CRM: The answer to survival is right under your nose.
I was too busy propping the bar up in the name of operational excellence to have watched Friends during its 90’s and noughties heyday, but even I’m aware of the emotional rollercoaster underpinning each character’s quest to find the perfect partner.
And nearly 20 years after its finale I don’t think I’m spoiling anything by remembering that the answer was right under the nose of at least 60% of the gang – Monica fell for Chandler and Rachel fell for Ross.
And this got me thinking about how we approach marketing in our industry. Turning to a never-ending stream of shiny new technologies in the hope of discovering an unlimited supply of silver bullets, when the answer to truly effective marketing with a provable ROI has been right under our noses all along – our customer database.
At this point there’s a good chance you’re settling in for a pleasant read, safe in the knowledge that you’ve done the work – you’ve got yourself a gleaming CRM and have been chucking names and email addresses into it with happy abandon for months or even years. It’s only a matter of time before that bad boy starts making you an absolute ton of money right?
Your CRM is not a 3D printer, churning out hungry & thirsty people clutching fist fulls of £20 notes whenever you need them. Your CRM is an incredible machine, (especially if you’ve signed up with Airship!) but like all machines, its output depends entirely on what you put in.
If fuel powers an actual machine, it’s data which powers your CRM – specifically Proof of Presence data. We want data which proves someone was in your building or have bought something on your website. Social and other ‘vanity’ data might give everyone at HQ a warm fuzzy glow but it’s not going to help you here.
So what makes good data other than proving presence? We live in the era of personalisation so anything that can help us tailor our messaging is worth capturing and holding onto. You’ll need a good spread of demo and geographic (name, age, gender, location), behavioural (recency, frequency, visit times, product preferences, spending habits) and psychographic (the data which captures the ‘why’ behind the behaviour such as identity, mindset, environmental consciousness etc etc) – and for as many people as possible.
If a machine needs materials to work with, your CRM needs content. And we’re not talking the content you feel very pleased with, which beautifully articulates how great your brand is and why someone should choose YOU. We’re looking for the kind of content which takes your overarching messaging and transforms it into something more relevant for the recipient.
So let’s say your overarching messaging is around your new menu. We want content which not only enables us to deliver the parts of the new menu messaging most relevant to the reader (for e.g. highlighting the vegan dishes to those who have bought vegan products before), but really drill down to the reason behind that behaviour (care around the environment, animal welfare or even health or allergies).
As a regular viewer of BBC’s ‘Inside the Factory’ I can attest to each machine knowing exactly what it’s there to make – and your CRM is no different. Sending an untargeted, un-personalised email out with the hope that it will ‘drive some significant sales’ is a bit like studying for 20 minutes and expecting a first – it happens to the gifted, but even then, not very often.
You need to know how your database is made up (in terms of your key groups and their value) for you to know the action you are trying to drive. 30% of your base lapsed? That’s going to lead to a different approach and expectation of result to an email you send out to the group who were in for lunch yesterday. Segmenting your base and being realistic about the actions you hope to drive enables you to build a strategy and see the results of your efforts far more clearly.
In every episode of ‘Inside the Factory, we see that even the smartest of machines have a manual operator who maintains the quality and consistency of output, feeds in the appropriate materials or fuel and quickly makes tweaks when production starts to go a bit awry – your CRM is no different.
Effective email marketing is almost a full-time job when done right – but the return should speak for itself.
So, as the impact of recession looms ever closer, the key to survival (and even prosperity) for most hospitality businesses will be found in your database. It’s time to shore up your relationship with your key groups and give them compelling reasons to stay right by your side as they become increasingly careful about where they spend their cash.
Whether in matters of love or liquidity, the answer is often to be found right under your nose.
Drop us a line to find out about our segmented and personalised managed CRM service.
In 1994 Edwina Dunn and Clive Humby, the owners of a business they had set up just 4 years earlier, were invited to present to Tesco – who were thinking of starting a loyalty scheme.
At the end of the presentation followed a long and awkward silence, before Tesco’s then chairman, Lord MacLaurin, famously remarked. “What scares me about this is that you know more about my customers after three months than I know after 30 years.”
The software and pioneering data-led approach Dunn and Humby demonstrated that day enabled Tesco to double its market share in little more than a year and completely transformed the way the country shopped.
It’s been 26 years since Clive and Edwina used their expertise to help Tesco launch the Clubcard, nearly 20 since Nectar launched, 23 years since Boots launched its data collection tool, Advantage – and even new kids on the block Netflix and Spotify have put collecting and using data at the heart of their business model since their founding in 1997 and 1996 respectively.
Supermarkets and other retailers take data collection extremely seriously, and as a result know how often you visit, how long you linger, the journey you’ll make around the store, your pricing sensitivities, which brands and products you’re loyal to and which you could be turned by, your life stage, your insecurities, and your aspirations.
Netflix and Spotify, who harvest data from that first ‘free trial’ sign-up, are constantly using the data they gather to segment and push you along a sales funnel so seamlessly, it sometimes feels like they know you better than you know yourself. They even know at what point you’re likely to cancel your subscription and can take relevant action to avoid that too.
And thriving high-street retailers such as H&M, McDonalds, Zara and Nike make data collection and its deployment a foundation of their marketing, commercial and operational strategies.
All these businesses collect meaningful data at every turn, and most importantly they know how to use it to drive short-term sales, long-term customer retention and unrivalled loyalty.
So given the challenges we were facing long before Covid took us in its grasp and the highly uncertain future ahead, it seems odd that hospitality remains one of the only customer-facing sectors still believing we can know our customers, their behaviours, mindsets and motivations well enough to drive optimum sales and build genuine business resilience through anecdotal evidence alone – and often just by looking at a handful of them whenever we visit a site.
I’ve written before about the significant but rarely acknowledged evolution hospitality has been through even in the last 10 or 20 years, the era of personalisation we now live in, and how the average leadership team is light years away from Generation Z – the digitally native and increasingly demanding 18-25 year olds who account for over 40% of the market today (and is a group literally growing by the day.)
And i’ve hammered home the startling new reality that exists – the brands who don’t know their customers in intimate detail (particularly those who represent the most value to them) will lose them to the brands who do.
Because the survival of both the majority of operators and our industry as a whole will depend on our ability to understand and influence prospective and existing customer’s behaviour and mindsets – both online by thinking like an eCommerce business and in-venue by responding to previous or likely behaviour long before they step over the threshold.
It’s clear that to be a customer business in 2021 and beyond, you must become a data business.
So why do we find it so hard as an industry to embrace the use of data?
It’s fair to say that the typical hospitality business is somewhat unique in the challenges which arise from its blend of in-person, emotionally charged, often instantaneous proposition – after all, Zara, Netflix and Tesco have never been held accountable for the success or failure of someone’s 21st birthday, a spontaneous and desperately needed wind-down after a tough day at the office – or more tragically the death of a loved one who had simply eaten the wrong food.
It’s also true that as an industry, we’re still miles away from taking marketing seriously at all, let alone constructing our businesses around it.
And if you speak to anyone in hospitality it’s hard to imagine how data could exude the same passion, sense of vocation and sheer grit as many of us have at our core.
But that’s the huge opportunity we have to grasp – because while Sainsbury’s, Nike or Netflix have the data and the incredible insights it brings, they don’t have the same ability to execute it with the absolute heart that sits at hospitalities’ centre.
And so we must embrace meaningful data collection whole-heartedly – because data which tells us how to attract customers who will represent the most value to us, convert existing customers to spend more money and retain them for as long as possible – brought to life with the passion, empathy and creativity this industry is known for would be a very powerful force indeed.
It’s fascinating watching the evolution of a hospitality business. Site one, two and three take off – it’s time to get some financial expertise in. Site four onwards sees heavyweight HR and operational support drafted in. By site ten, there might even be a commercial director.
Somewhere between site four and never, the search begins for a marketer – although no one involved in the process seems to know why they need one or can articulate the value they will bring to the business (other than bringing the operations team’s ideas to life). So they hire someone junior and give them a budget of nothing to work wonders with. Of course, this does not work, so the marketer is exited and everyone agrees that marketing is just a cost this business cannot afford.
Years go by, and eventually the business (and then often only because the investors have made noises about marketing), makes a big hire. By this time, the culture of the business is firmly established, and while the marketer’s role is described as being strategic in the job description, it becomes clear it’s rather more about actioning operations’ requests and cheerfully trying to stay on top of the often-nonsensical whims of the man in charge.
And so marketers become frustrated, knowing they can offer more; marketing becomes increasingly perceived as a cost centre rather than a smart investment, and while the profile of operations, HR and finance rises, marketing does not get a serious seat at the boardroom table.
So let’s rewind and ask ourselves what could have happened had we thought differently about the role of marketing from the start.
The business, which, of course, need operations, HR and finance in place, invests in heavyweight marketing support from the start – even if only part time. Everyone involved is clear on how marketing can significantly increase revenue by driving new customer acquisition, converting existing customers through targeted communications and using what we know about those customers to retain them for longer.
Finance stops talking about marketing as a cost, operations defer to the skills of the marketer rather than just emailing them daily with urgent requests, and HR feels empowered to attract a team that will best bring the brand to life.
Now if you’re a marketer, you might well be thinking, er, sounds great Vic, but how do I do that acquisition, conversion and retention thing? Well how would anyone know how to build communications and campaigns that resonate with the right people at the right time and increase sales and return on investment – intelligence.
Operators have systems and spreadsheets full of it, detailing everything from margin and labour percentages to NPS to sales and cost forecasting.
Finance has P&Ls going back years, while HR has churn models and exit interviews. The big boss himself will have reporting, insight and consultancy coming from every direction.
So what does the marketer, head heavy with the weight of the sales-driving crown, have? Usually nothing more than a pointless colour-coded plan, built on the collective gut instinct of the business – which, if you squint your eyes a bit, looks suspiciously like the previous one (and the one before that).
So, with the long slog of recovery ahead and 40% of your customer base (Generation Z) being an alien concept to most of the leadership team, where does this marketing intelligence come from? Data is the answer.
By organising the “proof of presence” and zero/first-party data sitting in your Wi-Fi, pay-at-table, CRM, feedback and booking platforms, and analysing it to identify and profile your key customer groups and trends, it’s possible to monetise it by turning insight into smart and targeted action – bringing it to life with the innovation, empathy and creativity marketing is so brilliant at.
Marketing can stop being dismissed as the “colouring-in department” by lazy colleagues who have never bothered to find out what marketers are capable of or why every single one of the top 100 brands in the world puts marketing front and centre as a matter of routine – and can rightfully claim its place as the sales-driving, business resilience-building, vital voice of the customer in the boardroom.
Because if you’re not putting your customers at the heart of your marketing now, (100% of respondents in a recent DataHawks survey said they could not confidently say who their most valuable customers were), in this era of personalisation – you’re going to find the next few years almost impossible to navigate. And your survival as a business will become more precarious by the day.
I hate to be the bearer of bad news, but it’s likely that if you have a beautifully colour coded 12-month marketing plan sitting proudly somewhere on your desktop or cloud, you’ve been wasting your time.
According to many ‘leading industry figures’, it might take 2, even 3 years for the hospitality industry to ‘get back to normal’. Well hold on to your seat reader, because I’ve got news – it wasn’t ‘normal’ before Covid – and despite our collective refusal to face facts, it’s clear our customers, brands and familiar trading environment had slipped away from us a very long time ago.
Consider the short but profound recent history of the hospitality industry. The 90’s were all about innovation and choice, with a boom of exciting new brands from grab and go to pubs to high end casual dining. The 00’s brought a shift to online, where websites enabled the customer to decide, almost in real-time, where to spend their cash. Then the birth of social, particularly Instagram in 2010 powered the era of the ‘experience economy’. Customers wanted to eat and drink, but they wanted it with bells on.
But now the ‘millennials’ who drove the ‘experience economy’ are turning 40, and Gen Z are setting the agenda. Like groups before them, they still want to eat, drink and have fun – but this group do not remember a time before Spotify, Netflix and Deliveroo, so like everything else in their lives, they want their eating & drinking experience to be entirely on their own terms. With Gen Z (any human aged roughly between 18 and 25) accounting for 40% of the out of home market, not including the older groups they influence and are part of, this is a group no hospitality brand can afford to lose from their grasp.
And when you add to this the fact we’re going through one of the biggest social, economic and technological shifts in history for allgroups – which has been even further accelerated by the pandemic – how could any of us rustle up an effective long-term plan for that?
Which is why, the yearly process of a board demanding a 12-18 (eighteen!) month marketing plan from their CEO, who in turn demands a colourful excel sheet from their marketing team, thick with key dates, menu launches, vanity social and ‘brand activation’ (which will all be pushed to one side in favour of a relentless campaign of discounting or ad hoc menu changes for many brands anyway) is at best a waste of everyone’s time – and at worst a yearly exercise in burying our heads even deeper in the hospitality sand.
If this approach paid dividends I’d be the first one telling you to crack on, but it doesn’t. So why do we do it? Well, mainly because it’s just what we’ve always done.
History isn’t clear on who first said “insanity is doing the same thing over and over and expecting different results”, but it’s relevance to the modern marketer has never been more keenly felt.
So if not this, what?
Rory Sutherland, advertising and behavioural science legend, tells the story of the ‘waggle dance’ bee.
Every morning 80% of the hives bees head out on a mission to their favourite haunts to collect as much nectar as possible. They’ve done their homework and know exactly where to find the best nectar and keep going back to fill their little nectar pouches with more and more.
But what happens, say, if the bees turn up to their favourite location to find a bunch of greedy cows have ravaged their flower patch? For the bees this could spell disaster, but it doesn’t – because the other 20% of the bees had been on a different kind of mission – to find the next untapped source of the best nectar. And they use their ‘waggle’ to show the rest of the bees exactly where to find it.
So what does the bee’s story tell us about how we should be marketing?
While key dates and menu launches offer us a great content opportunity, they are not the basis of intelligent or effective marketing. In fact, research conducted by Feed it Back in Jan of this year revealed only a tiny fraction of people booking a ‘key date’ meal expect or even want a change of menu. And when you consider the average casual dining brand has a customer visit frequency of less than 3 times a year (according to our findings), you have to conclude that frequent menu changes are a colossal waste of time and money.
Instead, we should be gathering intelligence by getting deep into our data to surface the customer acquisition, conversion and retention opportunities which exist in the here and now, and use the creativity and innovation this sector is known for to EXPLOIT them to maximum effect – while keeping back 20% of our resource to identify and EXPLORE new trends in our data which will drive brand development and business resilience by enabling us to adapt when our nectar starts to run out. Just like our little bees.
You don’t need to be in the hospitality sector to know that it has been decimated by the COVID crisis. With the government’s latest tier policies continuing to keep thousands of restaurants and bars closed, the future of many businesses really does hang in the balance. However, hospitality settings are still permitted within all tiers to provide takeaway services – and with this in mind it seems the moral responsibility of the likes of Deliveroo and Just Eat, who are seeing monumental spikes in demand for their ‘middle-man’ delivery services, to share customer insight data direct with restaurants to give them the best chance of both survival and thriving in 2021.
It is no secret that the likes of Deliveroo take a significant percentage on a sale – up to 35% commission plus VAT in some instances – but with restaurants, including independent ventures, having little choice but to engage with these platforms in order to continue serving their food, it seems a no-brainer that key data captured by these companies should be shared. If the right data were shared with brands, it would give a richer understanding of the profiles and behaviours of their most valuable customers, as well as their wider base, which may now be different given the context of the pandemic. It should be acknowledged that crunching data may not be top of the list of priorities for businesses just clinging on for dear-life, but the time and energy – or a professional bought in – to analyse that rich source of data, if it were shared, could result in a highly effective marketing strategy for 2021 and increased revenue.
Whether the big delivery companies do share this data or not, all hospitality businesses would benefit from recognising that this winter period could be an opportune time to capture data and then assess who their most valuable customers really are. This could be by utilising their own Test & Trace QR code, along side the NHS one, and offering opt ins; taking email addresses when takeaways are ordered, along with recording other key data, such as the time and day of the week of orders; or considering incentives for diners to share their data whether eating in or at home. In my experience of working with hospitality brands, many make assumptions about their customer base and those assumptions – not founded in any fact or statistics – mean they are literally leaving money on the table.
When uninterrupted in-restaurant dining recommences in 2021, with early spring looking the most realistic time for that, all those businesses who’ve survived the COVID crisis will need to thrive in order to make up for the losses endured in the pandemic. If restaurants don’t survive, then the big delivery companies will also begin to struggle for the levels of success and revenue they’ve achieved in this period. In the spirit of supporting our industry as a whole – one they rely on for their existence – I call on these delivery companies to consider sharing data. I am in no doubt that given the circumstances most customers using the various apps and platforms, would opt into the restaurant also having eyes on their data.
This article first appeared in Premier Hospitality
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