar chart, but the concept was first developed by Henry Gantt in the early 1900s to illustrate a project schedule. In this version of a Gantt chart the director of revenue and the marketer teamed to illustrate four specific periods: planning, implementing, the booking window, and the travel window. It sounds simple, but one of the challenges in busy hotels is identifying the exact horizon over which these four terminal elements occur. By visually illustrating this timeline, the revenue team is better equipped to address need periods in a timely and ultimately more effective manner.
The second best practice was a deployment map. Once again, a Gantt chart was used but this time to illustrate the timing of each initiative. Every offer was noted, identifying the booking window and the travel window. But the key takeaway was a visual understanding of exactly how many offers were in the marketplace at any one time and how these offers overlapped, crowded the space, or even conflicted.
I was also impressed with a simple “product bulletin.” The purpose of this tool was to thoroughly communicate to reservations, front desk, accounting, and sales the details of upcoming products, packages, and promotions. Typically, hotels advise staff of new packages or promotions by email, focusing largely on how to load the product in the system, which rate code to use, how to book. Usually, most of the information provided is operations oriented. This tool is designed to help sell the product. Emphasis is placed on sales and marketing details to arm staff with specific knowledge that will help to close more business. Marketing-oriented details are included, such as the product’s objective, target market, features and benefits, and suggested scripting. In this best practice it isn’t just about the “mechanics;” it’s all about how the initiative is being marketed and to whom.
Finally, I’ve been impressed more recently with the progress being made in data visualization. From a best practices perspective, if a revenue manager can tell the story with graphs and charts, instead of spreadsheets, convergence will be swift. Marketers, generally speaking, are visual, creative, out-of-the-box thinkers. It makes sense to speak their language.
In my experience, organizations where the relationship is strongest between revenue management and digital marketing place an emphasis on transparency and communication. And it’s not surprising that the convergence of the disciplines has its most appealing elements in the empirical data. When a marketer appears in the revenue manager’s office (or vice versa) showing hard data, from sources such as Google Analytics or TripAdvisor, on exactly how the consumer is searching, researching and booking, it’s hard to argue with the facts. Let’s face it, digital marketing is new school. Many of our revenue management approaches are still old school. In a way it’s ironic. I think revenue managers in many cases had to bring directors of sales along into the revenue management world. Now, digital marketers are doing the same to revenue managers. The key certainly is convergence not collision, and I hope you’re not hearing any screeching tires in your hotel.
Want to Learn More?
This topic will be addressed on 3 December as part of the 10-part 2014 Revenue Management Webinar Series produced by the HSMAI Revenue Management Advisory Board and HSMAI University in partnership with Hotel News Now and STR, the parent company of HNN. Each month a webinar covers one aspect of cutting edge revenue management in today's economy in conjunction with articles written by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program, archives are available.
About the Author
Bonnie’s career in travel, tourism, and hospitality is extensive and multi-dimensional including positions as Senior Vice President, Operations for a major North American hotel REIT, General Manager for two 4½-diamond hotels, and General Manager Operations for a major tour operator. Her diverse product knowledge of hotel, tour, cruise, air, rail and car rental inventories offers a unique cross-fertilization of industry strategies.
She holds a bachelor’s degree from the University of Illinois, a Certificate in Revenue Management from Cornell University, and a Certification from Guelph University’s Hospitality Managers Development Course. She’s the chairperson of the International Society of Hospitality Consultants and she is also a member of HSMAI’s Revenue Management Advisory Board. Bonnie is a sought after speaker internationally, an accomplished author of numerous industry articles, and a regular columnist for HotelNewsNow.
About HSMAI’s 2014 Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to guide the development of products and programs that optimize revenue for hotels.
• Chair: Kathleen Cullen, CRME, Senior Vice President Revenue & Distribution, Commune Hotels & Resorts
• Calvin Anderson, Director of Revenue Management, Hilton New York
• Chris K. Anderson, Professor, Cornell University
• Veronica Andrews, Director of Active Data, STR
• Vish Bhatia, Co-founder and President, Hotelsoft, Inc.
• Patrick Bosworth, CRME, CEO & Co-Founder, Duetto
• Bonnie E. Buckhiester, President & CEO, Buckhiester Management Limited
• Tom Buoy, CRME, EVP Pricing and Revenue Optimization, Extended Stay Hotels
• Janelle Cornett, Regional Director, Revenue Management, TPG Hospitality
• Sloan Dean, CRME, Vice President of Revenue Optimization, Ashford Hospitality Trust
• Jon Eliot, CRME, VP of Revenue Management, Premier Hospitality Management
• Neal Fegan, CRME, Executive Director of Revenue Management, FRHI International
• Nick Graham, VP, Hotel, Hotwire, Expedia
• Linda Gulrajani, CRME, Vice President, Revenue Strategy & Distribution, Marcus Hotels & Resorts
• Dev Koushik, VP, Global Revenue Optimization, IHG
• Kelly McGuire, Executive Director, Hospitality and Travel Global Practice, SAS Institute Inc.
• Karen McWilliams, Sr. Corp Director of Revenue Strategy, Concord Hospitality Enterprises
• Mark Molinari, CRME, Corporate Vice President of Revenue Management and Distribution, Las Vegas Sands
• Garth Peterson, CRME, Director Of Sales, Americas, IDeaS - A SAS COMPANY
• Susan Spencer, Market Director - N. America, ChannelRUSH
• Tim Wiersma, Vice President, Revenue Management, Red Roof Inns, Inc.
• Nicole Young, CRME, Corporate Director Revenue and Sales, SBE
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