Why Upselling is Key to Growth and Loyalty
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Nor1 is a technology company focused on upselling perishable inventory through real-time data and decisioning. Their core solutions are designed for the hospitality industry, enabling hotels to directly contact guests throughout their stay to offer upgrades, activities, services and more. Nor1 utilizes predictive analytics and machine learning to understand customer preferences and optimize upsell offers on mobile devices. Upselling is critical for revenue growth, customer loyalty and experience enhancement.
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Why Upselling is Key to Growth and Loyalty
- 1. Why upselling is the key to long-term growth and loyalty Webinar 20 August 2013
- 2. K Kevin May Editor & Moderator Gene Quinn CEO & Producer Your hosts
- 3. K Jason Bryant Founder & co-CEO Nor1 Your panelists Henry Harteveldt Travel Industry Analyst Hudson Crossing
- 4. Why Upselling is the Key to Long Term Revenue Growth and Loyalty
- 5. 5 Nor1’s patented technologies are focused on perishable inventories serving a variety of industries, while our core solutions are designed to support the hospitality industry. Nor1 enables hoteliers to have direct contact, in real-time, with their guests throughout the trip lifecycle, from booking through check-out. About Nor1 Post-StayPre-Stay At Check-in Upsell and Cross-sell offers from tours and activities, dining, transportation, spa, etc. Global Team: Mix of technologists, data scientists, and travel industry veterans in Silicon Valley, Mexico, Germany and Singapore. Intra-Stay Upsell at booking confirmation Pre-Arrival Emails Hotel Services Upsell Satisfaction and Loyalty
- 6. 6 Nor1 is the Technology Leader in Upsell Solutions Engineered to provide a clearer understanding of: • What consumers want • Are willing to pay for; and • Improve the offer process
- 9. 9 Upselling refers to revenue potential that goes above and beyond a traditional booking.
- 10. 10 Why is Upselling Critical? 1. Creates greater utilization of fixed assets 1. Builds customer loyalty - enhanced guest experience 1. Maximize the value of each reservation 2. Leverage the resultant data across the enterprise
- 11. 11 Upsell Benefits for Consumers • Consumers love room upgrades and will pay for them. • Helps differentiate your business in eyes of consumers. • Makes your business’s Mobile application more relevant during the actual travel phase.
- 12. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Travel-focused strategic advisory firm Headquartered in New York City, serving a global client base New subscription research program focusing on marketing, distribution and technology ─ Objective and independent ─ Mix of large-scale consumer surveys and topic-specific industry executive studies About Hudson Crossing 12
- 13. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC The Journey “Story Arc” Spans Multiple Sales Opportunities 13 Dream Research Book Outbound journey Destination Return journey Share Dream Story arc Channels/Touchpoints Products/Offers/Promotions Can Reach Travelers Beyond Initial Booking Point
- 14. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC The Traveler Has Two Wallets 14 Source: Overstock.co The room Everything else
- 15. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC The “Three I’s” Of Travel Merchandising 15 Inspiration IndividualismImmediacy Source: Google Images
- 16. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Traveling Is An Excuse For Self-Indulgence 16 3 in 5 travelers say they do nicer things for themselves when they are on a trip Base US online travelers Source: Hudson Crossing’s US Travel Online Study, Q1 2013 Source: Google Images
- 17. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Details Matter 17 74% of travelers consider the quality of a hotel’s amenities and service to be important Base US online travelers Source: Hudson Crossing’s US Travel Online Study, Q1 2013 Source: OmniHotels.com
- 18. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC A Significant Number Of Travelers Can Be Tempted With Up-Sell/Cross-Sell Offers 18 Save time/reduce hassle: 47% Receive better service: 48% Enjoy more comfort: 45% Percent of US travelers who will consider paying a reasonable premium for the following: Base US online travelers Source: Hudson Crossing’s US Travel Online Study, Q1 2013 Source: Google Images
- 19. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Travelers Have Above-Average Mobile Device Ownership 19 53% 66% 75% 81% 85% 88% 91% 21% 42% 59% 71% 79% 85% 89% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2012 2013 2014 (E)2015 (E)2016 (E)2017 (E)2018 (E) US Smartphones US Tablets 2013 US average smartphone adoption (43%) Source: Hudson Crossing analysis US mobile device average” Pew Internet Research 2013 US average tablet adoption (31%)
- 20. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Mobile Enables Additional Selling Opportunities 20 0% 10% 20% 30% 40% 50% 60% 70% 80% During initial reservationBetween making reservation and check-inAt the airportOn the plane Premium in-flight meal Checked bag fees Upgrades Fast-track security screening Priority boarding Airport transfer Advance seat assignments Hotel accomodations Travel insurance Base: Smartphone-owning US online leisure airline passengers Source: Hudson Crossing’s US Online Leisure Travel Study, Q1 2013 Percent of airline passengers who want to buy the following items after making initial reservation 25%-50% of product sales opportunity
- 21. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Definition: Using relevant data to create and target offers, Customer Managed Experiences are products/services that customers create and buy on their channel/platform of choice and use when and where the customer wants. Entering The Era Of Customer Managed Experiences (CMX) 21
- 22. Confidential ̶̶ All Rights Reserved | Copyright 2013 - Hudson Crossing LLC Ancillary Products Are The CMX Catalysts 22 Source: Wizie.com
- 23. 23 The Pain of Paying = Strong Consumer Interest for Upgrades After Initial Purchase
- 24. 24 Capitalize on Loyalty Complimentary option is pre-selected A 5% increase in customer retention can increase a company’s profitability by 75%... Bain and Company. Paid options are also shown
- 25. 25 The Upsell Opportunity $9 IS THE AVERAGE PRICE PAID FOR A HIGH FLOOR $28+ IS THE AVERAGE PRICE PAID FOR EARLY CHECK IN $36+ IS THE AVERAGE PRICE PAID FOR LATE CHECK OUT $58 IS THE AVERAGE PRICE PAID FOR KING SUITE (MOST POPULAR UPGRADE REQUESTED)
- 26. 26 Creating True Personalized Commerce In order to create a relevant dialogue with the traveler by predicting what they are most likely to be interested in at a given point in time, Real-Time Data & Decisioning must be core to your Upsell Strategy.
- 27. 27 Three Levels of Analytics Maturity: Optimization Mathematics Machine Learning Data Mining Probability Theory Statistics Customer Behavior Management Science Operations Research Mathematical Programming Stochastic Programming Game Theory Simulation EconomicsComputer Science Decision Science Artificial Intelligence Dynamic Programming Big Data Profiles Predictive Modeling Personalization Business Intelligence Experimentation 1. Traditional Business Intelligence 1. Predictive Business Intelligence 1. Real-Time Decision Intelligence
- 28. 28 Real-Time Upsell Offers Take Real-Time Algorithmic Analysis Data points worth considering, include: • Consumer profile • Current transaction • Historical transactions • Inventory availability Real-time decisions include: • Product(s) selection • Assortment • Pricing Machine learning algorithms learn from each transaction to calibrate future offers. • Constraint handling • Geo Location • Weather
- 29. 29 62%of restaurant searches are from smartphone and tablet devices, according to Google. 75%of Americans bring their phones to the bathroom.Searches on mobile devices are 66% more likely to have local intent than a desktop search. 80%of mobile users prefer locally relevant advertising and 75% are more likely to take an action after seeing a location-specific message. (Sources: Mobile Audience Insights Report from JiWire, 2012 and Digiday, 2013) Statistics for Mobile Purchasing
- 30. 30
- 31. 31 Make relevant and targeted offers to consumers while they are traveling, such as: • Maps • Dining Offers • Room Upgrades • On-Site Schedules • Event Invitations • Tours • Weather • Spa Offers • Activities • Reminders • Flight Delay Communications The Mobile Upsell = Experience Management
- 32. 32 What’s the Secret to Upsell Success? • Invest in analytics and real-time decisioning. • Optimize everything for Mobile. • Think more broadly about your product set. • Engage multiple functions in the discussion of upselling and to leverage the resultant data. Upselling is the Key to Long Term Revenue Growth and Loyalty
- 33. K Q & A
- 34. K Replay and presentation from today’s webinar will be available at www.tnooz.com Please send your questions to kevin@tnooz.com
- 35. Company Confidential. Do Not Copy or Distribute © 2013 Nor1 Inc. All Rights Reserved “Nor1”, “Powered by Nor1”, “Nor1 Upgrade Your Life”, “eStandby”, “eStandby Upgrade”, “Nor1 Upgrade”, “PRiME”, “Front Desk Integration”, and “eReach” are representative of some of the logos and trademarks registered by Nor1, Inc. Copyright © 2004-2013 Nor1, Inc. All Rights Reserved The Nor1 system and/or its use is covered by Patent 7,249,062 B2 and other patents pending. Thank you
- 37. 37 Core Technology Assets • Unique buying process that allows merchants to price and merchandise perishable inventory more effectively • Utilizes PRiME technology to optimize offers • Platform that connects travel consumers and decision makers • Patent issued for “Method for Transacting for a Perishable Object Having an Uncertain Availability” • Deep integration into property management systems to provide up-sell offer at point of check-in • Initial integration with Micros Opera (leader in PMS systems with 22K properties) • Utilizes PRiME technology to optimize offers made • Extendible to other point of sales, e.g. retail check out at cash register, mobile payment checkout • Predictive modeling engine trained on millions of historical transactions • Makes real-time decisions on product selection, pricing, and display rank • Leverages data from consumer and supplier profiles, behavioral observations, real-time transaction information, and inventory availability for offer optimization • Understands consumer’s willingness to pay and can steer demand on behalf of supplier • 2 Patents issued/allowed: “Computer-Implemented Systems and Methods for Automatic Merchandising” “A Method and a System for Simultaneous Pricing and Merchandising”
Hinweis der Redaktion
- Overall objective as to why upselling is so important. We’ll share some trends and stats through our experience of doing this for 8 years.And a general direction on where things are going and what organizations should be investing in…And a checklist of things for you to give consideration to in order to have a robust, results oriented upselling program
- Nor1’s upsell solutions provide a clearer understanding of what consumers wantare willing to pay for, and improve the way those products and services are offered to them.
- Qualify (upsell and cros-sell all together…
- For 3. Customer cost of acquisition is going up and up while customer conversion rates across the industry are down as number of sources travelers consult increases. (GDS, travel agents, OTAs, hotels, travel review sites, meta-search, search engines, social media, etc.) 1.45% (lowest of any industry)Plus, you now have Limited forecasting ability thanks to Mobile and last minute booking channels that have shortened the booking cycle.Leverage the resultant data (and derived statistics, such as willingness to pay) across the enterprise
- 8 years of validation shows that guests will pay for upgrades and it can enhance not hinder their satisfaction
- From Henry’s stat’s - Here are some specifics and truths we’ve uncovered as it relates to upselling.There is a Buyer Behavior Dynamic – the pain of paying - Refer to Henry’s Wallet slide…. When the offer is made is really important. What you ideally want to strive for , initially, is to let the customer book the room and then after that – then there is a different wallet that the guest will consider other options on top of the initial booking.. With each subsequent purchase related to the original purchase, the pain of paying diminishes…. And new funds are mentally unlocked at specific points of time
- Unique opportunity with your loyalty guests because they convert more highly with upgrade offers…and are likely to continue their loyalty thru a better guest experience. Bain and Company, a global business consulting firm, state that “a 5% increase in customer retention can increase a company’s profitability by 75%.” The Harvard Business Review tested out this statement, and found that “when MBNA America, a Delaware-based credit card company, cut its 10% defection rate in half, profits rose a whopping 125.”Upselling your current customers can additionally generate a tremendous amount of revenue from your customer base to your business.Unique opportunity with your loyalty guests because they convert more highly with upgrade offers…and are likely to continue their loyalty thru a better guest experience.
- The biggest mistakes we see hoteliers making in considering upselling –Not seeing an Upsell as an Incremental Revenue Opportunity - so How much More do you want to make on this existing booking? Not considering the Original Value of the Reservation when making room upgrades. For example a guest paying $159 for a room is unlikely to upgrade to your Presidential Suite at twice the price. But might jump at a chance to move to a junior suite for an additional $30. It’s Relative Value. When you Cross-Sell other services and offers then that Relative Value is removed and is evaluated differently. LATE CHECK OUT Number of requests = 83,250 Average Price Paid = $36.50 EARLY CHECK IN Number of requests = 52,300 Average Price Paid = $28.75 HIGH FLOOR Number of requests = 396,215 Average Price Paid = $9KING SUITE Is our most requested upgrade.
- Two primary components – real time analytics/decisioning and intersecting that with mobile.To be most effective, personalization is ideally managed from a single integrated platform that makes it easy for you to deliver a relevant experience across all customer interactions. When executed properly personalization enables you to extend the customer experience in a way that feels personal but is automatically driven.
- Get clear on analytics and your ability on each of these levels will impact your ability to upsell… First, let’s go over the progression of analytics and how your organization can achieve real-time decision intelligence
- As you extend the customer profile by adding enhanced information based on a customer’s actions (such as buying history, click behavior, search terms, and shopping cart contents) then you can group similar profiles into personas, and tailor interactions to make the shopping experience more relevant and targeted. Each of the variables have a certain weighting, and the weighting itself changes for each reservation based on the unique intersection of the booking, guest, and property – there is no one size fits all!What you think that a person is likely to want or has done in the past, isn’t actually the best indicator of what they will choose to do in this moment. What a customer tells you doesn’t always have predictive power when you look at it in isolation….Decision Intelligence technology enables a hotel to answer questions like: ‘what product should I be offering the guest right now?’ It also answers more complex questions: ‘should I even be offering a service right now’ or ‘is this the right time to make this offer?’ So how do we solve this problem?travellers expect a higher level of personalization based on their preferences and current locations.Mainframe, client server, the web, to mobile and tablet at an unprecendented speed of consumer consumption. A computer in your pocket – changing buyer behavior along the way.
- Intra-stay offers – ancillary services – tours and activities are the next wave of upselling as mobile makes possible making real-time offers to travelers at the point of consumption.The types of behaviors being exhibited via mobile demonstrate the importance of timing. According to Google, 62% of restaurant searches are from smartphone and tablet devices.Searches on mobile devices are 66% more likely to have local intent than a desktop search. Meaning people searching on mobile phones are usually looking for something around them. 75 percent of Americans bring their phones to the bathroom. (Source: Digiday, 2013) 80 percent of mobile users prefer locally relevant advertising and 75 percent are more likely to take an action after seeing a location-specific message (Source: Mobile Audience Insights Report from JiWire, 2012) Since mobile searchers are often trying to find a quick answer to a present problem, they have stronger intent and are much closer to making a purchase than a desktop searcher.
- Real-time Analytics in combination with Mobile is the answer to why Upselling is the key to long-term revenue. We are witnessing a platform shift that has historically never happened so quickly. From Mainframe to client server, then the web,and to mobile/tablet. The consumer adoption is at an unprecendented speed essentially putting a computer in your pocket and forever changing buyer behavior along the way. Win the Mobile Upsell and the consumer relies on you to help navigate their trip experience.So why is this industry still treating it as ancillary to their marketing, loyalty and revenue efforts?While the technical requirements of mobile force it into the realm of a specialist expertise, the key to winning lies in realizing that mobile actually represents the confluence of four key marketing disciplines: loyalty, revenue management, marketing and CRM. The potential of mobile is not only integral to marketing, it is integral to operations, merchandising, and other business functions.
- Ancillary offers will be a huge revenue opportunity as well as the differentiator in guest satisfaction. Even a select service hotel is capable of reaching guests with targeted communications about the weather, ground transportation and local dining offers. We believe offers should be focused on the guest experience not just on what you have to offer. A much broader offering of information and 3rd Party offers…which continues your dialogue with the guest. And if travel suppiers don’t, someone will. The winner in this will be the org that creates really compelling experience for the customer.
- We believe a significant percentage of future profits can be derived from the upselling approach we advocate. The push for greater occupancy and ADR magnifies upselling opportunity.