Part 2-These Digital Marketing Mega-Trends Are About To Turn Your Business On Its Head

In my last article, I made what I hope is a compelling argument that we are entering a period of profound change in consumer behavior thanks to the emergence of GenZ and the degradation of third-party data.  I talked in broad strokes about what you might do to protect against these changes or, better yet, take advantage of them.  Further, I’ll be hosting a webinar to go over these trends, and their alignment with economic conditions in 2023, and I encourage you to attend.

Indeed we believe that this change presents a tremendous opportunity for smart hotels to gain market share and win new customers, in large part because many in our industry will be caught flat-footed.  They’ll continue their marketing behaviors unchanged while wondering why they’re getting their butts kicked all of a sudden.  

Before I get too prescriptive of specific strategies to win going forward, I want to review and then introduce a visual model you are all familiar with - the conversion funnel.

This visual is useful in orienting your mind to the new paradigm in marketing … because it's flat-out wrong. 

Over the past decade as marketers, we relied on math (clickthrough and conversion rates) and the ability to target new customers on the cheap to optimize the above funnel.  We filled the top by buying inexpensive impressions from people looking to stay in a particular market.  We enhanced our chances at conversion by resurfacing our brands during the consideration and preference stages with all manners of retargeting.  And finally, we improved our chances of conversion in the intent and purchase phase by advertising for the name of our hotels or promoting time-sensitive offers.  Sounds reasonable?  That’s because it has been reasonable; and effective.  But the model is incomplete and inefficient, and those hens are coming home to roost.  

FLAW #1  The truth is, many marketers use the same message throughout the conversion funnel, regardless of the customer they are targeting.  They rely on the “frequency” of their message instead of the quality. Most hotels simply advertise their most popular package(s) through most of their digital advertising.

FLAW #2  Equally important, this model assumes the purchase as the end of the funnel, when the truth is, it's just the beginning.  As marketers, every purchase, every conversion in this model is given relatively equal weight (ADR * Length of Stay).  That's just not how you run your business.  You know who your best customers are; the ones who spend more money at your property or, better yet, stay more times every year.  In this conversion funnel, we as marketers treat all conversions as the same, because they all are just a single purchase.  We don’t identify and then try to find MORE of your best customers.  

These flaws are only exacerbated by the trends I mentioned in the first article. Simple, transactional messaging that relies on crazy levels of third-party data targeting and high-frequency advertising are the tools of yesterday, not tomorrow.  

At GCommerce, we’ve reimagined the conversion funnel as follows:

Notice that the purchase is not the bottom of the funnel, it's the second step.  The true bottom of the funnel is lifetime advocacy, which should better align with a hotel’s most valuable guest.  Marketing has a role to play in helping to attract and retain lifetime advocates, but it starts by understanding that our job is not to spend an outsized amount of our focus on the top of the funnel.

For example, did you know studies show people are most satisfied with their travel experience after they book but before they actually travel…that the anticipation of the trip is the most potent travel aphrodisiac?  Or that reaching out to and engaging with a guest after their stay is amongst the most effective ways to build long term brand loyalty?  Knowing that, how would you rebalance your marketing focus?

With the mega-trends as catalysts, it's high time that the industry takes a more holistic view of consumer marketing.  We contend that digital has a role to play all the way through this new conversion funnel.  Digital marketing can help build excitement after a customer has booked when they are most susceptible to brand messages.  We can help engage after the guest stays, keeping them connected to their experience.  We can encourage them to come back, and come back more frequently.  As they do, we can feed them great brand stories, solidifying their loyalty.  And finally, when these customers are passionate about singing your praises, we can give them the tools to do so more effectively.  Conversion is not a single, linear event.  It's a lifetime of interactions with a customer.

Capitalizing on Mega Trends For Your Hotel’s Marketing in 2023

With this new conversion funnel in mind, here are a few ways to leverage the mega-trends to your advantage as you work on marketing your hotel in 2023.  

• Map the New Conversion Funnel - Adapt the above conversion funnel to your specific property(s).  Take the time to detail the strategies, tactics, and budget you have assigned to every phase.  Chances are you will find a majority of your time and treasure are spent on the acquisition stage (the most expensive in the funnel).  Rebalance to reflect a more holistic view of the consumer funnel.
• Invest in Creative/Segmentation - Whether you are marketing to customers in the acquisition phase or trying to increase repeat visitation, make sure you segment your customers in obvious ways.  Maybe your segmentation is based on the purpose of trip, weekday/weekend travel or more detailed sentiments or experiences.  Please don’t feature the same creative regardless of segmentation!  Build story, creativity and relevance back into your marketing…your customers will thank you for it..  
• Build First-Party Database - Remembering that first-party data is marketing rocket fuel, it's worth revisiting every existing (and potential) guest touchpoint to ensure you are collecting the data.  At this point, I assume most of you are doing a great job collecting guest data at the front desk, but what about through other outlets?  What about through guest referrals or past guest digital forums that you host online?  When looking at each opportunity, are you giving people a good incentive to hand over their data?  Which brings me to…
• Provide a Data Incentive! - Why in the world would a past or future guest give you their data and the subsequent permissions required to use it?  Like it or not, this is a transactional relationship; they are giving you their data in exchange for something of intrinsic or implicit value.  Here’s an example to get you thinking - waive or discount resort fees for guests who join your loyalty program.  
• Install GA4 and Plan for Data Warehousing - Consider this a foundational step that you should have already made plans to execute.  The sunsetting of Universal Analytics and the emergence of GA4 has been a hot topic of late (we’ve been on it since 2021), but not many are talking about data warehousing.  Through Universal Analytics, Google would hold your data in perpetuity, allowing you to visualize year-over-year trends for all of your KPI’s.  With the transition to GA4, Google has implemented a 14-month data retention policy, meaning you won't be able to draw upon those year-over-year comparisons unless you warehouse your own data.  

Introducing Community Marketing for Hotels

The above tactics can and will provide you with a short-term advantage over your hotel’s flat-footed competitors.  But soon enough, that advantage will be eroded as the world catches up.  They are a good entree into the new paradigm in marketing.  At GCommerce, we have been thinking about what the most progressive, aggressive hotels and resorts should be doing to position themselves for success over the long term (5-10 years).

Given the scale of these digital marketing mega-trends, we believe there are strategies that reposition businesses for long-term structural advantages that can’t be replicated by slow-moving competitors.  The answer requires some more strategic thought that’s custom-tailored to your property, your positioning, and your location.  At GCommerce, we set out to develop a blueprint for our hotel clients that leverages the mesh point between the two mega-trends.  We arrived at the development of brand communities; not necessarily a new idea but one that we’ve modified to create incremental value in the face of these emerging trends.  Brand communities allow us to deploy more creative and connected storytelling, they provide a framework for marketing throughout the customer journey, not just during the acquisition phase, and they give us the means through which to collect gobs of first-party data.  In our experience, a community can be nurtured by just about any hotel that is differentiated in some meaningful way.  We’ve put this framework to work for several clients and the results have been eye-popping.  Clients not only enjoy increased engagement and real short-term returns on their investment, they are set up over the long term with a marketing advantage that can’t be stolen or replicated by their competition.  

Over the coming months, GCommerce will be sharing more about Community Marketing with our clients and in our writing/speaking.  We encourage you to reach out, if for no other reason than to review and track some of the use cases we are deploying.  We promise they are unlike anything else you are seeing from another hospitality digital marketing company.   

These Digital Marketing Mega-Trends Are About To Turn Your Business On Its Head

Marketers are furious competitors; at least the good ones are.  Think Michael Jordan looking for every advantage in order to beat the competition.  Like Jordan, we’re in a continuous state of reinvention and improvement, developing new ways to put the ball in the basket or, in the case of marketers, looking for novel ways to connect consumer and business.  

Consumers and businesses; the two sides of the fundamental marketing equation.  Equally weighted and equally important.  Because to be truly competitive, we have to understand the best way to present a business, but we also have to understand the nuances and idiosyncrasies of how consumers find and interact with those businesses.  This reality leads us to obsess over consumer trends, to become early adopters of new technologies (have you seen our new TikTok hotel ads service?), and track hotel marketing performance data with an intensity that makes our loved ones jealous.  

In that vein, I’m here to tell you that consumers - one half of the equation we all rely on for business, are in a state of transformation that will turn your business on its head.  Two trends, loosely related but equally dynamic, are driving this change in consumers.  Those who understand these trends will benefit with long term growth and market share.  Those who ignore them will see a decay in their customer base, and be left to wonder what the hell happened. 

At GCommerce, we are organizing our hotel marketing services and our client advocacy around these trends.  We’re creating webinars, giving speeches and writing articles to help educate our family; the hospitality family; about these changes.  We invite you to get involved, to learn the trends and deploy the strategies we believe will be most effective in a new world.  But first, what the heck am I talking about.  Here’s a primer.

Leading Indicators

*A leading indicator is a measurable set of data that may help to forecast future economic activity. Leading economic indicators can be used to predict changes in the economy before the economy begins to shift in a particular direction.”

Nothing gets a marketer more juiced than a quality leading indicator (I know…we’re super fun and interesting people).  When the indicator is predictable and repeatable enough, it allows us to see the future.  In my estimation, there is no greater consumer leading indicator than a new generation coming of age and entering a workforce.  Time and again, when the oldest members of a new generation enter the workforce, our culture, our businesses and our way of life changes.  And it’s not a strange coincidence; the dynamism of a new generation growing up and becoming consumers is the exact thing that changes society.  These new cohorts invent ideas and businesses that become ubiquitous successes we all come to know and integrate into our own lives.

Each generation is a product of two primary influences - their parents and the state of the society in which they were raised.  Millennials inherited their Baby Boomer parents’ optimism and need for inclusion (participation trophies anyone?).  GenZ inherited their GenX parents’ skepticism and hard-work ethic.  At the same time, the dominant trends of society during their youth play a huge role in a generation’s prevailing world view.  While Baby Boomers were relentlessly optimistic and ambitious thanks to the post-war expansion of the middle class, GenX were troubled by exploding divorce rates and serious financial insecurity.  These realities can be traced to the businesses they formed, the media they consumed and their relationships with their preferred businesses.  Every fifteen years or so, members of the emerging generation start businesses that are quickly adopted by the masses; thereby placing their indelible mark on the world and transforming society to better reflect their own worldviews.  

Don’t make the mistake of thinking “these young people aren’t my customers.”  Millennials weren’t your customers when Zuck was founding Facebook, or Chesky was sleeping on couches while inventing AirBnB, but their work and their generation changed your reality.  

Here we are, standing on the precipice.  GenZ is entering the workforce as we speak; their leading edge is about 26 years old.  It’s not a matter of if, but when and how they will change the way you operate and market your business.  The obvious question is “what impact will GenZ have, and how can we prepare or take advantage?”  To answer that, we need to understand them a little better.

Who are GenZ

GenZ are generally characterized as those who do not remember life before 9/11.  A couple years ago I wrote an article about how Alexa was raising my GenZ daughter.  While millennials may have been digitally fluent, this generation is digitally native.  They are children of the great recession that touched their neighborhoods, their neighbors and, in many cases, their own family.  This was also the first generation to grow up with what we know now was an overconsumption of information.  TV sets went from carrying dozens of channels to hundreds of channels, only to be dwarfed by the amount of content, opinions, and even truths available online.  They watched their older millennial cohort incur mountains of student and credit card debt.  They were also the first generation to become acutely aware that their data was for sale to the highest bidder.  

As this generation comes of age, they are far more fiscally responsible than their older peers.  Instead of being enamored with the ever expanding reach of technology and media, they are more focused on things that they can see, touch and smell.  They are focused on their own communities, however they come to define those.  Ultimately, they are gravitating towards media, technology and community that bring more creativity, relevance and meaning to their lives.  

How are these desires manifesting in this generation:

• Unlike millennials, GenZ’s social media participation is more about voyeurship and less about self expression.  They want to stay connected with their social circles, but they aren't interested in having their future job prospects impacted by things they post online in their teens.  They have a voracious appetite for TikTok, but are rarely found posting on any channels about the intimate details of their lives.  
• With the world at the tip of their mouse, the novelty of digital transformation has worn off.  Whereas previous generations were enamored with pushing the boundaries of innovation, GenZ is more interested in technology that fits into, and improves, their immediate circumstances.
• They are exhausted with information overload in a post-truth world.  Instead of a blistering onslaught of opinions, they are seeking out creativity, relevance and meaning.  They want to relate to their own small community and their own interests in a relevant way. 
• They are activists, but not just on weekends.  They want to do business with companies that support their vision for a kinder and more connected world.

So what’s the prescription, doctor? How can your hotel adapt to target GenZ?

We’ll answer that in increasingly more detail over time, but in general know this.  You have to change the way you communicate as a brand.  Your customers are going to respond to creativity, not frequency.  Yelling “15 minutes will save you 15% or more on car insurance” 10 times a day simply won’t work any more.  Same with featuring the same bed and breakfast package on every channel all the time.  We have to become storytellers again with our brand as the setting and our customer as the hero.  We have to think hard about relevance; how our brand is uniquely meaningful to our customers.  And we have to do so with authenticity and integrity.  

The good news in all of this is that we are all in the travel industry - for my money the most personal, emotional and meaningful consumer category on the planet.  We have the ability to tell meaningful and transformative stories; we just need to renew our commitment.  Remember, to be appealing in this reimagined world, we also have to be intimate and personal, which is becoming all the more difficult with the emergence of our second mega-trend.

The World of Data For Hotel Marketing

The marketing world is undergoing a sea of change in data and the platforms we use to target and speak to consumers.  You’ve likely seen or experienced the change as you are now asked to accept cookies when you visit a site, or your iPhone gives you the option to block apps from tracking you.  Many of you have heard about the transition to Google Analytics 4 and the death of 3rd party cookies all together.  Like the emergence of GenZ, these changes are not cosmetic.  They are going to change the way you operate moving forward.

Data, and the platforms that leverage them, have been at the heart of hotel digital marketing for over two decades.  When search engines first offered hotels the ability to advertise to people who searched for “Boston Hotel”, the prospect and value of consumer targeting was forever changed.  Over time, as new technology and new platforms emerged, so did the sophistication of our data collection and consumer targeting.  What started as demographic and behavioral targeting matured as platforms like Facebook gave us the option to target people based on their psychographics.  Not only could we target people who made a certain amount of money, or lived in a certain city/region, we could target them based on what they cared most about.  We knew if they were golf enthusiasts, or foodies with a particular appetite for seafood.  Best of all, the targeting was cheap…which led to eye-popping returns.  This data is often referred to or categorized as “third-party data.”  As marketers, we got a little drunk with the power third-party data offered.  It was so darn inexpensive to target small segments of the population that we did so with reckless abandon.  It’s no coincidence, then, that society pushed back.

Our ability as marketers and as businesses to segment and target prospects through third-party data is being systematically eroded.  In some cases, laws like GDPR and CCPA are legally limiting our use of data.  More often ubiquitous platforms like Google, Facebook and Apple are changing their data policies.  If you haven’t read about the death of third party cookies and the emergence of GA4, start here.   

These changes are going to have a profound impact on the way you market your hotel and, if you aren't careful, the returns you can expect from your advertising dollars.  Read any article about the erosion of third-party data, and they all reach the same conclusion; first-party data will become more valuable than gold going forward.  First-party data is the information that a brand collects, with permission, from their own branded outlets.  When a guest stays at your hotel and gives you their information, that's first-party data.  When a guest browses your website - first-party data.  When a prospect joins a loyalty program - first-party data.  Third-party data erosion means that digital channels like paid search and social media advertising are losing their teeth, but also that marketing using first-party data is gaining in effectiveness (and returns).  

Once again, going forward GCommerce is committed to providing innovative strategies and tactics to collect and deploy first-party data to market your hotel.  In all cases though, it starts with the data collection.  Simply put, if you haven’t installed Google Analytics 4, you’re behind.  It's the tip of the spear; the measurement and management tool that will make all first-party data efforts accountable.  

The trick then becomes creating marketing and engagement mechanisms that inspire your customers and prospects to hand over their information.  As GenZ goes, so goes the world.  Remember, GenZ knows their data is for sale, and they are reluctant to turn it over.  Brands will need to create effective (creative, relevant, meaningful) communications in order to connect with their customers.  They’ll need to earn their trust and admiration before they earn their data.  That data will become competitive jet-fuel.  Those with deep, rich first-party data will enjoy lasting success while those competing with an “old school” mentality will be relegated to the bench.

The emergence of GenZ and decline of third-party data are not inextricably related, but they do end up pointing to the same conclusion.  We are in the midst of a disruptive and transformative shift in consumer behavior.  We need to follow an entirely new game plan.  In the very near future, our marketing will be focused on a deeper and more creative relationship with a smaller group of loyal customers.  Small footprint, deep impact.

In my next article, I’ll outline a strategy that incorporates all of these insights into an actionable plan of attack.  We won’t give you all the secrets (we reserve those for our partners and clients), but we’ll give you enough to get you thinking.