Customer experience report part 2


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Unpicking the state of the guest experience in the UK Hospitality Sector

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Customer experience report part 2

  1. 1. The Customer Experience in the Hospitality Industry Part 2 The Sub Sector & Competitive Set PerformanceSponsored by © Customer Service Benchmarking Ltd June 2012 1
  2. 2. ARE YOUBEING SERVED?Why is it that we recognise the increasing demands of Using a first-class legal team combined with a uniquecustomers in the hospitality sector, but so often fail to apply technology platform, we can deliver fixed priced legalthe same measures to the legal profession? How often do you services in a more flexible, tailored way whether you are ahear lawyers talking about customer service? small business, mid-sized company, or a large organisation balancing your internal legal capabilities with an externalWe believe all businesses, small or large, should expect the panel of experts.same level of service from their legal partners as they do fromtheir hospitality providers. We’ve built our business model We know how important it is to meet both the changingaround the needs of our clients, providing price certainty and needs of our clients and their expectation for a qualityservice choice. service at a fair price. Learn more at or call 0844 257 6000LEGAL MATTERS 2
  3. 3. Forward “A vital piece of intelligence for all hospitality leaders. Whether in preparation to welcome the world as hosts of the Olympic Games 2012 or simply to grow sales and profit in the most competitive economic conditions for a generation, this report, based on robust “actual” visit data identifies the challenges and opportunities ahead. The report presents compelling evidence for a shift in focus - to engage existing guestsand leave them with a desire to return and tell their friends. Peer to peer recommendation has always been the most powerful marketing vehicle and in a social media-rich environment the opportunities and risks are even greater. Such customer centric intelligence, vital for competitive advantage, was not previouslyavailable but Customer Service Benchmark now provides an accessible tool for all leaders to assess where they are currently and to identify the scale of their opportunity-gap by measuring and benchmarking performance in areas that matter. The report raises some important questions and challenges.” Bob Cotton “A vital piece of intelligence” 3
  4. 4. Introduction “When the majority are average, focus on and deliver excellent experiences for competitive advantage” In Part 1 we illustrated the performance of the hospitality industry. In Part 2 we drill down to consider the relative performance of the sub sectors of the Hospitality Industry and each of their constituent competitive sets. We aim tochallenge. We aim to identify average and offer guidance for those who aspire for more by highlighting the performance gaps and identifying opportunities. Sub Sector Accommodation Food Led Drink Led Competitive Sets B&Bs Casual Dining Community Pubs Budget Hotels Fast Food High Street 3-4* Hotels Coffee + Destination Pubs 5* Hotels Fine Dining Boutique Hotels Gastro Pubs Ancillary 4
  5. 5. Every Sub Sector, Every Question Below Target Each sub sector performs below target in all areas. Too much emphasis on training systems and process. Too little welcome, warmth, interest and knowledge. Accommodation businesses only manage a welcome score of 77.68% even with a receptionist. Being welcome is not defined by saying hello, it is exhibiting behaviours that make people feel welcome! The Drink-led Sector offers the best perceived value. Food-led team appear to be trained - but in what? It appears the wrong things. Restaurant teams are perceived to be better trained - they know how to take orders, serve goods and transact guests yetlack personality. What is the purpose of your training? Provide systems and processes to aid the team but train knowledge to instil confidence and release personality. Recognise behaviours that matter! 80 Accommodation Drink Food 78 Personality 76 Welcome, Warmth, Interest, Confidence Skills Pace, Training, 74 Knowledge Reflections Perceived Value, 72 Willingness to Recommend Welcome Warmth Interest Confidence Pace Training 70 Knowledge Value Recommend WANTED: Places that excite and satisfy guest emotional needs! 10
  6. 6. Ive learnedthat peoplewill forgetwhat you said,people willforget whatyou did, butpeople willnever forgethow you madethem feel.Maya Angelou photo credit: Ben Sutherland 11
  7. 7. Accommodation fails to deliver Home from Home Experiences Disappointing performance from the Accommodation-led Sector, only 5* Hotels achieve 90% and only for reflections. Under-performing overall, 5* Hotels benefit from kudos and association rather than the team behaviours and the experience afforded guests. Guests want to tell people they stayed there despite the experience rather than because of it. Boutique Hotels demonstrate how differentiation on design rather than actual guest experience fails to deliver.3-4* Hotel performance demonstrates why it has shrunk in a sector revolutionised by the development of budgethotels. While net growth in rooms has been nominal over the last 30 years, the growth in Budget hotels that offera better price and a better experience has hastened the demise of the undifferentiated and squeezed mid market offers. 100 3-4 Star 5 Star B&B 90 Boutique Budget 80 Differentiate or die! Experience is the only competitive advantage opportunity for mid 70 market as budget hotels grow and improve. Personality Skills Reflections 60 Average Score Ensure you deliver on experience not just design and kudos! 12
  8. 8. “We brought prices down, down, down so they are now essentially commodities. So if we want to succeed in this business, we have to move in a direction of adding other value to the relationship with our clients. And so where I might have said 15 years ago, We want to be the best discount brokerage, today I want to be the best relationship company in financial services.” Charles Schwab “We have the best customer satisfaction record, based onTransportation Dept. statistics, of any airline in America, thefewest complaints filed per 100,000 passengers carried. So you’re not just getting low fares, you’re also getting wonderful customer service.” Herb Kelleher Price isn’t enough! Even for successful low-cost operators! 13
  9. 9. 5* Hotels Reliant on Kudos and Maslow 5 Star willingness to recommend is excellent but clearly driven by kudos rather than the quality of the experience. High price provides status and high personal brand value but experiences are formal and often inhospitable. B&B personality performance eclipses all. Boutique Hotels are welcoming but often disappoint on every other level. Warmth is the most concerning aspect - reserved, formal, slightly distant or just don’t care prevails. Guests want warmth & personality - a home from home experience is sadly lacking across the accommodation sector. Stop processing people and start welcoming guests to your home!Budget hotels are growing, booking is easy, they are developing the experience and offering far more than a cheap bed. 100 3-4 Star 5 Star 90 B&B Boutique Budget 80What are thedoormen andreceptionists 70 doing? 60 Welcome Warmth Interest Confidence Pace Training Knowledge Value Recommend Average Score Formality is the enemy of warmth and hospitality! 14
  10. 10. Be welcoming - AND MEAN IT!• Let your personality and welcome reach out from beyond the counter.• Acknowledge queuing guests - let them see you are there and have seen them• Make eye contact and Smile - with your eyes as well as your mouth.• Be first, Be there & Mean it• Ensure all team members recognise their responsibility to welcome guests• Make the section closest to the entrance smaller, providing that team member the capacity to welcome guests• Only one host - are you sure?• Good Afternoon, Hello, Hi, Evening Madam or Howday Dooday - it’s less about what you say and more about how you say it Recognise team members that mean it! 15
  11. 11. Food-Led Businesses lack personality Unlike the hotel sector the restaurant industry has “enjoyed” phenomenal growth in guest choice - the competitive challenge has grown in tough economic times yet price rather than experience has been the approach adopted by most. Each competitive set delivers experiences below the 90% target. Fine Dining best and only 6.34% adrift. Over-supply and the challenging economic climate demands competitive advantage.The consumer needs experiences, they want places to escape, socialise, explore and enjoy, yet the evidence shows a bewildering choice that fails to excite and engage. In the face of rising prices, debt burdens, static or falling sales and profit the answer is not to slash costs and cut prices but to engage guests and provide experiences worthy ofrecommendation. Discounting is not a long term or strategic solution. The eating-out market fails to deliver and faces increasing competition from supermarkets and entertainment sources that better meet their experience and value requirements. 100 Ancillary Casual Dining Coffee + Fast Food 90 Fine Dining Gastro 80 Ancillary is 19.52% adrift of earning recommendations. 70 Personality Skills Reflections 60 Average Score Price is an unsustainable battleground! 16
  12. 12. Unrivalled choice but lacking experience and engagement Welcome, Warmth, Interest and Knowledge are weakest! Ancillary where the hospitality provision is secondary e.g. motorway services, theme parks, museums and supermarkets are the worst performers in almost all areas. Surprisingly(?) even those with formal host / maitre’d, the welcome is below 90% target level. 70%-89.9% just means ambivalence, it is not at the level (90%) required to develop advocacy! Fast Food and Coffee+ ‘off the pace’ required by guests and lacking in personality. Gastros: over-promising on design and marketing but failing to meet guest expectations. 90 75 60Welcome Warmth Interest Confidence Pace Training Knowledge Value Recommend Average Score Ancillary Casual Dining Coffee + Fast Food Fine Dining Gastro In a competitive market - Differentiate on Experience! 17
  13. 13. Drink Competitive Sets Illustrate why there are so many closures!The Smoking ban effectively turned pubs into restaurants overnight and with the added competition from a rapidlygrowing restaurant sector which has benefitted from fresh ideas and investment, pubs have largely lost their placeand their way. Despite an enviable heritage and fondness they have allowed others to steal a march on them and clearly bring up the rear in the experience stakes. Once the heart of the community - “the third place” - they now close at a double digit rate every week. Pubs and Bars - venues for convivial socialising and escape, fail to deliver against all measures but particularly disappointing and damaging is the lack of personality factors. Most even fail to acknowledge guests at the bar. Destination pubs are the best performing set but still almost 10% below target. 90 80 70 Personality Skills Reflections 60 Average Score Community Destination High Street Return to what made pubs the social hub! 18
  14. 14. Experience Lite in Pubs and Bars Destination Pubs perform best against all measures but are they restaurants in disguise developed by restauranteurs? The drink-led sector looks much worse without the contribution of pubs in destination locations which serve food.If only... there were only pubs? Competition has grown, needs have changed and a more discerning and affluent societychoose restaurants that fulfil multiple needs, excite and engage them while those pubs stuck in the past struggle on and close.A great pint is not enough! A proud heritage - the envy of many nations is diminishing fast. High Street pubs and bars are being supported by capex fuelled fashionable design - an unsustainable strategy as volumes fall. 90 Community Destination High Street 80 Community Pubs Welcome @ 70 68.52% isactually saying go away! Welcome Warmth Interest Confidence Pace Training Knowledge 60 Value Recommend Average Score Pubs need to be the 3rd place again! 19
  15. 15. Experience Benchmarks We have evolving experience metrics for each of the following segments of the Hospitality sector.Sadly all below the 90% target - the level required for advocacy and recommendation. We are pleased to be helping one client at a time. Part 3 considers the performance of the basket of talent which makes up The Eclectic Benchmark. The report will illustrate clearly the gaps between the average performers (the majority) and the best of the best! 90 85 80 5* Hotels Fine Dining Gastro Pubs B&B’s 75 Destination Accommodation Hospitality Sector Casual Dining Coffee + Food Led Budget Hotels Boutique 3-4* Hotels Drink Led Community High Street 70 Fast Food Ancillary 65 Focus teams on consumer metrics that matter! You have to be better than the rest! 20
  16. 16. Insufficiently Welcoming across the “experience” sector Contract Catering, Motorway Services, Theme Parks and other ancillarys provide the worst welcome followed by Community pubs Only Boutique Hotels provide a level of welcome worthy of note and recommendation 90 85 80 Boutique 753-4* Hotels 5* Hotels Fine Dining Budget Hotels B&B’s Destination Casual Dining 70 Gastro Pubs Community High Street Fast Food 65 Coffee + Ancillary 60 Welcome You wouldn’t fail to greet guests to your home! 21
  17. 17. A lack of Warmth across the Sector Fast Food and Boutique join the underachievers Ancillary and Community. Fine Dining and Gastro leading the way but all below 90% target.Caring for, being attentive, listening to, demonstrating enthusiasm and affection or kindness towards guests delivers a sense of warmth. A simple gift easily bestowed upon guests will provide significant competitive advantage.Warmth is the key driver of recommendation : 29.7% of guests cited warmth as the key reason for their willingness to recommend. 90 85 80 75 Fine Dining B&B’s Destination 5* Hotels 70 Gastro Pubs Casual Dining 3-4* Hotels Budget Hotels Boutique Community 65 Coffee + High Street Fast Food Ancillary 60 Warmth Turn up the heat on operators to demonstrate warmth! 22
  18. 18. Show Interest The worst area : evidence of an inability to demonstrate an interest in the guests themselves and their needs. An abject performance seriously limits sales and profitability. Asking questions of the guest about their day, work, recent activities, holidays, shopping exploits etc, not onlydemonstrates you are interested in them but it provides the essential sales fuel. Understanding guests facilitates thebest matching of goods, services and an experience to guests encouraging them to return, to bring their friends and therefore maximise long term sales. 90 85 80 75 Fine Dining B&B’s 5* Hotels Gastro Pubs Destination 70 Boutique Budget Hotels Casual Dining Community High Street 3-4* Hotels Coffee + 65 Fast Food Ancillary 60 Interest Ask questions - show interest in their needs! 23
  19. 19. Emotions Matter“Fill guests with a burning desire to return and bring their friends” 24
  20. 20. Demonstrate Knowledge Knowledge is the foundation for confidence and guest interaction. Without knowledge team members will actively avoid engaging with guests. 5* Hotels are the only competitive set reaching target levels while fine dining is close.These high-end experiences do not have the exclusive rights to demonstrating knowledge and staffing levels are notan acceptable excuse. Every team member from every team should share their knowledge PROACTIVELY and build the guests’ appreciation of your points of differentiation, values and substantiality. 90 85 80 5* Hotels 75 Fine Dining B&B’s Gastro Pubs Destination 70 Casual Dining 3-4* Hotels Budget Hotels Community High Street Coffee + 65 Fast Food Ancillary Boutique 60 Knowledge Stop training systems and processes! Develop team member knowledge for competitive advantage! 25
  21. 21. Insufficient Perceived Value The perceived value is insufficient to justify the price in all but the case of 5* Hotels providing competitive advantage opportunities for alternate forms of entertainment, relaxation, socialising, exploration and emotional need fulfilment. Price does not define value as demonstrated by 5* hotels. Perceived value is judged emotionally, subjectively by the individual and on the whole experience - how well the experience actually met or exceeded the experience they anticipated.Boutique Hotels prices are clearly deemed unjustified by the experience and 67.5% means these guests are detractors. High hopes destroyed by the reality are punished dramatically. 5* Hotels benefit from the desire of guests to tell people where they have been staying but trading on kudos alone is fragile. Budget and Fast Food offers may have lower initial expectations but this can be an opportunity or a curse. 90 Your marketing indicates a promise and an expectation 85 which must be delivered! 80 5* Hotels 75 Fine Dining B&B’s Destination Budget Hotels 3-4* Hotels 70 Casual Dining Gastro Pubs Fast Food Coffee + Community Ancillary High Street 65 Boutique 60 Value The Experience is the justification for price elasticity! 26
  22. 22. Guests not inspired to Recommend Willingness to recommend is a reflection of the whole experience, the emotional value added and the confidence that it will be replicated if recommended to others.The experiences being offered are not good enough - they fail to excite. Only 5* Hotels exceed the target level. High price is not a barrier evidenced by 5*, Fine Dining and Gastros better-than-average performance. Provide guests with the fuel and confidence to recommend. In the world of social media word spreads faster thanever before. Every negative is heard by more people and damages not only the errant operator concerned. Trading on price, design or kudos is fragile lasting only until a competitor who gets it all right comes along. 90 Budget brands have to work harder to gain recommendation - its not cool to declare your 85 allegiance to such brands from 5* Hotels the rooftops. 80 75 Gastro Pubs Fine Dining B&B’s Destination 3-4* Hotels 70 Casual Dining Budget Hotels Boutique Coffee + High Street Community 65 Fast Food Ancillary 60 Willingness to Recommend 87% of experiences fail to generate recommendations! 27
  23. 23. Competitive Advantage Quotes• “An organisations ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” - Jack Welch• “Customer service isn’t just a department” - Tony Hsieh• “When you’ve got only single-digit market share — and you’re competing with the big boys — you either differentiate or die.” – Michael Dell• “Arsenal have won that advantage, nobody gave it to them. By playing fantastic football and by winning matches and by winning trophies, they won that respect that the opponent has for them.” - Jose Mourinho• “Good enough never is. Set your standards so high that even the flaws are considered excellent.” – Debbi Fields• “It’s one thing to read about your company, but when a customer can associate it with an actual person, it creates a deeper, more meaningful connection to the brand.” Tony Hsieh• “Information is power, particularly when the competition ignores the opportunity to do the same.” – Mark Cuban• “A societys competitive advantage will come not from how well its’ schools teach the multiplication and periodic tables, but from how well they stimulate imagination and creativity.” - Albert Einstein• “You do not merely want to be the best of the best. You want to be considered the only ones who do what you do.” — Jerry GarciaMake your Customer’s Experiences your Competitive Advantage 28
  24. 24. PACE + PERSONALITY = Competitive AdvantageAre you in the business of providing experiences at pace? Ensure your pace meets the expectations of guests - long queues, no personality - disaster. Fast Food is expected to be just that and queues are detractors unless you manage the guests’ queue experience. Engage people in the queue: show them you care. Demonstrate you recognise their pain. Don’t stroll through peak times.Acknowledge people - Apologise - Give them confidence that you know they are there and that you understand they have little time to stand in a queue. Perfect solution pace and personality! 90% 90 GAP > 10% Target GAP 20% 85 Get faster 80 With personality! 75 70 65 60 Pace Personality Coffee + Fast Food Fast Food & Coffee + Be personable at pace! 29
  25. 25. Useful Reading “Those spending the most money are the worst brands.” “Good is the enemy of great.”•Drive - Daniel H. Pink “Management is efficiency in climbing the ladder of success;•The Service Profit Chain - Heskett, Sasser & leadership determines whether the ladder is leaning against the Schlesinger right wall.”•The One thing you need to know - Marcus Buckingham•The Seven Habits of Highly Effective People - Stephen R. Covey•Maverick - Ricardo Semler•Made in America - Sam Walton•Purple Cow - Seth Godin•The Experience Economy - B. Joseph Pine II, James H. Gilmore•Gung Ho - Ken Blanchard•Whale Done - Ken Blanchard•Funky Business - Kjell Nordstrom & Jonas Ridderstrale•Fundamentals - Jim Sullivan•The Nordstrom Way - Spencer McCarthy•Good to Great - Jim Collins•First Break all the Rules - Marcus Buckingham•Emotional Branding - Marcus Gobe You have all the time in the world - make space to read! 30
  26. 26. Guests Migrate Faster than Ever Social Media means that word of mouth now happens at 100 lightning speeds, disgruntled guests no longer tell 8-10 but potentially thousands direct from their mobile phone. 78.35 74 75 70.33 The bottom 10% demonstrate a Net Promoter Score of -92 meaning almost every guest is a detractor and looking for 50 somewhere better to go or staying in. Those providing experiences worthy of recommendations 25 must be active on Social Media. Those failing to grow competitive advantage and advocacy 12.4 must focus on what matters and on delivering experiences. -96 0 Social Media means consumers find new opportunities to Guest -25 satisfy their needs faster than ever before. Migration Pattern -50 -75 Looking to buy a business? Why believe the arbitrarily generated goodwill valuation? -100 The P&L a/c accurately describes history not the likelihood of Net Promoter Score future sales and profits. Amazon Apple Eclectic Benchmark Contributor Hospitality Sector Bottom 10% Deliver experiences and embrace Social Media! 31
  27. 27. Going out of business in blissful ignorance?In 2012 the speed to extinction of Bottom 10% operations is faster than ever before - thanks to social media, high debt burdens, poor guest experiences and world class competitors - hastening the inevitable. Unwelcoming, cold, inhospitable and a perfect recipe for declining sales, profits and closure. “If you always do what you always did then you will always get what you always got” If you have a business that delivers against your system and process requirements and yet is suffering declining sales do not assume its because of current economic conditions. Many businesses are growing. Measure what guests feel! 60 45 30 15 Welcome 0 Warmth Interest Confidence Pace Training Knowledge Value Recommend Average Score P&L a/c’s do not measure future sales potential! 32
  28. 28. Conclusions The average performance of the sector and its sub sets is not made up ofpolarised highs and lows. The vast majority of venues are gathered around the mean. In such markets the opportunity for those who differentiate is great. Added to this, differentiation in highly competitive markets is crucial and offers huge rewards to experience-starved consumers. Hospitality businesses must focus on experience, not the goods they offer or the service they provide - rather focus on the experience they afford time-poor, discerning guests who long for escape, socialisation and exploration. Measure what guests think about you! 33
  29. 29. Boutique hotels market a differentiated position promising an experience that is in demand. Excellent! In many cases the experience fails to live up to the expectations and aspirations of the guests. 5* hotels are differentiated and appeal to high level emotional needs but kudos alone is not sustainable - formal is not hospitable.Budget hotels have developed a successful differentiated offer led by price but are adding more experience than 3-4* and are winning, squeezing the mid-market while challenging the old order. Differentiate on Experience! 34
  30. 30. B&Bs owner-led warmth threatens to provide a recipe for success but lackingfollow though across other question areas and the marketing clout of budget operatorsPace is a basic expectation in the fast food and Coffee + market - work more efficiently with personality for competitive advantageSimple requirements such as welcome are missing even from those with host doormen and receptionists Measure what matters! 35
  31. 31. The restaurant market is highly competitive though very few operators recognise and take advantage of the experience opportunityPubs and bars have a fine history and heritage, they are fondly considered buthave failed to react to the competitive charge that has taken place around them - they were the 3rd place now they are in 3rd place. While the goods must meet expectations and the service must be professional and efficient it is the experience that will attract loyal guests and advocacy Emotions drive value, engage guests to drive advocacy! 36
  32. 32. Its not the burger, pizza, draught ale, bed or spa that develop competitiveadvantage, these are replicable by the next new market entrant - it’s the emotions you develop that define the brand and issues forth advocates, ambivalents, backbenchers or assassins.Focus on and consistently deliver the things that matter and are in short supply to ensure your business stands out in a cluttered and pressurised market 37
  33. 33. Be Better!The current environment is made for standout hospitality operators who deliver excellent experiences! 38
  34. 34. What can we t 3 a r learn from the P coming soon.... best of the best? Why some businesses prosper and others fail Which businesses are setting the pace - the Eclectic Benchmark Contributors Case 1: Knowledge = confidence and growth Case 2: The power of personality and pace Case 3: Engaging guests drives promotion Case 4: Budget Hotels - Better than you imagined?Differentiated, better and prospering 39
  35. 35. Improve yourCompetitive Advantage Our clients outperform the sector, their sub sectors and the appropriate competitive set If you would like to: Focus the team on what matters Benchmark your current performance Improve your guests experiences Grow advocacy and competitive advantage We would be delighted to support your guest experience development. In our hands the right questions + independent professional mystery guests enables us to produce pragmatic, operator centric intelligence reports that drive focus, improved customer service and guest advocacy @davidmchattie | @CSBenchmark 07795813097 40