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The Guest Experience is the New Marketing

Written by Scott Hannah
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Focus on raising your Net Promoter Scores and watch your profits grow.

 

One of the biggest business trends today, across the entire Western world, is the increased focus on the guest experience. Steve Cannon, Mercedes Benz USA president and CEO, said it best: “The customer experience is the new marketing.”

guest journey

The customer experience is what differentiates a ski trip from a beach vacation or cruise, one ski resort from another, and one equipment manufacturer from another. For the average ski resort, the guest experience drives repeat and referral business that accounts for 70 percent of its total revenues.

pie chart

As important as the guest experience is to every ski resort and ski area, it may be even more important to the industry overall. That’s particularly true for beginning skiers and riders. A great guest experience is essential to increasing trial via word-of-mouth, increasing visit frequencies (a particular challenge with Millennials, who are skiing/riding half as often as Boomers), converting beginners into core skiers and riders, and retention.

Now, creating new skiers and riders is expensive. It costs seven times as much to create a new guest as to retain an existing one. Still, the return on that new guest can be significant, and it’s an essential part of any business. Fortunately, as you increase your number of Promoters, as determined by Net Promoter Scores (NPS), you make that cost easier to bear (more on that later).

Here’s the bottom line: If the industry is to grow, ski resorts must adopt a more guest-centric approach to managing their businesses, in which all operational and capital decisions consider the impact on the guest experience.

Measuring the Experience

As the old adage says, “you manage what you measure.” To continuously enhance the guest experience, a resort must solicit and respond to carefully designed, ongoing guest feedback. Based on our 13 years of experience surveying skiers, riders, and tubers, we have discovered the key aspects of a great measurement program:

1. Who: To ensure the guest feedback is reliable, resorts must frequently survey a representative sample of their guests, daily is best. Surveying a larger number of guests has three advantages:
•     It increases management’s confidence that the sample is representative of the resort’s universe of guests.
•     It increases the number of respondents for lesser-experienced facilities and services, such as lessons.
•     It facilitates the recovery of a greater number of Detractors. If a resort reaches out to these customers, it can turn many into Passives or Promoters and minimize their negative impact.

2. What: There are two key aspects of “what.” First: the entire, end-to-end guest journey (see chart, facing page) needs to be measured, not simply the on-mountain experience. A poor experience in a single area can create a Detractor, regardless of the experiences elsewhere. The guest journey begins with selecting the resort and planning the visit. It continues through departure and with the return home.

A bad experience often leaves a lasting impression. According to Ruby Newell-Legner, a customer service trainer and consultant to the sports and entertainment industry, “It takes 12 positive experiences to make up for one unresolved negative experience.” In many cases, the Detractor may not return and could criticize the resort to others in person, in user reviews and in other social media.

Second, the survey should measure both the guests’ satisfaction with their visit (the interactions with staff and facilities) and their emotional connection to the resort. The survey instrument should measure satisfaction with not only the physical components of the visit experience, but also the emotional engagement the resort achieves with the guest. Both must be positive to create loyalty.

As Maya Angelou, the late American poet and civil rights activist, observed: “People will forget what you said. People will forget what you did. But people will never forget how you made them feel.”

3. When: All guests should be surveyed post-departure, rather than during their visit. This is because on-site surveying (1) interrupts the guest experience, (2) measures only part of the entire guest journey, (3) minimizes the amount of feedback that can be collected, and (4) artificially inflates the ratings due to the “interviewer effect.” Many guests are hesitant to criticize the resort directly to a member of the resort’s staff.

4. Where: Guests should be able to complete their survey at a time and location of their choice, be it in their homes or offices.

5. How: To produce quality, in- depth feedback, the surveying is most efficiently conducted by email, using guest contact information from multiple sources—on-site collection, point-of-sale, and lodging’s property management system, for example.

Prioritizing Guest Experiences

The guest journey is complex, and not all experiences are of equal importance to overall satisfaction and loyalty. How important is the rental process? Snow conditions? Lodging? Food and beverage? If a resort knows the importance of each, it can focus on improving its performance in the most important areas—the key “drivers” or “determinants”—and, in doing so, make the greatest improvement in overall satisfaction and loyalty.

Fortunately, you can identify and quantify these key drivers, using supplemental correlation and regression analyses of the quantitative survey data. This analysis, which is typically done at the end of a season, can then guide decisions on operational and capital enhancements and on marketing initiatives.

The drivers vary by resort. Friendliness/helpful is one that is common to most resorts. It is also controllable, and doesn’t require capital investment. Other drivers can include the overall skiing/riding experience or overall fun.

The Value of Loyalty

Companies and other organizations have shifted their focus from satisfaction to loyalty—as measured by the NPS—because loyalty, unlike satisfaction, is proven to drive incremental revenues, profits, and market share.

The key to achieving these gains? Increase the number and percentage of Promoters, while decreasing the number and percentage of Detractors. This works for two reasons:

First, Promoters visit far more often than Passives, who ski/ride far more often than Detractors. (See charts at right.) On average, Promoters devote 65 percent of their total visits to their favorite resort. Passives, who may like a particular resort but are not loyal to it, tally 51 percent of their total season’s visits there. Detractors apportion just 38 percent of their total visits to the area.

Second, Promoters refer others significantly more often than Passives, who refer much more often than Detractors.

Best of all, a resort can calculate the revenue impact of increasing one’s Net Promoter Score using its own visit and referral frequencies, as illustrated in our Revenue Calculator, below.

roi

As shown in the calculator, the ROI on an investment in research can be dramatic. Even a 4-point increase in NPS produces a significant increase in revenues.

That’s because Promoters devote more of their yearly total visits to their preferred resort. For example, a Promoter might average 8.8 visits, compared to 5.5 for a Passive, and 2.9 for a Detractor. In the example here, a research outlay of less than $10,000 showed the way to a revenue gain of nearly $300,000 for an area with 250,000 annual visits. A 35:1 ROI is within reach of many areas.

resort shares

And that calculation simply reflects an increase in visits; it doesn’t factor in Promoters’ greater spending, or gains from reducing negative word of mouth as the number of Detractors falls.

It comes down to this:
•  The guest experience is responsible for generating 70 percent of your revenues.
•  It costs seven times as much to create a new guest as to retain an existing one.
•  A small increase in guest loyalty generates a significant increase in revenue.
And that raises some key questions:
• Are you allocating sufficient resources to enhancing the guest experience?
• Are you continuously making it easier for your guests to enjoy our sport?
• Are you removing departmental silos to make the guest experience seamless?
• Are you focusing improvements on what’s most important to your guests?

If you can’t answer “yes” to these questions, you should seriously consider using NPS as one of your key metrics to evaluate the health of your business. 

guest experience guest editor

Read 1006 times Last modified on Wednesday, 19 April 2017 12:26
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