when less is more: focusing on the persuadable guest
TRANSCRIPT
When Less is More: Focusing on the Persuadable Guest
#org#chrs1
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Anil Kaul Chief Executive Officer, AbsolutData@anil_kaul
Guha AthreyaAssociate Director, Hospitality Solutions, AbsolutData@GuhaAthreya
@Absolutdata
#persuadable
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What can we learn from the success of Obama’s 2012 Presidential Campaign?
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Fact 1: Marketing @hotels is about….Offers, Deals & Discounts…
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…this is also true for other sectors of Travel & Hospitality…
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Fact 2: Offers are rich and cost intensive
10% Discount for AAA Members
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Double Points next Quarter
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4th Night Free at Select Resorts
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Free Room Upgrade
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15% Discount Advance Purchase
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Military Discount
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Breakfast Included
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$150 On-board Credit
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$90 Discount on Suites
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AARP Member Discount
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4th night free!!! (with 3 paid nights)
The Success of a Campaign is determined by Precision in Targeting
Is this a good promotion?
Benefit:
• Lift in Response Rate = 13%-10% = 3%
• Incremental Stays = 3% of 100k = 3k
• Incremental Nights = 3k x 3 Nights = 9k
Cost:
• Non Incremental Stays = 13k-3k=10k
• Free Nights = 10k x 1 Night = 10k
Net Benefit is -1k Nights
Now consider the economics
Test 100 k
13 k
13% Response
Targeted
10 k
1 k
10% Response
Hold Out
Cont
rol
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Over targeting has multiple disadvantages…
Loss of Revenue
Triggers Shopping Behavior
Trains Loyal Customers to wait for Offers and Discounts
Dilutes the Offers
Increases Marketing Costs
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What can we learn from the success of Obama’s 2012 Presidential Campaign?
1. Don’t Over Target
2.
3.
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Why do Marketers Over Target?
WHY ?
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Responsiveness
Num
ber o
f Pro
spec
ts
Unresponsive Responsive
Negative ROI Low-Med ROI High ROI
Today, most marketers know who will respond to a given offer. That helps, but only to a point…
Responsiveness
Num
ber o
f Pro
spec
ts
Negative ROI Low-Med ROI High ROI
Unresponsive Responsive
Persuadable
Sure Fire
Marketers can gain significantly by focusing on the Persuadable Guests and excluding the Sure Fires.
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What can we learn from the success of Obama’s 2012 Presidential Campaign?
1. Don’t Over Target
2. Identify who is Persuadable
3.
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So, how do we identify Persuadable Guests?
How ?
To identify the Persuadable Guest, we must first understand the difference between Persuadable and Responsive
Responsive Guest
Buys when given an offer
Buys when given an offer Buys when
given an offerPersuadable Guest Buys Only when given an offer
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There are Proven Analytical Methodologies to predict influence and identify Persuadable Guests – e.g. Uplift Modeling
• PR(Offer) is high
• Where PR is the Probability of Response
Responsive Guest
Buys when given an offer
Buys when given an offer Buys when
given an offerPersuadable Guest Buys Only when given an offer
• PR(Offer) >> PR(No_Offer)
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This is not just a targeting solution…
What promotions worked in the past?
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How can we make it better?2
Who should we target?3
Who can we persuade?1
Where can we find them?2
What should we offer them?3
Old Backward Looking Process New Forward Looking Process
Understanding the Persuadable Guest can completely turn around the way
Promotions are Developed and Executed
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What can we learn from the success of Obama’s 2012 Presidential Campaign?
1. Don’t Over Target
2. Identify who is Persuadable
3. Design your campaign around the Persuadable
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Across many industries, the most successful campaigns have focused on Persuadable Customers
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3 Phased Approach
A success story in Hospitality
Phase 1: Identifying & Understanding the Persuadable Guests (for 1 Promotion)
Phase 2: Designing offers and touch points around the Persuadable Guests
Phase 3: Limited in-market tests followed by full scale roll out
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Impact on One Promotion in One Quarter
A success story in Hospitality
Saved $2MM by not targeting the
Sure Fires
Used a small part of the savings to
give richer offers to the
Persuadable Guests
Generated an additional $4MM in
incremental revenue with no
increase in budgets
Thank you