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How to Get Your Hotel’s Social Media Budget Approved (Or, Proving the ROI of Social)

Hotel Social Media Budget ApprovedThis post is written for the ambitious social media manager with dozens of creative ideas and innovative projects planned, but needs increased budget to support her work. And if recent conversations I’ve had are any indicator, this scenario seems to be unfortunately common.

Moving forward requires you to quantify the value of your activities, and the benefits tend to fall into two categories:

1) Cost savings

Customer service. Faster response times and faster issue resolution increases customer satisfaction and saves your company money. Data shared by Simpliflying at the EyeForTravel Social Media Strategies conference indicated it’s seven times cheaper to serve a customer on Twitter than in a call center.

Feedback collection. Money spent gather customer feedback can be reduced when you go online. In the past, hotels had to collect insight through expensive mystery shopping and satisfaction surveys, but now travelers are sharing this information without being asked. Social media acts as a virtual “24/7 mystery shopper” that allows you to view your hotels through the eyes of guests. Rather than hiring a traditional mystery shopper, analysis of online reviews can provide a much more comprehensive view of what your clients are experiencing.

Business intelligence. Of course, travelers are not just reviewing your hotel and talking about you on the social web – they’re doing this for each of your competitors. Competitive insights from ReviewPro can help you identify areas of competitive advantage – and the areas you need to improve in to stay competitive.

Market research.There is a wealth of data on the social web, and with the right listening tools, you can get detailed insights into consumer trends and preferences. Reviews and the social web can act as a virtual focus group to test new ideas. Anything from advertising concept testing to market research can be done by engaging with your social audience – but receiving these benefits requires you to have a tool in place to collect insights.

PR & media. Journalists are increasingly using sites such as Twitter to identify hot topics and gather sources for stories. By actively participating on the social web, you increase your visibility – and the chances of receiving media coverage.

Website traffic. Instead of paying for advertising to drive web traffic, social media activity can increase your visibility in search engine results and drive traffic directly to your website. A key development that has taken place over the past few months is that search engines have become much more social. Google and Bing are using data from Twitter, Facebook, and Google+ to determine how they rank websites in their results pages. The quality and quantity of your guest reviews, how many websites contain customer reviews, and the sentiment behind the customer reviews also play an important role in increasing search engine rankings – especially with local search. And placement is critical, with the first 3 results on a search page receiving 79% of the clicks.

Advertising. If you do decide to invest in advertising, you can improve response rates and sales conversion rates by talking about the topics that your customers recognize as your areas of competitive advantage. Semantic analysis of user-generated content can be a valuable tool for this. Additionally, using guest feedback as part of your advertising copy can improve performance – consumers tend to believe other consumers more than us as marketers.

Sales. Using tools such as ReviewPro’s saved social searches can be used to identify opportunities for sales and service. It can act in effect like a lead generation tool for your sales team, saving significant amounts of money and leading to revenue growth.

Time savings. Management involvement in social media activities is important, but executives typically have very little time – and their time is valuable. A top priority for hotel managers is not to spend time aggregating data: software can do that and save hours each week. Time should be prioritized on serving guests and acting on the insights that technology can provide.

2) Revenue generation

This is where the real money is. Providing concrete examples of how your activities will not only save money, but grow revenue, is the fastest way to achieve budget approval.

Consumers perceptions of a hotel have always played an influence on hotel selection and impacted the price they were willing to pay for a given property.   The social web has taken this concept to the next level. While this is common sense, there is an increasing amount of compelling data to help quantify this opportunity.

  • 35% of holidaymakers changed their choice of hotel last year after browsing social media platforms (WTM 2010)
  • “Good reviews of 4.0 or 5.0 generate more than double the conversion of a review of 1.0-2.9” (Expedia)
  • Consumers were willing to pay between 20-99% more for a 5-star rated product than for a 4-star rated product, depending on the product category. (comScore/Kelsey, October 2007)

Measurable results and a tangible ROI can be obtained by leveraging online review and social media analytics in 3 key areas:

  1. Optimizing ADR/RevPar
  2. Increasing conversion rates
  3. Maximing online distribution revenue

Hotel managers today are observing a direct link between what is being said about their establishments online and the revenue they can generate.

Growing revenue through building loyalty

Online reviews also provide hotels with the opportunity to build loyalty through listening to feedback, making changes based on it, and then communicating these changes back to customers. Recent research from the CMO Council made the impact of loyalty on profitability very clear:

  • Acquiring new customers can cost five times more than satisfying and retaining current customers.
  • Loyal customers are 15 times more likely to increase spend than high-risk, intermittent customers.
  • A two percent increase in customer retention has the same effect on profits as cutting costs by 10 percent.

Semantic analysis of online reviews also presents the opportunity to continually improve quality, leading to more satisfied guests and higher loyalty. We encourage you to read the case studies of Olivia Plaza Hotel and Sidorme to see how these hotels are improving quality – and growing revenues – in this way.

Spread the costs around

Finally, remember that not all expenses from activities on the social web should be allocated to the social media or marketing budget. Communicate the opportunities for increased performance in customer service, public relations, advertising, and sales. Obtain budget approval by demonstrating how each area of your hotels’ operation can become more effective.

Schedule an appointment with a ReviewPro advisor if you need help proving the value of social media for your organization.