Platform Thinking: A Powerful Approach to Upselling
Platform thinking has fundamentally changed consumer experience across every industry.
NB: This is an article from Jason G. Bryant, Founder, CEO & Chairman of the Board at Nor1
According to Vox, Uber conducted research in global markets to measure how long consumers were willing to wait for a ride. Over twelve months, consumer patience with waiting decreased by 30%. Uber, a platform company, requires a complex data set “interwoven” with an AI algorithm to deliver the nearest car in the shortest amount of time. Delivering on technology and experience at this elevated level changes the “way all industries are expected to work.” Hotels are no exception.
For hotels, delivering on changing guest expectations requires more than one single platform. Hotels have long conflated the idea of a platform with one central system that underpins the operation, most notably the PMS. From there, most properties have stitched products together to solve other business needs. Many PMSs have attempted to integrate some of these product pieces into the platform (i.e., guest texting apps, mobile check-in, housekeeping turnover, and so forth). However, to meet evolving guest expectations, hotels must take a platform strategy instead of purchasing products piecemeal. For instance, upselling tools have long been sold as either a product that can be purchased for a specific phase of the guest lifecycle, most often during the online booking phase, or a service in which staff is trained to anticipate guest preferences and coached on delivery. This disjointed approach creates inconsistencies in offer presentation and pricing, with no way to link data or performance, or strategy. However, creating an upselling platform strategy generates a consistent and reliable approach to generating conversions and revenue from the very first point of contact and throughout the stay.
Clarity Around Platforms
The term platform has achieved some amount of ubiquity in the last decade, with the rise of B2C, platform-driven companies like Airbnb. Harvard Business Review recently defined a platform saying, “Products produce a single revenue stream, while platforms—which we define as intermediaries that connect two or more distinct groups of users and enable their direct interaction—can generate many.” In this case, a platform serves as a foundation that allows a variety of services to reach a diversity of users. Examples include Uber, which connects those who need a ride with those who can provide one, Amazon, which connects sellers with consumers, or the iPhone marketplace, which gives users access to a wide array of apps.
That said, successful platform thinking doesn’t require creating a platform or owning it. As Accenture reports, “Having a platform strategy and the business know-how to exploit it is more important than ‘owning’ the ecosystem.” Accenture cites medical equipment maker Philips Healthcare, which has created a platform business model using three different cloud partners (Salesforce, Amazon AWS IoT, and Alibaba AliCloud), all with the intent of “unleashing Philips’ market opportunities, from patient management to data collection to consumer and home devices.”
Hotels can create a similar platform strategy by looking beyond technology products that solve a particular problem at a specific point in the guest lifecycle, and instead, identify platforms that address a need holistically. Some will be operational, while other guest-facing technologies should aim to resolve a problem (or create an opportunity) across the entire guest journey. For instance, a communications platform may allow guests to connect with the property via a variety of means, including text, chat, or direct messaging. CRM platforms have evolved to enable hotels to track guest preferences and communicate with them from pre- to post-stay and via email, text, and voice. An upselling platform serves as a valuable extension of these other strategies that underpin a coherent guest experience, driven by data.
A Platform Strategy for Upselling
Data powered by artificial intelligence (AI) is the basis of a comprehensive upselling platform. In some sense, a system such as that powered by Nor1’s Prime is both an intelligence platform and a merchandising platform. As a merchandising platform, Prime stores millions of data points generated by guest interactions with upsell offers. As an intelligence platform, Prime drives the selection, pricing, and presentation of offers to individual guests. With an AI-driven platform, guests receive upgrades and ancillary offers tailored to their specific preferences. Further—and perhaps most notable about adopting a comprehensive solution—the selection, pricing, and presentation use real-time intelligence, evolving as the guest does, or does not accept offers. This dramatically increases the chances that the guest will eventually opt-in to one or more offers over the course of the guest journey.
Prime functions similarly to the system Airbnb has created, “an ‘ecosystem’ of algorithms that predict the likelihood a host will accept a guest’s request for booking, and that a guest will rate a trip or experience highly” (VentureBeat). These, in tandem, increase the likelihood the guest will have an experience that will generate loyalty to Airbnb. Similarly, when implemented as a platform across the guest journey, Prime selects offers for pre-arrival (from booking to 24 hours before arrival), for check-in (available for both front-desk agents and mobile check-in), as well as while on-property (ancillary offers) and future stay offers at checkout and post-checkout.
With a platform approach to upselling, hotels are relying on consistent AI-generated data at all points of contact with the guest. When hotels select only one point of contact to rely on data for upselling (i.e., a product approach versus a platform approach), the systems inevitably rely on different data about the guest, which disrupts the overall guest experience. Say, for instance, you use the upselling technology for online booking, but the front desk relies on PMS data alone. The PMS will undoubtedly house fewer data about the guest than an AI-powered system, and it won’t tell the front desk that the guest was already offered a junior suite and declined it. Naturally, the savvy approach would be to re-tailor the offer, give the guest something that hasn’t already been presented. However, the front desk isn’t equipped to do this and, therefore, is likely to repeat the offer unnecessarily—or, worse, to the guest’s consternation.
Airbnb reported over $1 billion in revenue in the 2nd quarter of 2019, the second time the company has hit these impressive numbers in just one quarter (Reuters). It’s another sign of the times when a platform company outperforms a traditional product-oriented brand, such as Marriott, which netted $952 million in the same quarter (Marriott). Airbnb is, after all, at its core, a technology platform focused on the valuable work of connecting travelers with the ideal place to stay in virtually any location in the world.
The 2016 book Platform Revolution defines a platform as a business model that “uses technology to connect people, organizations, and resources in an interactive ecosystem in which amazing amounts of value can be created and exchanged” (HospitalityNet). A platform approach to technology creates consistent communication between hotels and guests. Further, it bolsters the guest experience in innumerable ways when AI-powered data is used to create value and true personalization for the broadest range of guests by assessing what the guest is willing to pay for a better stay and refining the opportunities across the journey.