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Better Customer Satisfaction = Better Profitability

If I am honest, a year ago I was an un-believer.  I was a doubter.  I genuinely did not believe that what customers said about you on review sites could impact pricing.  I was wrong.  I felt that positive or negative reviews may slightly impact your brand image but not pricing.  This however is not the case – customer perception & customer satisfaction directly impact revenue – let me explain…

Let’s say that within your competitive set, the average TripAdvisor score is 4.  How would your business be affected if your score was 3 or 5? I would take a guess and say that it would be VERY affected.

And it is not just about TripAdvisor of course, as hoteliers we need to look at every part of our customers experience and we need to listen to what customers are telling us.  After all, a good customer experience drives loyalty up and a bad customer experience drives loyalty down.

It is a well documented fact (by the clever people who monitor statistics and customer behaviour) that the hotel industry as well as the internet provider industry have the most to either gain or loose from a change in customer perception of our product.

If we look at our own industry, from a buying perspective, customers know that if a hotel has a lower than average customer satisfaction score, they can easily switch provider.  It is not like having the hassle that is involved when you might for example switch bank or electricity company if one of those providers let you down. Changing loyalty from one hotel to another is simple and there is no ‘switch cost’.  Customers have a choice of where to stay and those choices are many and varied, so as hoteliers we need to fight really hard to ensure that this ‘switch’ doesn’t happen.

If you can improve your customer satisfaction score to ‘above average’ you can gain revenue in 3 ways:

  1. Incremental revenue from existing customers – customers will tend to stay longer, spend more in your bars and outlets, treat themselves to an upgrade and  will definitely pay higher rates
  2. Retained revenue from reduced ‘churn’ – we all know that it costs less to service an existing customer than it costs to gain a new customer – think of all the e:shots, Google PPC, Facebook promoted posts and offline advertising we have to do to gain new customers
  3. New revenue from new sales – customers that see you as having a higher than average guest satisfaction score will be more likely to chose your product over a competitor with a lower score. There is definitely an opportunity to take business from your competitor and to increase market share.

What we have to understand (and this is fact, again gleaned by those clever people who track statistics) is that customers now put experience above price. This is fantastic news for all of us! So if we get the service right; the product to match our customers needs; staff that are genuinely engaged and enthused in this wonderful industry then we can nail the experience and we can charge more! Oh if life were that simple…Or maybe it is…

So how do we increase customer satisfaction? Well the first thing is to listen.  Listen to what your customers are saying about you.  What are their pain points? What are you getting wrong?  Find the problems and fix them, it actually is that simple. If you have repeated comments about a bad check-in experience, train your team.  If you have feedback that your breakfast offering is poor, speak to your chef and fix it.  If your beds are uncomfortable, the rooms are too hot or too cold, the decor is shabby – fix these things.

Give your customer the experience that they deserve. If you do your guest satisfaction goes up and your guests pay more and more revenue is added straight to your bottom line.  If you don’t, then trust me, making that switch for a customer is easy and it will be your competitor making money, not you.

(and for all things revenue, just ask@rightrevenue.wpengine.com)