Do you use influencers to promote your company, your brand, or your product? We do. Are you happy with the result? I am not entirely sure yet.
We use influencers for lead generation, content creation, and brand awareness. As you can see, lead generation is the only activity in the list that can be measured ROI. In that front, it doesn’t work well for us. It could be because we expect too many things from the program – quantity, consent, data, etc.
But, I find that using influencers for content creation (videos, photos, posts, etc) is worth doing. It’s very cost effective and you will get different perspectives, which is necessary if you have to maintain your social media.
My final advice is you should work with a few, long term influencers. Building relationship with a few is more important than working with a number of short term ones. They will know your product better and they will put more effort to work with you.
We should all try to avoid doing a discount promotion. I know I have to. However, with a pressure to increase a short term gain, we all need to do discounting. As it doesn’t require much of a brain work, let add some intelligence behind it. There are 2 ways to do discounting – absolute (or numerical) discounts or relative (or percentage) discounts. Which way is working better than which? The rule of 100 is your answer.
Researchers find that whether a discount seems larger as money or percentage off depends on the original price.
- If the prices are lower than $100, the percentage discounts (e.g. 10% off) will seem larger.
- If the prices are higher than $100, the numerical discounts (e.g. $100 off) will seem larger.
Let’s try this rule in your next promotion.
We will talk about an economic concept today. Boring, I heard. Not really. I think if you continue reading you might find it interesting. I talked in the past about discounting, fixed cost, branding, etc. But, I never explained those marketing approaches from an economic perspective. Please allow me to.
Price elasticity of demand (PED) is a way to measure a sensitivity of a change in price when a quantity demanded change. The formula is simple – % change in quantity divided by % change in price. There are 3 possible outcomes:
- Elastic – if the change in quantity is greater than the change in price
- Unitary – if the change in quantity equal to the change in price
- Inelastic – if the change in quantity is less than the change in price
The interesting part that could apply in the marketing world is that most of the goods out there (my company’s product included) are price elastic, meaning when the price drops, the quantity demanded increases. There are a few important points to note here:
- If it’s easy for your customers to substitute your product with another (e.g. substitute products or lots of offers from competitors), when you increase your price your demand will drop. This is because customers simply buy from your competitors or buy a substitute product.
- The more discretionary a purchase is, the more its quantity will fall in response to price rises.
- The less discretionary a good is, the less its quantity demanded will fall. It means the price is inelastic i.e. customers agree to pay premium prices for brand named items, additive products (e.g. alcohol, cigarette), and required add-on products (e.g. iPhones to use iTunes).
From an economic perspective, to get out of the discounting game, we have to find a way to move our product’s price from being elastic to being inelastic. Building a brand is one way. Making your product additive is another.
Not too boring? Interesting?
I was asked this question by my senior management team multiple time. The question is – how can we reduce our product cost per unit? They also put pressure on me to increase the offer price in order to reduce our cost per unit. The problem is it is not that simple.
Everyone knows that in any cost structure there are fixed cost and variable cost. In our case, the fixed cost contribute more than 55% of the total cost. It means we have inefficiency in our operations. By increasing the offer price, it means we pass our inefficiency to customers. As we are in a hospitality industry, customers can always buy holiday packages somewhere else. There are a lot of cheaper deals out there in the market.
The only 2 ways to reduce our cost per unit in this situation is 1) reduce our operational costs (e.g. reduce the size of the call centre) or 2) sell more packages even though it means we have to reduce the price (to drive more quantity to dilute the fixed cost).
It looks to be an interesting year answering the same question.
Do you think we focus too much on millennials as a business? I do. I don’t mean to say that they are not important. They are a new generation with a different kind of behaviors. They possess different behaviors when compared to other generations because of the environment they grew up with. However, they are not the only generation that we should focus on. In fact, I am not sure if we should focus on customers based purely on demographic factors like ages, genders, etc.
Segmenting customers bases on psychographic or behavioral factors are something we should look at. Why? I am in mid 40s. But, I like many things the millennials like. I like new gadgets, new smart phones, new social media sites. Better yet, I have higher purchasing power than the millennials.
My point is when imagine who your customers are (aka your customer personas) think about their behaviors. Your “David” persona could be males, love technologies, like adrenaline travel experiences, drive expensive cars, watch Netflix. As you can see, David could be anyone across 3 generations – Millennials, Gen X, and Gen Y. The important bit is you have to craft your message to David about what he likes to get his interests, regardless of his demographics.
Get your customer personas right. Craft relevant messages to them. This is a formula for success in 2020.
Next year will be a very interesting year for me and for my company. We all know that things will get harder considering that we are a sales-driven and an outbound-based company. It means we care about what we need more than what customers need. That’s why it’s going to be very, very hard.
I have a long list of what need to be done. My mission is still the same. I want to make a difference even though I am just a middle level leader. One key item that I need to do is to change the way we sell our hotel product. Our problem is we have an average, mediocre hotel product with mediocre infrastructure. There is no reason whatsoever for people to care about our product.
What I have in mind is we have to present our hotel product differently. The basic idea is that in the past we use hotels as a selling point and destinations as a supporting reason. The new trend is customers want more experiences. Therefore, we will use the experiences as a selling point, and the hotels will be use as auxiliary. This idea sounds simple but it requires an upside down thinking and execution. We don’t have the infrastructure to do this. And, I don’t know how far I can take this idea to. One thing that I do know is this is the only way to compete in the crowded market.
This is just one item in my list. Next year will be very interesting.
I have got a chance to help the hotel team with their marketing efforts. I spent times doing research to understand their terminologies so I didn’t look silly during the process. The more I learn about this industry, the more I feel there are a lot of opportunities to disrupt how the marketing is done.
The major challenge for all hoteliers is OTAs (Online Travel Agents) like Expedia, Booking.com, Agoda. They are like a large shopping center that sells similar product. People of course like to go there because it’s a one stop shop. You can compare prices and there are so many options. Furthermore, those OTAs have invested excessively in technology. They offer a very good personalised experience. Hotels have a love-hate relationship with OTAs. Hotels have to rely on them, pay high commission, and don’t get full control of their own booking data. Worst of all, OTAs drive the room rates down due mainly to a competitive force.
It’s a common knowledge and practice that all hotels want direct bookings. The influence from OTAs is great to the level that hotels can’t even set different prices on their websites. They have to stick to this illusive ‘rate parity’. They are afraid to get punished from those OTAs. Another funny thing about the influence of OTAs is all hotels must have a revenue management team – big or small. This team’s job is to do research about competitors’ rates and customer demand. They then adjust prices up and down depending on the research information. Some hotels put the revenue management function ahead of other functions to drive bookings. And, I don’t really understand this logic. Price is important but you also need to give good reasons to customers to consider your price and to see that your price give good value. By good value, I don’t mean cheap rates.
The marketing function in this industry is quite secondary. I have amused when I learnt about this fact. It is a battle that I intend to take from now. It wouldn’t be easy when OTAs have trained customers to look for the cheap or discounted rates. And, it wouldn’t be easy when the hotels respond to this OTA challenge by focusing on revenue management side.
That’s why it’s intriguing and I am excited to change that.