“Way back in 2008”, the Vice President of our analytics group spoke at a corporate meeting about marketing strategies for 2014. He said “We were all continuously saying”, he continues, “it’s all good”. “Today, we no longer use the 2008 phrase, but we continuously compliment every action taken by anyone inside our companies no matter how insignificant. We see emails back and forth about how amazing everyone is and how hard we all work, then we sit in long budget meetings to talk about how we are not making our numbers”. He concluded.
How does that happen and who is to blame if anyone?
Is it marketing’s fault? Did sales mess it up for us? Was it the economy, more inventory on the market, price cutting by our competitors, or can we simply blame it on Obama’s new Affordable Care Act? The answer is nobody inside our company really knows. The reason we don’t know is because we spend little time analyzing failure and all of our time commending each other for a job well done. While we do not suggest stopping the flow of emails regarding a job well done, we also suggest investigation into the continuous crisis discounting and the number of incidences of these types of activities.
We created an Incidence Index to help guide our marketing and sales efforts. The index is a chart that details the number of times in one year that we have crisis discounting and track increases in these activities. We have noted a considerable increase in the use of crisis discounting or pricing over the last three-year period to the point where crisis discounting has become part of daily life at hotels and resorts.
The Valorem team tries to understand why bad things happen and how often they happen. Is it normal to have crisis discounts across Online Travel Agents 24-48 hours prior? If so, should the meeting atmosphere about not making our numbers really be a nice meeting about what has become standard operating procedure? If sales are down, then automatically open the flood gates by reducing prices. Cant we put this into our Pallisades program and let it run without holding continuous meetings to scold sales for their inability to make good on their plans?
What we have noticed over the last five years is that while marketing creates those beautiful and amazing marketing plans, which we all praise, with amazing strategies to grow and increase revenue embedded, the effectiveness of the plan is low.
In our Valorem Group offices we have two camps of thought, one that believes that it is the process of writing a marketing plan and the other that believes that it is the use of a plan in a flexible age. The first camp simply states that little time has been put into thinking about the best plan while the latter is concerned with the inflexibility of the plan.
While we wont bore you with a discussion about these two, we do want to go back to measuring failure as a path to success. We have measured the incidences of price decreases within 24-48 hours across a three-year period and have noted considerable increases in most of the companies analyzed [see, we used the word increases which is a positive word, to refer to the rate of failure, which we think you should send us a kudos for].
So to get down to the grain of it all, we take existing marketing plans with elaborate calendars and match it to the incidences of price decreases in a crisis mode. We analyze the cost of the marketing action, whether advertising, email campaigns, etc., and then identify those marketing practices which have had no impact on reducing the number of crisis events. We identify the weakness in the marketing plan and come up with solutions that will work. That doesn’t mean throwing solutions that have always been thrown at a problem in the past, it means giving some long and serious thought to activities and results based on your company’s Incidence Index. If you set as a goal to reduce the incidence of crisis discounting, you would be better off than setting the goal to increase revenue.
We then help marketing gurus get their groove back on by opening the doors to a broader look at the market and competitive set. The competitive strategy of price cutting is standard and we should plan on it, not use it as the excuse after plans fail. We need to prevent and establish countermeasures without competing on a lower price point. We stop and consider increased room inventory counts in our areas, competitive new market entry strategies, new airline lift in or away from your area and other market components that will always affect your plan, but are considered with less frequency.
We suggest you start your own incidence index at your property and gauge the effectiveness of your planning. If you want some ideas, reach out to us at any time. If you would like to see more tips about marketing, please click here https://valoremgroup.com/tips-news/