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6 Components of a Successful Upselling Strategy

By Jonathan Lee & Jason G Bryant

June 18, 2018

The primary goal of hotel revenue management is usually to optimize RevPAR and RevPAG (revenue per available guest). Nor1’s eStandby Upgrade® and CheckIn Merchandising™ enable hotels to achieve this goal by increasing room upsells and ancillary revenue using intelligent technology based on over 150 million unique buyer behavior records. A smart upselling strategy must take a multi-pronged approach as outlined in a recent white paper, “A Modern Approach to Maximizing the Value of Premium Inventory through Data Science” by Nor1’s CEO Jason Bryant. Think of it this way. You cannot lose weight simply by eating less. You must also exercise regularly, eat nutritious and balanced meals, and get enough sleep. It takes a lifestyle change. Similarly, hotel revenue managers cannot merely rely on one tactic or siloed techniques to enhance revenue. Times are changing and so are guest expectations.

As such, what you offer your guests, how you offer it to them, and when you make the offer will significantly impact the success of your upsell strategy.

That said, it is important to first define when exactly upsells take place. The upsell life cycle includes the entire period from booking to check-out. Upsells should occur during any point in this cycle, which could be days or even weeks.

A coherent upsell strategy must encompass web, email, and mobile-based offers and agent driven offers – from the moment of booking until check-out – to maximize value creation.

Any upselling strategy that fails to capture value at all points in the guests’ interaction with the hotel is suboptimal and will actually create opportunity costs to the hotel.

Nor1 Data Scientists have determined, based on millions of transactions, that guest demand for room upsells (not including add-ons) was $25 per reservation

Since only a very small percentage of guests are willing to book premium inventory at a full-rate at the time of booking, hotels must solicit the guests that already have a confirmed reservation.  

 

But why would a guest who has already said “no” say “yes” later?

Today’s guests usually book what is standard. Premium inventory often goes unused. Therefore, upselling post-booking is an ideal time to make relevant offers to guests.

The buyer behavior of guests often shifts after a booking.  They are different buyers post-booking. They are making a different decision from a different frame of reference.

When travelers are planning their vacation, they may spend weeks agonizing over how much to spend. Paying for those flights and hotel reservations causes travelers some pain in the wallet. However, once travelers book, the pain of paying diminishes even as additional expenses arise.

 

In lies the opportunity.

 

If you know that your guests would be more satisfied with their stay by paying more for a better experience, why would you not let them?

Here are the four most common mistakes of hotel upsell programs.

  1. Pricing offers without pricing intelligence (data science), which causes significant loss of revenue.

  2. Making offers that are not based on real-time inventory.

  3. Creating offers in a vacuum. Offers are made based on one specific point of interaction with no consideration of what has already occurred in the past.

  4. Over-reliance on human interaction. Empowered human interaction at the front desk is invaluable. However, without coherency, decisions about what to offer the guest and for how much will be imprecise and lack standardization.
 
hotel-room-check-in

Nor1’s coherent approach to upselling, built on state-of-the-art technology and top quality front desk agent training, enables hotels to address these concerns.

Nor1’s six-fold Optimal Upsell Progression®  strategy includes the following:

1. On Booking Page

Guests who pay full price value certainty. They pay a premium to secure top inventory. This group represents only a small fraction of the bookers. Nevertheless, exposing all guests to available room-types can capture the small segment of the population who does want to upgrade immediately and, perhaps more importantly, educate others about the options now so that they might upgrade later.

2. Post Confirmation in Booking Path

Guests who hotels can target for upsell at this stage are value-conscious. They also want premium inventory, but are willing to pay only incrementally more in exchange for guaranteeing a certain room-type or amenities. To convert these guests, hotels should identify guests’ willingness to pay. Nor1’s eStandby Upgrade® uses advanced artificial intelligence and machine learning, built on millions of buyer behavior data for more than a decade, to recommend the right product to the right guest for the right price.

3. Booking Confirmation Email

As mentioned earlier, a guest’s pain of paying diminishes with her growing excitement for the upcoming trip. Her buyer behavior dynamics will shift after a booking. Offering her tailored upgrades at great value is a way to approach her again when she’s ready to make a decision from a different frame of reference. Nor1’s eStandby Upgrade® not only displays upgrade offers on the post-confirmation booking path, but it also sends branded confirmation emails recommending the right product to the right guest for the right price based on the guest’s buyer behavior up to this point.

4. Pre-Arrival Email

Pricing certainty for offers hotels can make at this stage will depend on the existing eStandby Upgrade® queue. To convert guests for upgrades at this stage, hotels must be able to make offers in mobile-optimized ways. Nor1’s eXpress Upgrade®  is the perfect solution for such occasion. For hotels using eStandby®, PRiME®, Nor’1 data-driven decision intelligence and merchandising engine, will automatically fine-tune the offers not only based on available inventory, but also based on offers to which the guests have already been exposed.

To use use a basketball analogy, having a strong “frontcourt” is great and so is having a great “backcourt”, but having both is so much better.

Hotels who use eStandby Upgrade® and CheckIn Merchandising™ can hyper-target their guests with offers based on the guests’ buyer behavior throughout the booking journey.
If guest interactions pre-arrival can be likened to the “frontcourt”, interactions at and after their arrival is like the “backcourt”.   Guests who value premium inventory still need multiple exposures before they can make a decision as their price sensitivity may have changed since booking. Whether the guest booked directly on brand.com or with an OTA, CheckIn Merchandising™ enables the hotel to deliver a delightful guest experience through optimized upselling.
CheckIn Merchandising™ coupled with Nor’1 hands-on front desk agent training is driving unparalleled upsell success at hotels around the world.

6. During Stay

Actively engaging customers throughout their reservation lifecycle is essential to ensuring a great guest experience. It also provides the hotel with an opportunity to make relevant offers. Generating additional revenue by selling more of on-property offerings, including restaurant, golf, bar, and spa sounds like a no-brainer, but are you properly equipped to do this?   Nor’1 eReach™ can automatically make the optimal offer to the right guest at the right time through a mobile device. Also, eDirect™, the newest addition to Nor1’s suite of solutions, enables the hotel front desk, spa, and restaurants to reach guests instantly on their mobile device via text messaging.

Most properties possess significant untapped opportunity that, if approached with a coherent strategy, can achieve the following:

  • Significant increase in ADR with existing bookings
  • Increased profit from upsold inventory revenue
  • Positive impact on the guest booking experience and on-property satisfaction, driving greater loyalty and repeat business
  • Invaluable guest behavior data that can be leveraged for all future guests

Still using outdated upselling methods? Contact sales@nor1.com for a free consultation on how Nor1’s modern approach to maximizing the value of premium inventory through data science and advanced front desk training can upgrade your upselling strategy.

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