What Does All This Mean?

Do you think it is expensive if each new corporate client costs you £ 5,000 to acquire? Maybe it is if you only look at the annual revenue of £ 19,000. But remember that you don’t have to spend this money again on this client. If you do everything right and service the client booker as they wish, then the overall cost is only £ 5,000 compared to the £ 95,000 they will spend over the projected four years. And 5.3 per cent is probably not an unreasonable marketing cost.

Increasing Revenue

As I said earlier, it is less expensive to generate extra revenue from your current customers than spend time, effort and money on finding new customers. But you still need to find new customers, if only to replace the 20-30 per cent that leave you for no particular reason that you can do much about. But do not forget the customers who have stopped using you because you have neglected them.

The interesting aspect of these tactics is the impact that improvements in all areas can have on your top line revenue. If you have ten per cent more customers, a ten per cent better average rate, and customers spending money with you ten per cent more often, then due to the compounding of the increases, your revenue will increase by over 30 per cent.

There are five major strategies that you can use to develop additional revenue for your hotel, and below we explore some tactics for each:

• Increase the number of leads.
• Convert leads to customers.
• Increase the number of transactions.
• Increase the average rate/spend.
• Improve customer retention.

Increase The Number Of Leads

It is your marketing activity that generates interest in your hotel, and you have to find a range of activities that work for you. New leads are the lifeblood of any commercial organisation and without them your business will naturally deteriorate. The many possibilities for generating sales leads are expanded upon in detail in Part 2 but they are listed here as a reminder:

• telephone sales
• direct sales
• networking
• direct mail
• e-mail
• newsletters
• advertising
• media relations
• internet site.

Convert Leads To Customers

Once you have a steady stream of leads, you need to convert these into customers. As soon as you have managed to do this, you have the opportunity to impress them enough for them to become advocates and ambassadors for your hotel. Here are a few tactics:

• Ask for the sale: Sometimes we forget that this is all it takes.
• Be persistent: It often takes more than one encounter with a prospect to convert them to a customer. Don’t give up until you have made at least five contacts (phone/e-mail/letter etc).
• Have good systems: These are expanded in Chapter 10 under ‘Implement systems for an easier life’ (pages 268-280).
• Sales training: Train all your team to pick up on all the leads that come in, whether these are by phone, personal visits or mail.
• Give guarantee: Sometimes people are reluctant to take that first step. Make it so that they have nothing to lose.
• Pre-qualify: Make sure that all the leads you generate are from prospects that have the willingness and the means to spend money with you.
• Make first sale easy: Think of the lifetime value of each prospect, and then do something to make it easy for them to make the first purchase. Make a special offer for one room for a potential corporate client as a trial. If they like it they will make another booking, and then you may get the contract.

Increase The Number Of Transactions

Your current customers are your biggest asset and they represent the most cost-effective opportunity to generate extra revenue, whether it is for your hotel rooms, your restaurant or your leisure centre. There are probably hundreds of things you can do but here are a few to get you thinking.

• Promotions: Current guests are always receptive to special promotions, whether for rooms or food. Think of special menus or prices particularly for the early week lull.
• Bounce-backs: As guests leave your hotel or restaurant, give them a voucher entitling them to a special offer as a ‘valued guest’.
• Newsletters: Develop an interesting newsletter and a good database and you will have the ultimate tool for reaching your customers.
• Timed coupons: Whenever you make an offer or special promotion always put a time limit on it. Action is what you want to stimulate.
• Membership scheme: Your really committed customers will be in your scheme and will be very receptive to inducements to stay more often or use your restaurant more frequently.
• Dates/occasions: Collect data on your customers’ anniversaries and send them a special offer a few weeks beforehand.
• Cross selling: Receptionists have a unique opportunity to promote dinner on check-in, or to give out drinks vouchers for the bar.