U.S. consumers spent more than a trillion dollars annually on travel last year, according to the USTA.
However, when it comes to growing their business, many travel marketers continue to ignore or under-utilize the most important weapon in their arsenal: their existing customer data (CRM).
For many travel marketers, customers come in two flavors: “One & Done” and “Many Happy Returns.” One & Done consumers dive into a new hotel, airline, car rental, cruise ship, destination or experience and then check that box, never to be heard from again.
On the other end of the spectrum, Many Happy Returns-consumers find a travel provider or destination they love and want to revisit and experience over and over.
While returning customers may try other experiences and destinations throughout their lives, they can be valuable loyalists — the 20% high-value customer that drives 80% of the business that every marketer covets.
The importance of return customers
Repeat customers are extremely important to a travel marketers bottom line for three core reasons:
- Engaging with and motivating repeat customers is far more effective and less expensive than acquiring first-time buyers or re-acquiring lapsed buyers.
- Repeat customers are more likely to upgrade and/or expand their relationship with a brand over the course of multiple purchases.
- Repeaters are much more likely to become advocates who will generate referrals for the travel purchase that has become their “tradition”.
The quest for return customers
Obviously, the discerning travel marketer would prefer to pull in as many repeat customers as possible with acquisition efforts. But how do you locate and target this “holy grail” of travelers?
Many will explore key motivators and attitudes for travel and attempt to position their offering effectively to different groups of consumers. Others will explore behavioral segmentation, identifying and targeting consumers based on activities that indicate a likelihood for travel booking.
Incredibly, some marketers will revert to one of the oldest and most rudimentary tools — simple demographic segmentation focusing on the gender, age, income or home ownership status.
The key problem with many of these “simple” targeting techniques is their inability to reliably predict prospect behavior with the accuracy and efficacy of proper analytic models.
What if there was an approach available to marketers that can leverage what they know about return customers to effectively define, locate, predict, and acquire more of these customers on a regular basis?
That approach not only exists, but has been fully developed, tested, and optimized for over 20 years and then refined into a successful and powerful weapon known as people-based marketing.
Moving beyond One & Done customers
The dream of marketing in the one-to-one future raised by Don Peppers and Martha Rogers back in 1993, has turned it into reality.
We have a viable, predictable marketing system based on reliable analytic principles in which we can market to real people vs. relying on demographics, segments, pixels, and proxies.
The people-based marketing approach begins with your customer data. After locating and extracting those repeat customer records from a company’s CRM system, a propensity model is created using sound analytic methodology to clarify and quantify the factors that define these customers.
Once that model is developed and tested, it can then be applied to a high-quality, national database to locate and score prospective return customers all over the country.
Instead of relying on simple demographics, speculative segmentation or hunches, marketers using this approach find themselves in possession of a powerful asset— a list of individuals who possess the distinctive set of attributes known to exist in their best customers.
With the new modeled prospect universe is in place, you continue on an advanced analytic journey, creating new response models that optimize and improve engagement with prospects over time for each and every addressable channel.
The next level of model-driven acquisition: Channel effectiveness, selection and preference
Building response models for every outbound channel begins with a list responding customers for each addressable channel (direct mail, email, digital display, paid social, etc.).
These records are used to target more effectively and efficiently by creating “filters” that not only help identify the best prospects to target, but also indicate which channel(s) these prospects respond to more favorably.
As an example, once you’ve built a direct mail response model, you’ll be able to fine-tune prospects in your modeled universe and begin mailing to only the top 15%, 20%, or 25% based on their likelihood of responding via direct mail.
Suppressing prospects less likely to respond via direct mail will save you a great deal of money, and you can invest the savings into other activation channels.
Creative meets data: Dynamic creative optimization
Marketers’ chances of success are far greater when they know who to target and where. But what their message communicates is also very important. While some level of customization, personalization, and dynamic creative has been used for many years, the bar has been raised.
Sophisticated marketers today are leveraging Dynamic Creative Optimization (DCO).
Typically, a formal DCO program leverages tools and runs in support of digital media. Since online display and paid social banners and posts are often being served by machine-driven systems, driving variable dynamic creative through these pipes makes sense, and aligns with a program’s already-programmatic structure.
However, the most recent wave of DCO is beginning to consider multi-channel dynamic creative covering traditional channels like email, direct mail, display, and social.
In short, DCO takes each carefully tailored one-to-one marketing record and dynamically maps key data elements of that record to relevant content sections (copy, images, creative assets), creating a one-to-one message to match the precise record of each prospect being targeted.
DCO in practice: A cruise marketing example
In the travel world, the key to consumer marketing is relevance. Your message needs to resonate with the consumer based on his or her personal situation.
The cruise marketing example below provides a quick snapshot of how dynamically delivered creative elements can impact the message being received by each unique prospect.
As you read this, imagine Customer A receiving Customer B’s messaging —it happens every day with well-intentioned marketers who do their best to segment, yet “miss the boat” on one-to-one creative.
Today’s content management technology and production techniques allow this kind of dynamic message serving and the resulting “matched” ad, email, or direct mail piece effectively becomes the right message to the right person via the right channel.
Companies like Thunder and Zeta have emerged to take on this new level of content management and content “mapping” designed to deliver one-to-one creative.
Additionally, foundational marketing players like Google (through the Google Studio in their Google Marketing Platform), Adobe, and Facebook have also pushed DCO systems, generally titled “Creative Management Platforms,” into the marketplace.
People-based marketing in practice: Expanding beyond repeat travel customers with a luxury vacation provider
For travel companies, models can be expanded to further optimize marketing efforts after separating repeat customers from their “One and Done” counterparts.
To best optimize marketing efforts, we have worked with travel companies to focus on destination-based models as well as trip-based models. We’ve worked with clients to do this for traditional offline marketing channels, as well as online marketing vehicles.
For one of our Travel & Hospitality clients, we created unique models to address overall look-alikes (cloned prospects), short trip look-alikes (best suited for shorter excursions/getaways), and cultural trip look-alikes (more likely to purchase a culturally richer vacation vs. a simpler tourist getaway).
We then deployed all three product-based models through Merkle’s proprietary insights platform, M1 for maximum insights and activation across channels.
Below is a model validation example of how well these types of clone models work and how we determine targeting with their use:
The illustration above shows travel marketer performance of a product-based (travel type) model and how well it performed against a validation sample during a live conversion test.
People-based marketing in practice: Refining the customer base for a major entertainment destination
Repeat Customers are extremely important for entertainment destinations. While finding and converting these valuable customers is key, identifying their ongoing behavior and building new models to support those behaviors takes destination marketing to a new level.
Merkle worked with a client to target hotel and amusement park visitors together and separately based on multiple propensity models. Working with available CRM data, we expanded their program to target quick weekend get-aways (local residents with passes) as well as week-long multi-park trips (out of state).
We were also able to target based on their interest in special events like Mardi Gras and Halloween Horror Nights.
In addition to optimizing existing acquisition model use, marketers can create a specialized secondary model to tease out deal seekers, allowing them to move last-minute inventory without diluting brand value.
A solution with real results
In summary, building out the toolset and applying people-based marketing principles involves three core elements: Targeting the right prospects, using the right marketing channels, and using messaging that speaks to them with relevance and insight.
Four keys to a successful people-based marketing acquisition program
Building a true people-based marketing engine is a huge undertaking that requires investment, perseverance, patience, and a little internal marketing.
A people-based marketing approach allows marketers to identify those high-value customers, understand what makes them tick, and use that knowledge and data to find other customers like them.
Since it’s based on sound analytics and marketing to real people, it eliminates much of the guesswork still being used by many travel marketers in their current programs.
While the “One and Done” consumer will always exist, people-based marketing provides a way to bring “Many Happy Returns” into a leading CRM position.