As a hotel manager, you’ll already know that attracting new customers is a costly business. With the cost of sales increasing all the time as a result of high commissions paid to OTAs and independent booking sites, to make money, now more than ever, you need your customers to return time after time.
The fact is, in almost every business you care to think of, winning a new customer is costly, and time consuming: to secure a new room booking from a new customer likely requires lots of re-marketing, a discounted rate (to get them through the door), and perhaps even an up-sell (carrot) that you know will appeal to their senses.
Yes, we all need new customers but the real key to success for your business is in turning these new customers into loyal customers who will return to stay with you, rather than one of your competitors, time after time.
To help you identify the best ways to prevent customer churn and increase customer retention, we look at the three key areas of revenue, cost, and marketing.
Revenue
#1: Use lifetime customer value as a metric
Very often hotels look at customers solely on the basis of what they spend during the course of their stay. So, by way of example, in the case of a customer who stays one night and spends €150, the tendency could be to value this customer purely on the basis of this spend.
However, this way of thinking is extremely short-sighted because what if this customer were to become a regular/repeat customer, staying three to four times a year every year, for the next 10 years? By looking at the potential lifetime value of a customer to your business, rather than seeing them purely in a once-off context, their potential value to the business becomes a lot more significant.
#2: Repeat business & churn rate
How many of your customers will stay with you once, but never return, or conversely, how many are regular/repeat customers?
Calculating this data will be very revealing for your business: if you have a high churn rate then you need to survey your guests in order to establish to what extent customer service was a factor. Because once you know the reasons why your guests are not returning, you can fix the problem and entice them back over time.
