Ask most digital marketers, and they will nearly always recommend that a hotel invests 75% of marketing funds in digital. A Boston University report shows that in reality, 25-30% of marketing budgets (not limited to hospitality) are in digital marketing with some inching toward 50%. Online bookings are approximately 55% of total bookings, and while web presence does drive a portion of offline bookings, the steep recommendations are often out of line with the reality of where hotels and vacation rentals need to invest their funds. Major marketing considerations around technology, reservations and sales training, and loyalty programs are marginalized when digital marketing becomes the main agenda.
As you sit down to map out budgets for 2016, here are five fresh approaches that shake up the sales and marketing budget planning process to meet organization goals—goals that aren’t neatly categorized as digital versus non-digital—and generate more revenue next year.
Goodbye, Digital Marketing Budget. Hello Profit-Based Strategy
First and foremost, the days of talking about the budget regarding digital vs. traditional marketing are behind us. Digital marketing is a tactic to achieve a higher goal, namely profits. Profit-based sales and marketing budgets consider the anticipated NetRevPar of a strategy, which ensures the cost of the outreach, including commissions, ad spend, and supporting technology, are deducted from the projected revenue. The goals of a profit-based strategy are to put resources behind projects that will show demonstrable revenue and add future value for loyalty generating campaigns. A profit-based strategy/budget will be organized around revenue-centered ROI, as opposed to brand-centered or volume-centered ROI.
Complicated Does Not Create Profit
John Ruskin once said, “It is far more difficult to be simple than complicated,” and nowhere is this more relevant than in hospitality budget planning. Simplify not only the budget but also the documentation that supports it. Brilliant strategies can easily be stifled by overly complicated Excel spreadsheets. Ensure that the sales and marketing budget is generalized enough to give staff the opportunity to map out tactics throughout the year. This makes space for creativity and creativity can lead to some unexpected and profitable results.
Consider Staff: Investments and Expenses
Profitability is directly tied to the people who execute campaigns and generate bookings. Training reservations agents is an investment in increasing revenue—both through increased conversions as well as opportunities to book longer stays or create ancillary revenue opportunities. Further to this, the one-to-one contact with guests creates relationships and loyalty on a level that a website cannot.
Equally important is staff efficiency. Often during periods of growth and high revenues, efficiency is overlooked; however, the economy of time in a personnel-heavy industry has a substantial impact on profitability. One of the first steps toward maximizing performance is to automate wherever guest service standards can still be maintained. For instance, NAVIS Reach is designed to both automate and personalize guest service by relying on gathered guest data for a year-round automated email program that drives profit pre, during, and post-stay.
Singing the Same Song: Align Goals
Ensure strategies align with the organization’s goals for 2016, whether those are guest service oriented, loyalty driven, efficiencies, or expansion. Does each and every tactic support improvements in guest service? Are there proportionally enough strategies around generating lucrative repeat business and creating guest experiences from the very first touch point that will bring guests back? What technologies, advisors, mentors, or consultants are included in the budget to ensure all of these items are supported?
The Past Should Inform, Not Decide, the Future
Third-party consolidations have become the norm. The growth of Expedia, especially in light of the announcement that it will purchase HomeAway is a concern for both hotels and vacation rentals balancing commissions against the online presence OTA’s can offer. Simultaneously, travelers are changing, too. According to PhocusWright, last year 1 in 4 travelers stayed in private accommodations. This evolving landscape requires that accommodations suppliers study their own guest data carefully for budget allocations and to determine which efforts drove the most conversions and highest profits. Then this information must be considered in the context of travel industry predictions to strategize how to capture market share in spite of, or because of, enormous shifts.
New opportunities will arise, and sometimes the ability to profit from a market segment will be lost. Using nimble approaches to budgeting and investing in core staff in ways that allow them to shift with ease to the changes—all with an eye toward profitability—will produce desirable results.
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