Hospitality CRM: Past, Present and Future

June 2, 2021

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Jason Q. Freed

Much of the hotel technology stack functionality – property management, revenue management, distribution – has evolved over decades into what it is today. Even online distribution, which didn’t surface until after the turn of the century when guests first started booking their trips online – has been decades in the making.

Comparatively, hospitality Customer Relationship Management is a relatively new discipline. CRM has evolved from building websites and managing early digital marketing performance into the effective personalized marketing machine that it is today.

Since its inception, Bob Magliozzi has seen the evolution of hotel CRM firsthand. Around 2004, he was part of an innovative team that introduced the idea of using data to manage guest relationships. Since then, he’s been part of companies that were almost solely responsible for educating the industry on the benefits of using guest data to improve marketing and conversion. He’s witnessed the advancement of APIs, which allow developers to share guest data throughout other parts of the hotel stack, increasing its effectiveness.

Recently, Magliozzi joined Hapi as an advisor to help the company build the connectivity layer of hospitality systems to Salesforce, the world leader in Customer Relationship Management. We caught up with Magliozzi to get his take on how hotels are using guest data most effectively today and how a digital transformation could power how hotels connect with guests in the future.

Q: What do you remember about your first experiences with hotel CRM?

Magliozzi: Early on, it was simply the concept of helping segment audiences. We configured rules that looked at likenesses in the data so we were able to build smaller groups and send more targeted communication. For example, we built rules for content – if we knew a guest enjoyed golfing, we’d put a golf photo in the email we sent, or a spa image if they had booked spa appointments in the past. We did things like writing “Dear First Name” in our email communications or we’d say “Welcome Back” if you were a repeat customer.

Almost immediately we realized the importance of connecting CRM systems to the hotel PMS. Back then, interfacing solutions was a bit of a challenge. Selling interfaces was even more difficult because the buyer couldn’t actually see them. We were always trying to find ways to make interfaces more visually appealing. APIs were not a standard, so we had to utilize other methods like read-only direct database connections, picking up batch files daily and hourly, and even screen-scraping. And, there was always some form of data mapping.

Q: Are open APIs and simpler integrations paving the way?

Magliozzi: It’s better than it was. In many cases, integration ‘hubs’ are reducing integration costs and creating efficiencies. But suppliers are still experts in their specific product and not always experts in using the data from their product to power other systems. Hapi is improving that as much as possible by providing a completely open API structure for all vendors.

How have hoteliers and guests adopted CRM technology over time?

Magliozzi: Hotels today have a better understanding of what to do with the data. They know guest intelligence is important and understand that it can be used to improve engagement and conversion, and that you can target your messaging based on everything you know about the guest. 

The industry has gotten much better at the concept of look-alike modeling. For example, ‘my best customers behave this way and have these demographics and lifestyle attributes, let’s find more guests that look like them.’ Digital marketing technology has improved dramatically and today hotels are using cookie profiles to serve up display ads to similar guests. It’s a more scientific process as well – hotels aren’t wasting money ‘spraying and praying’ to find the right customers. When advertising, only consumers that fit the most logical criteria – ones that are similar to the hotel’s best guest profile – are targeted. They’re leveraging data to be more efficient and effective – spending less, driving more of the right traffic, and creating better ROI.

Q: Do you think customers today are more comfortable sharing their data?

Magliozzi: I actually think most consumers, specifically travelers, want their experiences and their engagement as personalized as possible, so they are more comfortable sharing their data. Some consumers do get hung up over privacy concerns but it’s a bit less than you might think. In the end, it minimizes spam and unwanted communication and it helps travelers build a relationship with their preferred brands. Travelers want to feel important and CRM and more integrated systems give us the data to do that. 

When used properly, guest data not only allows hotels to increase marketing conversion, it paves the way for an improved guest experience because the data can be served up and made accessible in real time to staff and guests, allowing hotels to provide surprise and delight moments and unique experiences while the guest is on property.

Q: What are the benefits and challenges to personalized marketing today?

Magliozzi: For hotels to implement and execute on the right strategies and understand what works and what doesn’t, they need more data and the right CRM platform. Many of the existing solutions are falling short – they’re either not sophisticated enough or their existing functionality doesn’t work well enough. 

The ideal CRM solution should have the known, successful strategies that work in all hotels built-in so hoteliers don’t have to figure it out. There should also be flexibility in rules configuration to allow hotels to customize and automate their own strategies in addition to what comes “out of the box.” Many existing solutions force users to have to do too much to make the system work for them. There should be much more intelligence and automation available. Basic functions like transactional emails – new reservation confirmation, changed reservation, cancellation, pre-arrival, ‘thank you’ at check-out – every hotel needs these to run a certain way. Every hotel should be using some form of a 7, 14, 30-day bounceback offer. If the guest booked through an OTA, there is specific messaging you can send to drive the guest to a direct booking next time. Anniversary and sleeper campaigns, birthdays and more – these campaigns are basic, fundamental, automated campaigns that every hotel should have out of the box.

And, to take it to the next level, there are personalization and dynamic content rules. Your CRM should have the ability to layer rules into your campaigns that speak directly to that individual, sending the right message to the right guest at the right time via their preferred channel. The more targeted and personal the messaging, the higher the conversion rate and ROI. 

Where do you see CRM and personalization headed in the future?

Magliozzi: Early on, hoteliers focused on email only, and SMS/text and digital marketing were separate. Now they’re able to leverage complete omni-channel marketing platforms that unify all channels and consumer interactions. This is really the holy grail for hotels and all businesses: one solution to manage every aspect of consumer intelligence and marketing. 

The next level for hotels is capturing more data from more sources, and that’s all about having a strong middleware and systems integration strategy. The goal is to connect all systems that capture any data about your guests and combine that with staff or housekeeping, revenue management, and other systems to form the most complete picture. Strong, flexible BI and Analytics tools are also key to provide a more complete understanding of guest behavior and sentiment, how your staff are responding, and identify key insights to create revenue opportunities and reduce costs.

I believe hoteliers are recognizing how important CRM, data management and middleware/systems integration tools are to the success of their business. I believe the industry will see a much wider adoption of Salesforce CRM and Marketing Cloud based on the fact that all of the capabilities mentioned earlier exist in Salesforce and have for quite some time. Hapi has been focused on improving systems connectivity for hotels and on providing deep connectivity to Salesforce so hotels can leverage the best technology available to engage guests and manage their business.

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