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Changing Customer Buying Behaviours

Heidi Gempel

February 23, 2021

Heidi and Matthew discuss how customer buying behaviours are changing as a result of COVID-19. How will these behaviours continue to change and how can hoteliers and revenue managers adapt to meet these changing behaviours and new expectations?

This podcast explores how the changes in customer behaviour are impacting revenue management and the customer journey and the implications for hoteliers in terms of customers requirements.

Click on the below link to hear their discussion or read the full conversation below:

Matthew: Today we will be talking about how customer buying behaviors are changing through the Covid-19 period. My guest today provides outsourced solutions for hotels including distribution and revenue management. A board member and facilitator of the revenue management advisory board for HSMAI Asia Pacific, from HGE international, welcome back Heidi Gempel!

Heidi: Good morning Matthew, thanks so much for having me on again.

Matthew: Thank you for coming back, its always a pleasure to discuss revenue management with you. So previously we discussed the important of forecasting, how has Covid changed customer behaviors and how have these changes impacted revenue management?

Heidi: Well one of the backbones for revenue management or for most strategies as part of hotel business planning is our market segmentation. I just want to give a bit of context with that and then answer your question.

I think what is important for us to remember is that our market segmentation, as it is done today in most of our hotels, is built around buyer profiles. So, we create rates for a group of buyers –it could be corporate buyers who buy in bulk and get a special discount, could be for wholesale. Even for OTAs we create rates that are given to OTAs for the purpose of giving it to a distributor who will then access the client database. This is how our market segmentation is structured and this is how we measure success at this moment in time.

Now what this reflects unfortunately is that it is highly commoditized. We create a rate product for our rooms, maybe a service offering with regard to special packages, but apart from that it is commoditized and given to a distributor or a bulk buyer as such to distribute on to the final customer. So what it doesn’t give us is an awful lot of insight about the customer who is actually going to stay with us. We may know that he is of a certain level in a company if we are a four- and five-star hotel because they must be senior person in that company or it might be a family because they booked for 2 adults and 2 children through an OTA and maybe that it is the school holiday. But apart from that it does not give us an awful lot of insight about them and the journey they have been on before they booked the hotel. All of this is what we call our market segmentation at the moment.

Now in some markets some of those segments don’t work at all. Wholesale in the majority of the markets is no longer producing because of Covid-19. A lot of these segments are completely eradicated at this moment in time or are very, very small. So we are working with a segmentation which is not necessarily providing us insight as to what actually works and gives us understanding about our customers. So the behavior of our customers because of what Covid has done to the world population, the citizens of every nation. It has changed the way we travel, it will change the way we travel, the way we interact with either hospitality providers or hotel providers or even airlines. It creates new fears in us that either the airline or the hotel need to learn to overcome, and engage the customer in to rebuild the trust element so that they would want to travel again.

So I think this is an opportunity that we in hospitality should have been waiting for in many ways because we would have continued with the buyer profile market segmentation portion because it worked. But I think its time for us to really change it up a bit and I think instead of the stages of the buying process for the market segment we really need to start engaging the customer journey of an individual or of a persona and why they make a purchase at the end of the day. So I think in the longer term this will impact our forecasting and the way we define our market segmentation within the hotel, the way we set goals and measure success. Right now it is all about rooms and revenues but I think in the future we will build goals for each stage of the customer journey and we will see how a customer transitions through all of this to help us understand the reason why they are purchasing and how they are purchasing in the end.

So I think in the longer term [Covid] will impact our forecasting and the way we define our market segmentation within the hotel, the way we set goals and measure success. Right now it is all about rooms and revenues but I think in the future we will build goals for each stage of the customer journey and we will see how a customer transitions through all of this to help us understand the reason why they are purchasing and how they are purchasing in the end.

Matthew: So with those changing buyer behaviors, you mentioned trust is more important now. Obviously, peoples sense of health and security is heightened and that personal relationship is important in building that trust. Do you think that will impact the channels that customers book through? Is direct now more important and going to become a great opportunity for hoteliers to encourage people to book direct?

Heidi: Yes I think so. I think this is absolutely a correct statement. Because of the safety requirements in the hotel, and a lot of governments have put very strict safety protocols in place in order to help customers to be assured that they will be safe when they travel. And I think this will become more and more important. And although maybe an OTA can tell you, yes, this hotel has been certified in these areas, if you travel with your family you want to call the hotel and say is it safe for me to come?

So, I think this is a golden opportunity for the hotels to really reengage with the customers directly and to help them trust them first and foremost when they make buying decision and to buy with them directly rather than through a third party. Now the business model of OTA’s I don’t think is going to go away, but I think they will have hard work to transfer that trust in a hotel where eventually a customer will be staying to the end consumer.

It will be far harder for them to communicate that to them and to assure them that they can trust that hotel then if the customer were to talk to the hotel directly. So I think it is absolutely an opportunity for us in the industry to address some of those barriers directly with the customer and therefore build trust and be able to build direct business. Therefore, being able to understand customer journey and decision-making process with a lot more clarity.

Matthew: So you just mentioned customer journey, how is the change in buying behavior impacting customer journey?

Heidi: Well, it makes it more transparent, I think. Customer behavior has been changed forever I think through Covid. Although business travel will come back, leisure travel obviously will come back but the behavior of the customer as they approach a business trip or a leisure trip will change forever.

Although business travel will come back, leisure travel obviously will come back but the behavior of the customer as they approach a business trip or a leisure trip will change forever.

So, what Covid is doing is giving us an opportunity to connect with these customers directly to help understand what is driving their behavior to make a purchasing decision and for us then to engage in that process, for us to provide the relevant content, the relevant information, and the relevant product in that process to help them make the purchase decision in the end. So, I think Covid is changing all of this for our customers and we have to learn what that change is and how to interpret it and how to respond to that change in for our customer first and foremost.

Matthew: Sure. And last time we spoke we talked about new revenue streams which are emerging from Covid like home delivery from hotel restaurants. What do you think the implications for hoteliers are for understanding their customers now that we have no contact with them?

Heidi: I think we have great opportunity; I think its one of those moments where we have everything to gain in my opinion. What we need to learn in this current season is what works. Are people who are ordering home delivery eating the same way at home as they are when go out into a restaurant?

Do they enjoy the same kind of food? At the moment a lot of hotels are working through third parties for the delivery portion and a lot of that data is hopefully not lost but is not utilized fully by the hotels. I would encourage everyone who does delivery to really keep and eye, how does your delivery service behave differently from your restaurant service If your restaurant is operating at the moment or even to how it was operating previously.

Not only from a menu point of view but even the timings, the hours, how many people are you serving in one order, what are some of the trends you are seeing from that. I think the other portion is really to engage with your third party vendors, to see what kind of customer insights can you give me about the people who are ordering my food. So that we can learn about them and understand, how do we track people who come back for the second or third time through a delivery order, is it actually possible. I think it is these sorts of questions we need to engage in. I think it is a great opportunity for us to broaden our reach, we have now opportunity to reach a customer segment that may have never been interested to stay with us before, but they do enjoy our services and our food and I think that’s great.

You mentioned earlier about the contactless customer services that we are engaging in now. I hear a lot of fear in hotels over whether that will replace an individual or replace hospitality. Personally I don’t think so. It will cause us to change yes that is for sure. For me, the way to look at it is that customers are enjoying the process of being contactless at this moment in time. A lot of that may be driven because of Covid and the fear of being exposed to human-to-human contact. Obviously, right now at this moment in time the contactless service is here to stay and customers are being educated in the process of engaging with businesses contactless. The challenge for us as hoteliers would be, is, must be, how do we put hospitality into the contactless service. The challenge for us as hoteliers would be, is, must be, how do we put hospitality into the contactless service.

The challenge for us as hoteliers would be, is, must be, how do we put hospitality into the contactless service.

How do we make it a special experience, a special moment for the person on the other end to engage with us as a brand, with us as a restaurant, with us as a hotel. How can we deliver our brand promise and our service promise through that customer service with the customer?

So I think we mustn’t shy away from it, we must fully engaged. We must consider that challenge and say what do now and how to we evolve in this current situation. Because it is going to stay, maybe not in this extreme right now, but it is not going to go away.

Matthew: Thank you very much Heidi that has been very insightful into the changing buyer behaviors,  customer journey and the golden opportunity we have now to connect with our guest directly.


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