Understanding which customer groups drive the greatest value is critical to the success of your revenue management strategy.
Before sophisticated marketing and advertising technologies existed, the “spray and pray” method used to be all marketers knew. Billboards, radio ads, TV commercials, and full-page magazine ads were all relied upon to produce positive results with no real market segmentation to target ideal customers. Now, all kinds of platforms exist for digital marketers to filter out the masses and hone in on exactly who they want.
Customer or marketing segmentation is a reality and the most successful marketers make it the foundation of their strategy.
What is customer segmentation? (guest segmentation)
Customer segmentation is a grouping of your target guests into groups of people who share similar wants and needs.
Traditionally this was restricted to demographics. However, the digitalisation of marketing has meant the slicing of data like never before. Using tools and multiple data points, you can paint a picture of exactly who you’re targeting, what they like, how they book, where they book, travel preferences, etc.
Smart marketers and revenue managers will tie this information in with pricing and offers to get desired results – more bookings.
Why should you care?
Overall, the main benefit of customer segmentation has to do with specificity. The more specific you can be with the groups of people you are targeting, the easier it is to find more high paying customers who will rave about your hotel. Once you know who you’re trying to reach you can focus your marketing and sales efforts on appealing to these groups.
It ties in closely with your pricing strategy. Typically, price sensitivity is looked at as a factor in “forming target groups”. This allows you to uniquely price each segment according to the type of customer you are looking at.
How to identify customer groups?
There are a number of different consumer segments you can create, including geographic, demographic, behavioural and psychographic.
Let’s look at some simple questions to ask yourself as you create these segments.
where are your guests primarily from? Which region? International or domestic? What languages do they speak?
why guests choose you? Is it business or leisure? If it is leisure, what experiences in your hotel are most attractive?
what is the profile of these guests? Teenagers, active young adults, families, SINKS, DINKS or active seniors? What is their purchasing power – lower end or luxury?
How many –
will your targeted guests be travelling solo, in groups (small or large) or couples? What do these groups look like – families, team buildings, clubs?
Prioritise your audiences
Once you’ve identified various audiences for your hotel, use the BCG matrix to assign priority.
As you go through this exercise, ask yourself the following questions:
· Is there a specific time when they plan and book their next holiday?
· How long do they stay? Which time of the year?
· Do you have all features desired by your contact group?
· Are they repeat guests? Have they subscribed to your loyalty programme?
How to identify customer segmentation with everyday marketing?
· Read and respond to online reviews and feedback from guests
· Create profiles to visualise your customers and improve your communications based on a more informed understanding of who’s staying with you
****Want to know more about market segmentation? Read here
At the end of the day, finding your most lucrative prospects is all about having the right information and using it wisely. Remember also that guest behaviour keeps changing. Segmentation is not a “do it once and forget” exercise. Keep digging into your data to refine your segments and change as market circumstances evolve.