Author: PRETECTUM

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Your Most Valuable Asset

Hotel Five Stars

Despite access to a lot of data, hoteliers have long underutilized the data at their disposal, perhaps because it was too fragmented of insufficient or variable quality or perhaps because they were not even sure where to start.

When used effectively, guest and stay data can provide hoteliers with the opportunity to improve direct customer interactions, improve revenue and optimize the way properties are run.

At face value, the challenges in hospitality are not dissimilar to those in other industries like banking, retail and automotive.

For hoteliers though, Harvard Business Review says that customer experience is the number one reason travellers use to select hotels the decision based on experience often outweighs price, location or star rating. The experience might be their own or it may be the experience of others too if they have never stayed there before. The same piece cites positive past experiences as resulting in 140% more spending.

Pretectum’s view is that one of the best ways to improve the customer experience is by leveraging the data that you have of your guests. With the Pretectum cloud-based CMDM you collect guest data, some kind of understanding of your guest and their demographic. With this optimized guest master data system in place and a good approach to evaluating and maintaining clean, organized, de-duped and error-free guest data, the analytics possibilities are endless.

Pretectum considers this to be one of the easiest ways to maintain your guest database to target an improved customer experience.

A well-maintained guest database will include not just the basic data about the guests but likely includes rolled-up or aggregated purchase behaviours too. That same database will also contain guest preferences as well as feedback from past surveys. This information can be incredibly valuable for developing your marketing or customization and personalization approach to your guests.

Connected

Industry analysts suggest that new customer acquisition is about five to seven times more than retaining existing ones. 65% of many companies’ business actually comes from repeat business customers.

Integration of your core systems to the CMDM is all done via APIs, these could be your property management system (PMS), your CRM system or your CDP. Connecting your systems allows you to set up automation, integrated and unified search and real-time data validation.

Click on the image for a better view of the platform
Click on the image for a better view of the platform

Making use of the guest data gives hoteliers an ability to anticipate guest needs, this is done by leveraging the central customer master data management system that comprises the guest database and analyzing tastes, behaviours and preferences.

You’re only really able to consistently impact the guest experience positively by analysing and using guest data effectively. Even ahead of check-in you can upsell accommodation with relevant offers and upgrades. Offers don’t have to be limited to just your facilities they can be part of collaborations or co-sells too! For offers to be timely, innovative and relevant they need to layer in guest preferences, rewards and discounts.

There should be little doubt, that you can use your guest database to improve your customer relationships and grow your business. It all starts with the first easy step of evaluating your business needs and evaluating the choices available to you in terms of customer master data management systems that can be complementary to the systems you may already have in place.

Contact Pretectum to learn more about how you can leverage CMDM to improve your hospitality business.

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Consumer Loyalty and Customer Master Data

Rewards Club card Handover

Previously it was mentioned how some airlines leveraged their loyalty programs to secure loans from various backers. At face value, this tells you that though we as consumers store value in our reward points or air miles, so do the airlines and retailers themselves!

Customer loyalty programs like Airmiles and rewards are forged relationships between brands and customers. This is one of the reasons that when a rewards or loyalty program changes the terms and conditions of the relationship, sometimes you will see a sharp uptick or drop-off in the use or support of that program. Launching a loyalty program is also expensive and complex.

In the US alone, companies spend a staggering $2 billion on loyalty programs every year according to Capgemini.

Typically loyalty programs serve as a way for the brand to offer membership-related exclusive products, promotions, or pricing. The reciprocated offer from the customer is their agreement to sustain the relationship with preference against that product line or service through repeat purchases or brand engagement.

In a nutshell, a loyalty program is another marketing mix element. A part of any marketing strategy Loyalty Programs is designed to encourage customers to sustain their shopping or use the services of a business associated with the brand and program.

Loyalty programs cover most types of commerce, each having different features and rewards. Industry segments that have leveraged broad loyalty programs include financial credit, hospitality & travel, retail and entertainment.

According to Sallie Burnett, a loyalty consultant and Founder of Customer Insight Group. in a Forbes article, one of the most successful loyalty program examples is that of Nordstrom retail stores. Nordstrom customers move up through levels from Member to Insider, Influencer and Ambassador.

Annex Cloud a loyalty experience solution suggests however that not all loyalty programs are a guarantee of success. Annex Cloud cite, a report by Capgemini wherein a high percentage of loyalty programs are considered to be failing.

53% of consumers stated that they abandoned at least one loyalty program within the last year which means businesses are putting money and energy into strategies that aren’t being successful. The main reasons vary, from a lack of reward relevance, flexibility, and value (44%) through a lack of a seamless multi-channel experience (33%) to customer service issues (17%).

Pretectum feels that one of the ways to mitigate some of the aspects of customer service and multi-channel interaction is through the convergence on a single-source-of-truth in relation to the customer master. If your sales, service, support and loyalty programs are all reading from the same song-sheet, a centralized customer master data hub, then the ability to service the same message consistently and coherently is greatly improved. This in turn leads to a greater likelihood of retention.

Here are some interesting statistics in relation to loyalty programs and the customer relationship from Smallbizgenius.net

  • 82% of companies say customer retention is cheaper than acquisition.
  • 75% of consumers say they prefer brands that offer rewards.
  • 56% of customers stay loyal to brands that “get them”
  • 58% of companies use personalization to retain customers 
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Customer data and business goodwill

brown wooden blocks on white surface

The accounting profession has long held a balance sheet item called “goodwill” but what is it exactly – it may even be something you have never heard of yourself?

In accounting, “goodwill” is classified on a balance sheet as an intangible asset.
 
This asset arises when an existing business is acquired and the market value of the inventory, plant and equipment and other assets is less than the value paid for the business.
 
So, “goodwill” on the balance sheet represents assets that are not separately identifiable.
 
Per a nice description in Wikipedia – technically, it is not “identifiable assets that are capable of being separated or divided from the entity and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract, identifiable asset, or liability”.
 
Many readers might be familiar with the concept of asset-strippers or corporate-raiders. These are typically investors that buy companies for their assets and not for the goodwill. They’ll then systematically liquid parts or assets within the company they acquire because the sum of the market value of the assets is greater than the balance sheet value. You could argue that there is negative goodwill in such organizations because the value of the business is greater when liquidated than running it as a unified going concern. 
 
Goodwill also does not include contractual or other legal rights regardless of whether those are transferable or separable from the entity or other rights and obligations. Per accounting standards, goodwill is evaluated periodically for any possible impairment in value.

 

Private companies in the US for example, may elect to expense a portion of the goodwill periodically on a straight-line basis over a ten-year period or less, reducing the asset’s recorded value. This charge is called an amortization expense.[1]

Goodwill is the only asset that competition cannot undersell or destroy.” – Marshall Field, Founder Marshal Field and Company

So why, do we care about goodwill? Well, just like branding , goodwill represents the reputation and the respect that your company or organization has within its audience. Similarly, your customer master represents a piece of your goodwill whether you explicitly account for that or not.

In the textbook “Introduction to Business” – authors Gitman, Daniel and Shah et al describe an aspect of business related to using Public Relations to build Goodwill.

“Like sales promotion, public relations can be a vital part of the promotional mix. Public relations is any communication or activity designed to win goodwill or prestige for a company or person.”

Let’s unpack that concept of “publicity”. In this context, this is any information about the company or product that appears in the news or is not directly paid for by the company.

They say, that “there’s no such thing as ‘bad’ publicity”. So that means that publicity can can be good or bad but ultimately it is all about building awareness.

But Public Relations (PR) also includes many other kinds of activities, such as lobbying, event planning, press agency, corporate or internal communication, crisis management for communications, creating product awareness and dealing with investor communication.

At the center of all of this communication has to be an understanding of the brand itself but also an understanding of the different channels of communication. Who you want to communicate with and what you want to communicate and why.

So why does all of this matter?

Unlike PR, advertising distinguishes itself by being purchased or paid media.  They’re commonly confused for one another particularly when you see or hear “paid promotions”. Advertising also tends to be a monologue whereas PR is ideally a dialog – two way communication, wherein the company listens and responds to the questions or comments or challenges pose by the public at large.

Advertising is done principally to promote products or services, with the objective of inducement to buy.

Part of the challenge with building goodwill is understanding who decides what your business goodwill looks like. Often the decision to establish goodwill on the balance sheet only happens when the business is sold but it can also happen when you acquire another entity and combine it with yours. If you considered selling your business, you would likely struggle to be able to argue that the customer master database has a value with an accountant, though an investor might see it otherwise.

Per a piece in the CPA Journal, by  Virginia Collins, CPA/CITP, CFE and Joel Lanz, CPA/CGMA/CITP/CFF, CISM, CISSP, CFE – CPAs have a special appreciation for the strategic use of data.

Accountants after all, use data to do their work. Without data their work is less useful and potentially unreliable. Master Data in particular, holds characteristics akin to those of financially reportable assets because it likely yields some future economic benefit to the business. Similarly, bad or wrong data or data that shouldn’t be held, represents some sort of risk to the business if it is used inappropriately or results in negative outcomes when decisions are based on it.

Most businesses have processes and procedures in place to manage physical assets or any other assets that appear on their current financial statements.

However, because data is an intangible asset that is not recognized as an asset by modern accounting standards, it is often not managed as an asset, it isn’t even managed the way perceived value of the brand (goodwill) is managed.

Accountants in general agree, that there is no good reason not to measure and manage data as the asset it is, particularly customer master data, even if you’re not accounting for it on the balance sheet.

Whether you use it to improve communications, either through public relations or advertising or whether you use it at the point in time when you transact with the customer or start a new customer outreach campaign or even just a conversation. The consensus seems to be that organizations should begin managing data, and customer master data in particular, as well as any information derived from it, just as if it were a real set of business assets as if it were shown on the financial statements.

Pretectum believes that the best way to manage your customer master data assets is with a centralized master data management platform like the Pretectum cloud-based C-MDM.