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What is RFM? Top 5 Ways to Elevate Your Digital Strategy & Increase Direct Bookings | By Margaret Mastrogiacomo

The digital landscape is constantly evolving.

Hotel digital marketers continue to seek more effective and cost-efficient ways to reach the right audience, at the right place, and at the right time.

But do hotel marketers truly know the value of each and every guest and, more importantly, do they understand what motivates guests to choose their hotel, then choose to stay again?.

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Understanding the lifetime value of guests, including the type of content and promotions that compels them to book direct, is crucial to an effective book direct strategy.

So, what's the secret to understanding the value of your guests and knowing your most profitable guest? The answer lies in RFM (recency, frequency and monetary) modeling. In a nutshell, this means:

With the combined power of RFM data, hotel marketers can get a deeper understanding of a guest's relationship with the brand and use this data to reach a more qualified audience with personalized messaging.

These are just some examples of RFM segmentation to help digital marketers better classify the value of past guests.

Once you analyze these key data points, you should start to get a better understanding of who your high-value guests are, what they are interested in, and what they love about your hotel. With these insights you can shape a customer persona, give it a name, and begin building website content and campaigns that go beyond targeting a blanket demographic with a human-centric approach that resonates with potential guests.

These customer personas can influence every aspect of your digital strategy from website design, user experience, and content to digital marketing and your CRM strategy.

When analyzing your RFM segmentation in your CRM data, make sure the segments you are targeting are profitable. For instance, while an RFM segment may spend less money with your hotel brand, if the cost per acquisition is low and it's a large enough segment of your existing and potential customer base, it may be worth investing more than a high-value segment that may be expensive to acquire. In evaluating the profitability of each RFM segment to help you reach your revenue goals faster, the focus should be on cost per acquisition, addressable market, and revenue potential.

Overall, RFM segmentation of your CRM data can be a powerful tool to launch a more personalized, effective, and cost-efficient digital strategy. Whether your top priority is design, content personalization, digital marketing, or simply getting to know your customers better, integrating RFM segments into your digital strategy will make your digital presence more impactful resulting in more direct bookings and ultimately, more loyal guests.