Bolster the Immunity of your Hospitality Business with a Marketing CRM & Loyalty Program

How to brace your hospitality business against the impact of COVID-19

Introduction

Since its origination in late 2019 in the Chinese city of Wuhan, the coronavirus (COVID-19) has gone on to become a highly discussed and equally dreaded phenomenon. With over 115,00 cases recorded across 110 countries and surpassing 4000 casualties, we, mankind, find ourselves at the doorstep of a pandemic.
Now, it is straightforward to foresee the health implications of a pandemic, but it is rather convoluted to anticipate the economic impact of the same.
However, history has witnessed before and as it is notoriously known to repeat itself, one can safely say that an economic slowdown is certain. The risk of the already tenuous world economy slipping into a recession has increased manifold due to the outbreak.
While the ramifications are widespread and across many, the hospitality industry has been one to have faced the immediate ill-effects of the COVID-19 pandemic. The consequences have been far-reaching and are not limited to aspects such as employee health, supply chain, operations and most importantly consumer behaviour.
Through this article, I’m looking to highlight the currently occurring as well as potential foreseeable repercussions of COVID-19 and the possible approaches to their mitigations.

“This virus is as economically contagious as it is medically contagious”

— Richard Baldwin
Professor, International Economics, Graduate Institute, Geneva.

How is this crisis different from previous cases?

Despite its similarities with the past horror of the 2003 SARS outbreak, the COVID-19 upsurge scenario differs in some aspects and it so happens that these very aspects have been critical to consumer behaviour and the changes as seen in it.
The evolution of handheld mobile devices, availability of internet, accessibility of news and the existence of social media, are pretty much the reasons responsible for the awareness, information as well as misinformation, and the perception that individuals have built towards the coronavirus outbreak. And hence, these have been surrogates of the influencing factors behind the behavioural changes noted amongst consumers.

Who are the consumers affected by this outbreak?

Let’s begin with identifying consumers and the segments they can be broadly polarized into:

1. Leisure Consumers
   They are whose purpose of visit is leisure or recreation. With no impending ill effects apart from foul moods, they’ve been the initial ones to cancel, postpone or keep on hold their plans. Examples of these would be, party goers or vacationers.
2. Obliged Consumers
   They are whose purpose of visit is obligatory or out of compulsion. With possible losses to incur, they’ve been next in line to make revisions unless absolutely necessary to pursue plans. Examples of these would be, businessmen or students.
3. Miscellaneous Consumers
   They are whose purpose of visit is either undefined or is due to an emergency. It is complicated to predict their decision to make amends to plans. Examples of these would be, indifferent public or diplomats.

What are the repercussions of the outbreak on consumer behaviour?

Let’s dive deeper into the deviations in consumer behaviour from the normal and the thoughts that incited the same.
The most probable action and hence the initial change in consumer outlook in response to the outbreak is the aversion of social interactions; one can discern conscious efforts taken by individuals to avoid crowds or crowded places. Thus, due to consumers refusing to venture beyond the safety of their homes, a 10% to 15% drop in footfall has been recorded across urban hospitality establishments such as restaurants, cafes and bars.

In line with the prior notion of avoiding crowds and also as a precautionary measure to curb the spread of the outbreak, there have been rampant cancellations of events, gatherings, conferences, and face to face meetings, that has led to a sharp drop in global travel. Which in turn has resulted in a 30% to 40% drop in occupancy and footfall at hospitality establishments such as hotels, quick service restaurants at airports or other transport stations.

Apart from the behavioural changes arising due to precaution or prevention, there have also been instances of behaviour alterations stemming from the stigmatization and even underlying xenophobia has been seen amongst consumers. For example, the sharp drop in sales of Corona beer or the alienation of Chinese and Italian cuisine restaurants.

How can you mitigate the impact of these repercussions?

Now, it has been observed from past experiences that behavioural changes amongst consumers typically last for approximately from one to three months, however, the aftermath might outlive that period and may persist for a longer time. Hence, long term value rather than short term profitability losses should be paid more heed to while thinking of mitigation.

So, now that we’ve identified consumers and their types, the shifts in their mindsets and behaviours; it is fairly clear that if not acted upon, it will adversely affect business. Below are a few approaches that can be adopted to mitigate the impact of the outbreak on hospitality businesses.

1. Identify the change in consumer behaviour and align business to address them.
   The key to mitigation lies in the identification and anticipation of behavioural shifts and acting in accordance to them. For example, consumers have developed a stigma towards certain cuisines and this should be addressed by either awareness communications or reducing the promotion or stockpiling of those particular foods.
2. Recognize new consumption trends and cater to the trends accordingly.
   Apart from a consumer behavioural change, there has also been a change in their consumption habits. For example, they’re subconsciously oriented towards healthy foods and it’s essential to ensure your establishment is prepared to cater to this increase in demand and ready capitalize on this trend by increasing items from the category or adding a promotional layer such as a discount on them.
3. Highlight safety measures and precautions undertaken.
   A major cause of fear of the COVID-19 outbreak is the lack of knowledge about it. Ruled by this fear, consumers are highly keen to know the safety measures observed and the precautions undertaken by your establishment and consequently increasing their probability of interacting with your business.
4. Give impetus to alternate sales mediums such as online ordering and delivery.
   It has been clear that consumers are avoiding crowds and going out altogether. In this case, it is essential to divert existing marketing objectives from generating dine-in visits to ensuring orders or takeaways. It might pay off to promote initiatives such as zero contact drop-offs or free deliveries to boost sales.
5. Keep consumers engaged, reinstate trust and generate visits from loyals.
   Instead of each other, hospitality establishments are essentially competing with consumers’ homes and kitchens. It is of utmost priority to keep them engaged and build their trust in you and for this, your loyal consumers can be considered as the lowest hanging fruit.

So where does a Marketing CRM & Loyalty Program fit into the picture?

Let’s start with the consumers itself; a Marketing CRM such as Hashtag Loyalty automatically segments consumers as per the lifecycle stage they lie in, their RFM (Recency, Frequency & Monetary) characteristics recorded at your business, the loyalty tiers they lie in, their demographics or as per the custom tags as defined by you.
In a glance, a business owner can gauge the breakdown of their audience and understand the activity of consumers within cohorts. Hence, allowing for better anticipation of trends for each.
The PoS integrated nature of the CRM and program also allows for capture of itemized data for each consumer and thus the segments they lie in, therefore enabling for the recognition of consumption habits and shifts in the same.

The CRM also allows business owners to keep their consumers engaged via campaigns, which prove to be an essential marketing and more importantly a communication channel. Campaigns allow for the relay of information such as awareness, safety and precautionary updates, store timings or product availabilities to their consumers. There is also the opportunity to incentivize consumers to take particular actions such as order online via reward campaigns. The specific targeting capabilities that allow business owners to personalize and tailor communications to the consumers or segments they’re reaching out to and ensure healthy reciprocation to them.The loyalty program itself can be used to keep consumers engaged and ensure visits via bonus points, multipliers and more. An actual strategy used by Hotel chains across the globe has been to extend the validity of points for consumers as well as extending top tier benefits to the lower tiers so as to curb the cancellations or ensure reschedules with their properties itself.

These are just some of the many benefits of employing a marketing CRM & Loyalty Program for your business. Apart from the daily value they add, technologies such as these have time and again proved to provide shelter to businesses during crises such as the outbreak that we lock heads with today.

You can share your thoughts with me on anshulj@hashtagloyalty.com
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