The Link Between Loyal Customers, RGI and Market Share

Revenue Generated Index is the key performance measure used by hotel companies to track changes in market share relative to competitors. But equally important is to understand the key drivers of RGI, those underlying metrics that can be used by functions such as marketing, sales, and revenue management to measure their impact on RGI.

For customer marketing, one such metric is share-of-wallet, the percentage of a customer’s spend at one company’s hotels relative to all spend at all major hotel brands. Every marketing group would like to know which of their customers are spending a significant share of their nights with competitors because that represents opportunity for growth. In an ideal state, a company could know the share of each customer, show how changes in share at the customer level factor into changes in RGI at the hotel or brand level, and identify which are low-share customers it needs to win vs. high-share customers it needs to retain.

Unfortunately, it is problematic to measure and track share-of-wallet at the customer level, and even harder to link it to RGI performance. Companies typically try to estimate customer share-of-wallet through surveys or third-party data partners. Both of these methods can offer a degree of insight, but both also give biased and incomplete views of share-of-wallet at the customer level. And they are even less accurate when aggregated to the hotel or brand level.

First, in the case of surveys and focus groups, researchers can calculate share-of-wallet at an individual level for those customers who are willing to complete a survey, but customers who choose to respond to surveys are rarely representative of the broader customer base. So this approach can give some indication whether share is changing for some types of customers, but is not helpful when trying to determine which individuals are likely to be loyal to you vs. your competitors.

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