How to Drive an Effective Digital Transformation in Hospitality
Thinking about how to digitally transform your hospitality organization? Here are the things you need to keep in mind.
When talking about digital transformation, it’s important to first understand the difference between digitization and digitalization, as leaders are confused about it very often.
Digitization means converting something that is not digital to a digital format. Nowadays there is not that much digitization anymore, as most content is already produced in a digital way (documents, photos, data, analytics…).
On the other hand, digital transformation means re-evaluating, re-engineering, and re-imagining the way you run your business. Before starting such a process, it is crucial to define your objectives and outline a clear roadmap towards achievement.
What does digital transformation include?
The real effort of digital transformation for companies is the digitalization of business processes which include:
1. Internal processes towards important stakeholders
2. External processes towards customers, with the goal of enhancing their overall experience with your brand or organization
The goal of a digitalization done right is a more efficient way of running your business and driving more revenue to your company. This is done through the implementation of new, innovative digital technologies, meaning hardware and software that will increase the value of your business.
Whether they are digital, commercial, marketing or product-wise, all digital transformations have a common objective: how to optimize customer experience that will result in higher conversion rates? Enabling digital should always help the usability of your product or service, with a direct impact on making the customer journey more integrated and easier.
How to plan out digital transformation
The best way to build and deliver a digital transformation plan is to match it with your CVP (Customer Value Proposition) roadmap. What makes it complex to deliver is the fact that digital has transversal impacts on operations, sales, marketing, CRM, Web/Mobile/App, customer experience, loyalty… you name it.
The prerequisite for such a plan is to have the right Program Manager to coordinate everything. Also, it requires strong and unconditional sponsorship and appropriate budget from the CEO and the Executive Committee of the company.
Once you have everyone on board, here are the crucial aspects to consider:
Data
A key element to succeed in your digital transformation is related to data. The way you collect it, the way you store it, the technology you use to integrate it in your business operations and in all your sales, marketing and digital operations will be a game changer. All business development, customer acquisition, retention and conversion strategies and go-to-market plans should only be based on the right data analysis for smarter decision-making process.
Data privacy is also a new-era standard in the AdTech industry. Searches for brands and the way customers engage with them will need to be based on full privacy-proof platforms like Profila.
Technology
Another layer of digitalizing your hospitality organization is how you manage tech innovation through R&D. I have not yet seen a lot of Chief Innovation Officers in charge of reinventing the hospitality of tomorrow both for products (rooms, meetings, food, drinks, ancillary revenues, customer experiences, technology…), services (hotel operations, housekeeping, back-of-the-house, HR…) and introducing new MarTech/AdTech platforms. Nonetheless, innovating and improving efficiency will have a positive impact on your EBITDA.
Engagement
Digital transformation also means engaging with your customers in a unique way. They are unique and they want to be treated uniquely. Listening to your customers’ needs in how they want to be connected to your brand is important.
This is crucial to the hospitality industry as it will support online direct sales to increase their market share at a much lower cost of distribution vs. third party online distributors.
We at Profila will give brands the technology and the platform to give customers the control over their personal data back, allowing brands to engage and connect with their customers in a private and personalized way. This will improve the ROI (return on investment) and ROAS (return on ad spend) of their digital marketing activities.
Content
I am quite sure that you did not include your content management in your digital transformation plan! Am I wrong? Creating and curating content is often done with extremely low priority in hospitality organizations.
Do you have a DAM (Data Asset Management) system that is connected to your MarTech environment? Why?
Because each piece of rich content that you create on purpose has value and can significantly impact your conversion.
With advanced analytics, you can now precisely measure the value of each piece of content you send on all your digital channels to your consumers. Remember the three drivers of a successful digital transformation: data, channels, and content.
Loyalty
Who said that loyalty programs are dead? Well, I believe that loyalty programs like they are built today are indeed on their way out. And guess what? Digital transformation presents a great necessity for relaunching innovative programs based on new rewarding systems that constantly enhance the member’s experiences instead of collecting useless points or miles.
Of course, this is difficult to do because historically, loyalty programs have been great sources of high margins for hotels, airlines, or any other travel supplier. We see that their customer retention ratios (based on level of activity per member) are declining. Hospitality companies cannot afford to overlook this strategic business. Still, this loyalty space is increasingly saturated, and we believe that innovative digital capabilities like blockchain exist to reimagine the loyal customer experiences.
In short, to improve engagement and the experience with your most valuable guests, it is crucial to offer loyalty programs which are:
- easy-to-use
- flexible
- personalized to each member
- community based — creating small communities based on similar behaviours and preferences will increase the engagement level of your customers
- privacy-proof (safe) — you need to guarantee full personal data privacy to your members
How blockchain fits into all this
The transparency of blockchain technology will help brands maintain or improve the level of trust when interacting with customers. All transactions on a blockchain are highly secure and safe for both customers and brands, which has also a significant impact on fraud reduction (reducing risk for loyalty data breach should be your priority n° 1). BaaS platforms (Blockchain-as-a-Service) will be the new standard for profitable, efficient, and experience-based loyalty programs.
Also, the blockchain token technology will allow customers to exchange tokens for rewards without compromising their personal data — a protocol known as ZKP (Zero Knowledge Proof). Profila is developing this technology for brands.
“The superpower of cryptocurrencies and blockchain technology is endless replication. It is expensive to write and think about, but once you have done it, once it is run once, you can run it everywhere. It is like a smart cow that knows how to open the fence. Only one cow must figure it out, and the rest of the cattle get out, they just follow the open hole”
- Charles Hoskinson / Cardano — IOHK (Input Output Hong Kong) Oct. 2021
Finally, introducing blockchain will also support the ability for hospitality organizations to shift business from expensive online third-party distribution to a cost-effective direct sales model, allowing them to manage customer engagement in an omnichannel capacity.
Keep in mind that retention is cheaper than acquisition.
AI & Automation
There are plenty of innovative technical progresses that can help drive better customer experience and engagement, which has a direct impact on your capacity to increase CVR (Conversion), enhance your CLV (Customer Lifetime Value) and finally drive profitable marketing activities. AI (Artificial Intelligence) is one of them.
AI gives brands and organizations the ability to strengthen the level of engagement they can have with their customers resulting in better retention. As AI is based on machine and deep learning and natural language technologies it can automate a lot of customer interactions. Conversational chatbots can revolutionize the efficiency of customer engagement and product recommendations based on archetypes (customer behaviours).
Profila is building a chatbot-like knowledge platform which will educate consumers on their privacy rights — you can learn more about it here.
Re-thinking the way marketing processes work
The other revolution of AI and blockchain technology is the data-driven customer insights generation based on customer behavioral patterns. This will support the personalization of customer engagement campaigns and improve business forecasting capabilities. Relevancy of the data collected is key for this.
And what about automating content creation based on context? Sending customized content to your most loyal customers will increase the level of engagement, the CLV (Customer Lifetime Value) and the conversion.
MarTech-integrated platforms are often forgotten by CTOs of Hospitality Organizations. Why? Because they consider marketing activities outside of the Customer Experience, which is a common mistake to make. Digital transformation should change this, allowing all Operational Systems (PMS, CRS, CRM, RMS, DAM, CMS…) to interact with each other, ideally in the cloud, to understand the entire customer journey.
By knowing your customer better from the very first touchpoint when they start searching for something online to the after-stay engagement, communications will allow you to be proactive in the way you retain business, but also where to go to acquire new business, at the best cost of acquisition.
Why, after staying 10 times in the same hotel, should customers still get asked another time if it is the first time they have stayed here? Fully integrated, cloud-based MarTech will help you fix this problem.
Have you ever tried multivariate testing on all your online marketing activities? Well, this is part of the digitalization of your processes and workflows. Changing variables in the backend of your systems will bring several options to the frontend of your customer experience. Tracking and measuring the best performing UX will help your brand increase their CVR (Conversion Rate). It’s that easy! Let the machine take decisions exclusively based on data analysis.
Finally, digital transformation is also impacting people profiles and the competencies you will require to build state-of-the-art digital teams. The COVID-19 crisis has forced the change into a digital society. There is no way back for companies, hence the growing demand for workers with expertise in digital technologies.
In conclusion — why digital transformation is no longer a choice
As described above, the digital world is an ever-changing world. Adaptive and agile behaviours are now key to deliver strong digital transformation plans in organizations. But I would like to highlight also that we are only at the beginning of the revolution.
We are at the edge of the so-called metaverse, the “embodied internet” — an integrated mix of physical and virtual experiences. This will continue to revolutionize the way brands and organizations engage with consumers digitally and anonymously.
To all my hospitality friends — digital innovations and transformations are here to support your next generation business. We all know that people will continue to travel by trains and planes, stay in hotels, and spend quality time in bars and restaurants. This is the human nature of the hospitality.
But in the end — technology is here to enhance the experience your customers already have with your organization. It is up to you whether you want to use it and make the moments they share with you more memorable.
