Your business strategy approach can influence so many different aspects in your company, from where you put your leadership and management focus, to how you commit the resources of your hospitality enterprise. It pretty much impacts every single aspect of your business. That’s why, I have decided to write this article after doing an extensive research and discovery for the past 15 years on the hospitality industries business strategy approach, because I believe this is affecting the industry’s ability to generate sustainable performance in key areas of their business.
Let’s look under the hood of the hospitality industry
I started my discovery by first looking at the organizational layout of the hospitality industry. The industry has chief officers, corporate executives, managers, and VPs at different levels, as well as operational department heads and directors for just about everything single aspect within a hospitality enterprise, but there does seem to be one very important seat missing at the table in over 99 percent of hospitality industry enterprises.
The empty seat to which I’m alluding to is the senior leadership position that’s focused on and responsible for representing the customer, the customer experience design initiatives, and implementing experience management systems.
During my research, I was surprised to find how few formalized customer experience programs are to be found in the industry. The hospitality industry seems to be moving more and more to a commodity driven business model position, similar to what has been taking place in the airline industry over the past several years. From that approach, the airline industry has earned the worst customer experience and customer satisfaction scores among all travel segment businesses.
I have discovered, however, that more and more other business segments (i.e. financial, retail etc.) seem to be moving in the direction of customer experience for both building their business platform as well as a way to differentiate themselves from the competition.
For example, the CEO and founder of Amazon, Jeffrey Bazos, stated on 60 Minutes that their customer experience is the top business priority in how they plan, run and develop their company in the present and going into the future.
Let’s talk ROI for a minute
This subject is also a real head scratcher for me, in the fact that the hotel companies who have committed to a customer experience business strategy have demonstrated tremendous across the board performance. It has also been shown to outperform the competition that may lag behind in this business strategy and leadership management approach.
In an article I wrote in which I outlined the net program benefit comparisons as it relates to the utilization of customer experience design with regards to the ROI impact on the hotel industry, I had gathered information from highly respected companies that measured customer experience and customer satisfaction scores. These included JD Power, Forrester Research, and Temkin, as well as several other prominent institutions and industry associations.
This astounds me even more for an industry that is so reliant on brand loyal customers for the lifeblood of their business, that a higher percentage of the industry does not utilize this business strategy approach. Another eye-opening statistic that became evident to me was that hospitality industry doesn’t recognize customer experience as its own business discipline, and nor do they consider it to be a top strategic business priority in their planning and development stages of their business.
Just imagine if this was the case when it came to the business disciplines of sales or marketing in your business. Also consider how this would impact your annual strategic development process around budgeting, capital expenditures and forecasting for the year with all the company’s focus being primarily on product and operations side of the business and very little focused on the actual customer experience or the customer themselves.
Magic pill or a placebo
What my research also has revealed that the hospitality industry does not believe that customer experience design is or can be a legitimate business differentiator for building an effective competitive advantage over their competition. I believe there are a couple of main causes for this perception. One of which centers around quality assurance best practices that the industry has so heavily relied upon for years. It definitely seems to be the magic pill that the industry keeps doubling down on for curing their pains, but is it truly effective or just wishful thinking on their part? The second one being, the type of economy with which they believe they are competing in (i.e. product, service, price or customer). Which I’ll elaborate further on in a follow-up article, but for now let me touch on quality assurance element.
My concern with the quality assurance approach is that it has a tendency to be internally focused on the businesses product offerings with a commodity driven focus towards pricing or with an overly bottom line intent on operations, and not more balanced on the customer or driving top line initiatives around growing the ADR as well as Rev-PAR opportunities. It also does not allow for a more externally focused leadership and management perspective to be made available for the customer that’s coming into the business enterprise. It may also continue to reinforce a commodity driven business model and cultural identity centered around product and service rather than the total customer experience for building preference and relevance with your customer segments.
If the value proposition is not positioned properly, it could actually widen the gap around your business’ ability to properly connect with your customers for creating brand retention, which would explain how the hospitality industry has struggled in the area of customer satisfaction and loyalty scores over the past decade. The hotel industry has also taken a backseat to the OTA’s, such as Priceline, Trip Advisor, etc., for becoming travelers’ favorite travel brands that they are willing to give their loyalty, as well as being held hostage to some degree when it comes to having control over their ADR. I believe this all leads back to the business strategy approach by the industry.
So who does take up the customer experience initiative and the responsibility for the customer in your hotel?
I know what you are going to say! It’s everyone’s job and responsibility to take care of the guest. Yes, it is! But, is the enterprise strategically designed for that to take place? Surprisingly, over 99 percent of hotels and hospitality enterprises are not strategically designed for that at all!
Who takes on the responsibility for leading and developing the guest experience business strategy initiatives in your organization? Do you employ an outside consulting service? Does your business have a customer experience executive/chief customer experience officer in the executive suite and corporate office setting? Do the general manager and regional vice presidents utilize experience management systems for enhancing and developing all the different business disciplines and operational departments in their hotel properties?
7 key elements found in highly successful customer experience driven enterprises
1. Is the guest experience considered its own business discipline within your company? I.e. the same way you look at marketing, HR, and sales, etc….
2. Do you employ senior leaders and managers/ chief customer experience officers with a top on down-perspective?
3. Do you have a customer experience focused business model and sales formula approach that moves the value proposition of your business towards the total customer experience, for ensuring a stronger connection with your customers?
4. Are your HR department’s personnel systems in alignment with customer experience design initiatives and business strategies? I.e. how you compensate, recognize, develop, hire/recruit and orientate, etc.
5. Are your brand dynamics in alignment with the customer experience for delivering the company’s brand promise and ensuring the brand values are meeting and delivering the customer expectations?
6. Is your service excellence program based on your customer experience design initiatives?
7. Does your organization see the customers as being a part of the business or as a separate entity, i.e. a culture of silo-ism around the customer, as opposed to your customer being in the center of your business?
I think you can start to see why I have made statements in my past articles that 50 percent or more of your business is being left unmanaged, or that the hospitality industry is leaving way too much money on the table when it comes to growing their ADR, Rev-PAR, and other top line revenues elements, not to mention, their ability to improve their customer loyalty position in a more sustainable direction.
Do you really want the pressure of always feeling like you have to compete on price as well as product and services based on the ebbs and flows of society, and your competition as well as feeling that you’re being held hostage by the OTA’s when it comes to having better control of your ADR?