Do you know the Customer Lifetime Value of your guests?

By James Bishop, Senior Director, Global Demand Partnerships at SiteMinder

Understanding your guests’ booking journey is critical to acquiring them. It’s key for hoteliers looking to build trust and customer satisfaction, not to mention customer advocacy. It’s also key for loyalty. Repeat bookings are great for reducing marketing costs, but, as importantly, they increase a crucial business metric: your Customer Lifetime Value (CLV).

Why it pays to know your CLV

CLV refers to the net margin of sales a customer brings you for the full duration of your relationship. This means that a customer who spends €400 over two years has a different value to one who spends the same amount over four.

Getting the most revenue out of every guest should be your goal, especially if you are based in a premium destination that travellers are likely to visit only once. Remember that every upsell and paid service or amenity contributes to your total revenue per available room (TRevPAR). At the end of the day, all incremental value adds up.

If you do attract returning guests, think about the value of that repeat business. Over time, it is those guests that bring the greatest CLV and it’s why capturing their contact details is key. OTAs are great for filling rooms, but they also incur a commission. It’s not a big price to pay for the visibility and revenue you get in return. However, while it’s necessary and strategic to pay that fee for the first booking, hoteliers looking to drive down costs should aim to secure the next booking directly. Capture your guest’s details upon arrival.

Choose well, win better

Hoteliers today have to compete not only with local properties, but with the world’s most successful companies, including OTAs and Google. Here are three tips to win:

  1. Have an easy-to-use, mobile-friendly website with amazing photos. Ensure it’s designed for conversion as consumers don’t want to complete too many steps or provide thousands of details to make a booking. Reduce clicks; get the process down to one click, through your booking engine, if possible.
  2. Open your doors to new guests by being visible on a variety of channels. Travellers from the UK don’t book their accommodation through the same channels as, say, the Chinese or Brazilian.
  3. Offer a personalised experience by extracting as much data as possible from your guests. Be aware of their allergies, needs and preferences so they feel at home away from home. And, once they depart, make sure they have all the possibilities to book directly with you again through your website, via phone or social media.