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We've recently added Performance by visitor country data to the Insights Dashboard in the Triptease Platform. This allows hotels to understand their website traffic in more depth, and use that knowledge to develop more effective targeted messaging for their potential customers.
Geographic segmentation of potential guests is one of the more straightforward ways to identify market segments for hotels. There's been a clear shift in the hotel industry towards personalized digital guest experiences in recent years. Hotels should capitalize on the rich geodata they can harness from web analytics to really enhance this personalization online.
But the big question with targeting comes down to this: Should hotels target their better-performing or worse-performing visitor segments?
Should you focus on conversion rate or Average Booking Value?
Let's consider the example of an upscale London hotel with a mixture of web traffic from domestic, European and international visitors. The hotel's international guests tend to stay longer than guests from the UK, so they have a higher Average Booking Value (ABV) - but a much lower conversion rate. Take a look at the table below:
When it comes to performance, the conversion rate may seem the natural place to focus. The international market has the lowest conversion rate, so perhaps you would benefit most by targeting those potential guests on your website.
However, a closer look at the detail of the table reveals more. Notice that the Revenue per Visitor (RPV) of the domestic segment is $40 ($1,000 * 4% = $40). It is $36 ($1,800 * 2% = $36) for the international segment.
So, does this tell us the opposite - that it is actually the domestic segment that should be more closely targeted? To make a really informed decision, you need to take other factors into account.
Getting the full picture of guest value
The London hotelier in our example might know from her historical data that international bookers spend more on ancillary items (for example, the spa and restaurant) than domestic bookers. When accounting for expenditure at the hotel, the international segment would then have the higher RPV.
The hotelier might stop at this point and decide that they have clearly discovered the highest-value segment target: international visitors with a higher RPV and lower conversion rate than their domestic counterparts.
But that's not quite the full story. All analysis up to this point has been focused purely on revenue. When considering profitability, that international segment may suddenly become less lucrative. For example, the international market at this hotel might require more staff to resource a more one-to-one service. They may also have been the focus of a recent marketing campaign, which would have needed budget expenditure. There are always more metrics to consider than those that are immediately apparent.
Target segments that best fit your hotel's goals
When targeting potential guests it's not always a black-and-white case of looking at who's best- and worst-performing on your website. Instead, it's a valuable exercise to clearly define your segments and all the underlying data relating to them that may not be immediately obvious.
Here are three key considerations for effective marketing targeted at segments:
Understand each segment's unique needs. International visitors may be more interested in amenities such as the spa than domestic visitors.
Fully measure and quantify each segment. Triptease's 'Performance by visitor country' segment aims to display all the crucial metrics for your geographic segments (share of traffic, revenue, etc).
Make sure the segment size you are planning to target is profitable. Consider the size of your segments and make sure that they are sufficiently large. If 30% of your traffic comes from the UK, for example, and has RPV of $40, but 5% of traffic is from France with RPV of $100, the UK is still a better prospect for targeting because of its size. A segment with less than 10% of traffic may be too costly to target, regardless of revenue potential.
The STP framework
A common approach to segmentation marketing that hoteliers could use is the 'segmenting, targeting and positioning' (STP) framework:
Segmenting: Identify segment types and develop customer profiles.
Targeting: Narrow down segments of interest to target (focus on profitability based on cost of acquisition and revenue potential).
Positioning: Craft and communicate a value proposition tailored to each segment using Triptease's Message Porter.
We'll be increasing the breadth of Triptease Insights over the next few months to enable hoteliers to analyse segments more easily. We would love to hear how you are undertaking targeting currently, and what other segmentation you would like to see in the platform. Contact the team at firstname.lastname@example.org.