By: Amy Hinote
As customer retention plays a larger role in the long-term success of a vacation rental management company, property managers look to create a foundation for customer relationship management (CRM) strategies.
It has been fifteen years since Bain & Company reported that increasing your customer retention rate by 5 percent increases profits by 25 to 95 percent. Yet most vacation rental marketers are still more focused on guest acquisition rather than retention.
With rising customer acquisition costs related to third-party distribution sites, implementing a full-scale customer retention strategy is quickly becoming essential for marketers tasked with growing the bottom line.
If your acquisition strategy is largely built on the use of third-party distribution sites, such as VRBO, FlipKey, Booking.com and Airbnb, then – as a vacation rental marketer – you will need an effective customer retention strategy in order to justify the escalating marketing dollars spent on these channels. Creating a process to collect and utilize customer data will necessarily be part of your customer retention strategy.
Technology platforms have been slow to help VRMs accomplish this objective. In the vacation rental industry, technology centers on the reservation transaction, not on the guest(s). In addition, vacation rentals, on average, have more than four guests per reservation who are partially responsible for the travel decision. Most of the current PMS systems and processes only track the payer, leaving out large amounts of guest data that marketers need to implement a comprehensive customer retention strategy.
New CRM solutions and technology tools are being introduced to help marketers gain access to the data they need to collect in order to establish a successful customer retention strategy. Guestbook, for example, is a web-based tool for VRMs being launched in the market in March that provides a CRM tool for capturing data from all of your guests along with the ability to offer and book area activities. Other technology providers have created apps like HomeAway’s Glad to Have You that can serve to capture data. NAVIS has also built its Reach CRM which integrates lead data into the database. Some vacation rental managers are reaching out to non-industry platforms, i.e. Salesforce and Marketo.
CRM is a powerful tool that empowers vacation rental marketers to better engage with their guests, but CRM technology requires being led by company strategy. CRM technology is not a standalone solution. It requires a strong, well-conceived plan to guide its use.
Developing a CRM Strategy
What is a CRM strategy? It is easy to confuse a CRM strategy with a CRM implementation plan. The CRM strategy is the blueprint for how to turn new guests into repeat guests. The goal is to move your guest from a “folio” to an emotional relationship which recognizes that your guest is your guest through any channel. CRM is not solely a marketing function. Your CRM strategy will include every department that has interactions with customers including reservations, front desk, service and marketing.
When formulating a customer retention strategy, involve people from all customer-facing departments. The CRM strategy articulates a plan to put your guest at the heart of your business and to develop an ongoing “relationship” with each guest. It is up to you to find out what’s important to guests who choose your homes.
Determine the Data You Want to Collect
In order to get the most out of a CRM, after settling on your objectives, determine which data you want to collect. Collecting data in the vacation rental industry is different from any other. In most destinations, the average party size is over four people per reservation. This creates a unique challenge because a vacation rental CRM strategy must find ways to collect data on all of the guests, not just the one who made the reservation.
Because of the complex challenges facing the vacation rental industry, we suggest starting very small. Eventually, you will find ways to expand customer profiles by capturing more data (for example, do they have children or pets, what are their ages, when are special occasions, etc.) It is much easier to implement tactics to get more data once you have your guests’ basic data.
The following fields are all you need to get started:
- Email Address
Using the CRM platform of your choice along with your PMS, connect this data to the property the guest booked, the folio number and the date they booked. In the future, you will find ways to expand this data, but this combination of data will allow you to create a solid foundation for a CRM strategy.
How to Collect Data on All of Your Guests
As a result of the challenges unique to the vacation rental industry, property managers have to get a little creative with how they are going to collect data from all of the guests (not just the name on the folio). Here are some ideas of ways to collect data from guests not on the reservation.
- Reservations Agents
Decide on a policy/process to capture this data at the time of the reservation. For example, you could say you need it for security or to email important information or key codes — the fastest and easiest way to capture the data is at the time of reservation.
- Apps with Key Codes
After the booking, many tools provide other ways to capture additional guest data for smart home access.
- Internet Access
Another tool for obtaining guest data is to add a landing page to the guest’s access point for Wi-Fi. Similar to a hotel, you can use this type of landing page to collect the data. Silicon Travel is one company that provides a solution for internet access landing pages.
- Activities Promotion
Like the Guestbook platform, providing guests access to activities and area information offers an alternative way to collect data.
- Surveys and Reviews
As you reach out to guests for surveys and reviews, find tactics and incentives to reach out to all the guests who stayed at the property.
- Pool Passes, Parking Passes and Amenity Access
Many condominiums and communities require passes of some type for shared amenities and parking. One idea is to require a record of guests’ name, email, city and home state in order to receive passes/access.
- Loyalty Programs
While not the easiest process to implement, guest loyalty programs are both an incredible way to collect customer data and a great tool for your overall CRM strategy.
Decide What You Want a CRM Platform to Do
Like determining which data to collect, when deciding what you want your CRM technology to do, keep it extraordinarily simple. The technology you use for CRM will be your number one source of customer data.
- Easy list import/export with assigned data fields
- Basic email functionality
- Automated emails
- Segmentation tools: If you start small in your data collection, you will only need segmentation based on booking date, booking window, stay date, preferred property type and geo-targeting.
Choose Which Technology You Will Use as a CRM
Ideally, if your PMS has the ability to tie multiple guests to a reservation, then in most cases you can simply use your PMS and/or third-party tools that are integrated with your PMS. Customer relationship management is about people rather than technology – and your CRM software is simply the supporting act.
The main objectives in laying the foundation for a guest retention strategy are (1) to get multiple departments working together to implement a CRM plan and (2) to start ongoing, targeted communications to your past guests.
Once you’ve built a simple CRM foundation, you’ll be able to craft creative messages designed to build customer trust, loyalty and repeat business.