Whether it’s adding extra pepperoni on a pizza, choosing add-ons when booking an airline ticket to AI-driven product recommendations in retail e-commerce, consumers are routinely exposed to personalization mechanisms in their shopping experiences. We have become accustomed to control over our purchases. So, what about hotels?
NB: This is an article from Roomdex, one of our Expert Partners
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Customization: Raising the bar for customers and every brand is expected to follow
Personalization isn’t new, but in recent years it has been increasingly valued by customers because the technology drivers have become smarter. Advances in digital and manufacturing tech have significantly increased the possibilities of personalization and companies in a wide variety of industries now offer some form of product customization. Nike for example has been at the forefront of product customization for some time now – actively selling customized products both online and offline. Instead of buying a standard off-the-shelf sneaker, Nike lets buyers choose their own design, color, and add-ons to create exactly the pair they want, 100% tailored by the buyer and according to their tastes.
In fast food, almost everything is customizable. Pizza, by its very nature, was probably one of the earliest to allow customers to take complete creative control when it comes to their order. Pineapple may be controversial for some, but with pizza you can order exactly what you want, made exactly the way you want it – tropical fruit topping and all. A whole host of brands like Chick-fil-A’s and Panera Bread offer a slew of customization options so you can create precisely what you’re craving. Subway only has 37 million possible sandwich variations – all the different breads, fillings and sauces make an almost unique sandwich possible for everyone, all while remaining fast food.
For nearly a decade, airlines (low-cost carriers in particular) have mastered the art of allowing the customer to create and decide what their ticket should include – baggage fees, travel insurance, speedy boarding, onboard meals or seat selection. And then, on the other end of the spectrum, even high-end brands such as Burberry and Gucci offer clients the ability to apply different designs on jackets or create custom prints on luggage.
But why does this all matter? Because exposure to such extreme personalization has completely altered customer expectations and the way we shop. Having only a few standard options isn’t enough to satisfy many customers now. We’ve become accustomed to extreme personalization. 62% of consumers say their experiences with one industry tend to influence their expectations of others. So, when a company delivers a personalized, valuable, and immediate experience, it raises the bar for customers and every brand is expected to follow. David Mattin, founder of New World Same Humans, calls it expectation transfer. When businesses take innovative leaps forward, they drive new (and higher) expectations among customers. Customers adjust their buying habits—almost overnight – and they grow to expect this superior experience from any business they engage with – including hotel stays.
ABS: Provide a customized shopping experience & increase revenue in the process
Traditionally, hoteliers have monetized basic features of a room to sell generic room types such as a room with a king bed, a room with a sea view etc. But if there’s one thing we have learned from retail e-commerce, it is that hoteliers have an opportunity to exploit guest customization expectations for increased revenue.
Instead of limiting guests to a“set menu” of say 5 room types, with attribute selling (ABS) hotels could offer a huge bevy of unique, sellable room combinations. Remove the blinders of room types and you see a wide variety of room attributes including (but not limited to): near the elevator, away from elevator, top floor, bottom floor, corner room, connecting room, balcony, Jacuzzi, sea view, city view, etc. You can then layer on other room products such as early check-in and late departure. While ABS is not limitless, it does provide a shopping experience that focuses on components that are important to guests. They have the option to customize their stay by selecting from a variety of options and personal their stay suited to their preferences (The trick to fulfillment of these requests is intelligent automation that has one foot in operations reality and another in revenue management reality. But that’s an article for another day!).
There are big gains to be made from customization:
- It fuels profit. According to one study, consumers are willing to pay a premium for custom-created products – in fact, up to 20% more. While it may not be an apples-to-apples comparison, hoteliers only have to look to the airline industry for an idea of how attribute-based selling could improve revenue. According to the Department of Transportation’s 2019 Airline Baggage Fee report, domestic air-travel carriers collected nearly $5 billion in baggage fees in 2018, up from $1.1 billion in 2008 – and checked luggage is just one sellable attribute of a flight booking.
- It drives loyalty: Deeper, more customer centric interactions drive customer loyalty and repeat business. Going back to our Nike example, even though their ‘Nike By You’ collection costs 30% to 50% more than their usual products, it still manages to increase repeat purchases rather significantly.
On top of this, having an active role in co-creating a product actually increases the product’s perceived value. Research also shows that when consumers have an active role in creating something, it further generates feelings of control, ownership and immediacy; there’s a much closer emotional bond than with something simply selected from a shelf of product clones or cookie cutter, standard options. Ultimately, customization has the ability to not only bolster your bottom line in the short term, but arguably fuel longer-term business growth.
ABS: Empower consumers to shop on their own terms
In short, your guests want more control. When it comes to their hotel stay, ABS (attribute-based selling) offers the same retail-style customization solution they are after. Not only will it deliver exactly what customers want but will help you increase revenue and brand loyalty in the process.