The Intersection of Revenue Management and Digital Marketing Analytics

By Michael Klein, Executive Director of Revenue Optimization, MGM Resorts International — member of HSMAI’s Revenue Management Advisory Board

Hoteliers are under increasing pressure to extract knowledge and insights from vast amounts of data in order to enhance business strategies and optimize the customer experience. It’s not news that the better the collaboration between marketing and revenue management, the more profitable and successful the enterprise.

But what does this really mean when it comes to data and analytics? I tried to answer that question during a session I co-presented with Hospitality Digital Marketing’s Loren Gray, CHDM, at HSMAI’s 2018 Digital Marketing Strategy Conference last month. Here’s an overview:

1. How we got here. Digital marketing has existed for about 20 years now, since websites became an integral part of the consumer landscape. In those 20 years, revenue optimization and digital marketing largely existed in silos, as two separate departments with their own agendas, goals, and KPIs. But industry consolidation and increasingly sophisticated technology have combined to bring our two disciplines closer together, moving us from reporting and into true analytics — that is, from simply summarizing information and monitoring performance to collecting and de-aggregating data, extracting meaningful insights, and truly understanding our business.

2. Building a successful framework. Today, revenue-optimization and digital-marketing professionals have made real progress toward functioning as a cohesive unit. To support that goal of creating what I call a profit-optimization team, here are seven steps:

  • Collaboration: This means working together, across every department involved with profit optimization — as well as establishing a committee to govern the next steps of the framework.
  • Common vernacular: Every department has not just its own terminology — does customer segmentation really mean the same thing as marketing segmentation? — but its own KPIs and its own goals. Making sure that everyone on the team is speaking the same language is the most important part of this framework.
  • Integrity in data: We need to identify the data we want to have, and make sure that it’s accurate, consistent, and represents the KPIs we created in the previous step.
  • Transparency: This follows naturally from integrity. Transparency means being upfront with our team about the data we have, the data we don’t have, and the data we want to have in the future.
  • Build trust: Now it’s time to get buy-in from our stakeholders, showing them that this is a holistic process designed to benefit the entire organization, not just one department.
  • Enable business decisions: With our analytics model and cross-departmental KPIs in place, we’re set up to make actionable business decisions. The key is to combine data from numerous sources — internal and third party — for a complete enterprise-wide picture.
  • Continuous improvement: Plan on running this framework at least once a year. We need to constantly ask ourselves and each other: What did we learn? How can we improve next time around?

3. The future. How do we push the relationship between revenue optimization and digital marketing even further in the next five to 10 years? By focusing on true personalization. Channel profitability — how much we are making in revenue (both room and ancillary) less our acquisition and processing costs — only takes you so far, categorizing guests in segments that can be limiting and ultimately inaccurate.

The solution will be to build advanced analytics via machine learning right into the booking engine, which will lead to conversation optimization through true customer personalization. This will require a significant investment in technology, built in house or with a third party, but it ultimately will lead to higher margins and a positive long-term value proposition to the operator. This investment will also lead to a fully integrated revenue and digital marketing team.

We’ll be discussing how to align revenue management and digital analytics — plus other topics such as driving profit throughout the customer journey and serving as the voice of revenue leadership in your organization — at HSMAI’s 2018 Revenue Optimization Conference in Houston on June 19–20.

Categories: Revenue Management, Forecast
Insight Type: