IQNOMY converting big data into highter occupancy rates


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“ A proper Big Data strategy makes it possible to once
again have personal relationships with consumers.”
Stef Driessen Sector Banker at ABN AMRO

IQNOMY Customer profiles Center Parcs increase conversion of its website and marketing campaigns
The power of personalized communication through the internet

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IQNOMY converting big data into highter occupancy rates

  1. 1. Inspiration for the leisure and hospitality industry convertingBigData intohigheroccupancyrates
  2. 2. “A proper Big Data strategy makes it possible to once again have personal relationships with consumers.” Stef Driessen Sector Banker at ABN AMRO
  3. 3. Big Data: game changer of leisure- and hospitality branch  Launch and learn.  05 Tjingo puts together virtual travels from international databases Virtual Touroperator clusters ‘On the Fly’.  07 Customer profiles Center Parcs increase conversion of its website and marketing campaigns The power of personalized communication through the internet.  09 Combining customer data and social media makes KLM fly high The battle grounds have moved beyond the planes.  12 convertingBigData intohigheroccupancyrates
  4. 4. “Big Data does not necessarily equal ‘Big Projects’. An excellent strategy is to start off small and keep things manageable, so you can learn and develop.” Stefan van Duin Director Business Analytics 4
  5. 5. The Economist Intelligence Unit in its research report examples ‘Big Data: Harnessing a game-changing asset’ predicts a new era. Any businesses capable of tapping into these valuable raw materials will increase their lead on the competition. A sharp focus on data can thus contribute to considerably higher occupancy rates. Outsmart the other market players in anticipating major developments in the industry. Or lead to considerably shorter queues thanks to the accurate mapping of visitor flows. Optimizing business processes through improved knowledge of processing times, too, offers many benefits. The biggest gains for the Dutch leisure industry will most likely be a deeper insight into the consumers’ experience. It clears the path for developing new business models. A provider of accommodation services like Airbnb and the taxi service Uber are great examples of such new, data-driven leisure companies. Personal relationships with customers Entrepreneurs used to have personal relationships with their customers. Growth in scale has increased the strain on such relationships. New technology, though, may very well restore this. The key to this development is the massive increase in consumer data – both in internal databases and in the social media. It swells by half a billion Tweets and 4.5 billion Facebook Likes a day. By aggregating and analysing this data, companies have increased their capabilities to identify their main customer segments. Next, they can map customer preferences, wishes and needs within these segments. What does the target group expect from a product? What are the thresholds or obstacles and what would make life more comfortable for customers? The strategy is to fully focus on increasing the relevance of communication and product. In doing so companies abandon the standard marketing campaigns, instead increasingly committing to long-term one-on-one relationships with each consumer. It is the modern marketeer’s Holy Grail: communicating with the right customer about the right product through the most suitable channel at the most relevant moment. A number of concrete steps is required to enable this. One of the first and most crucial elements is to always place the strategic objectives of the company at the core of big data aggregation and analysis – whether these objectives encompass optimizing the profit, increasing the number of customers, or enhancing their loyalty. If big data projects fail to be in sync with a company’s objectives they often bog down in experiments, with valuable data being wasted, wrongly applied or collected, and without having a clearly defined final objective. BigData:gamechanger ofleisure-andhospitalitybranch Today’s businesses are all digital – this feature certainly applies to the Dutch leisure and hospitality industry. A growing number of airline companies, hotel chains, recreational parks, museums and restaurants embrace ‘digital’ as an essential component of their business process. And ‘digital’ equals ‘data’. Big Data: a near endless flow of data growing exponentially every year. A raw material rich with valuable hidden patterns and insights. Not surprisingly, Euro commissioner Neelie Kroes (IT and Telecom) coins data as ‘the 21st century’s oil’. 5
  6. 6. ‘Launch and learn’ Entrepreneurs who want to be inspired will need to prick up their ears and keep their eyes open. Where do trends pop up, how do competitors respond, which start-ups distinguish themselves and what topics can companies explore to distinguish themselves within the industry? And an entrepreneur will have to be willing to experiment, too. Start with small projects, continuously monitor the results, immediately scale up experiments if they are successful and spread the knowledge across the company. And bear in mind: failure is an inherent part of this launch and learn process. It is both inevitable and valuable. The added value of data Having a clear sight of their final objectives, companies can then establish what data they need and where to obtain this. This would include, e.g., a search for data already available in the company and finding out which partners may be approached to provide additional data. Be very aware of the possibly highly sensitive character of the data you collect and record. While legislation and regulations is ever stricter, consumers, too, have become much more self-confident and critical if their personal details come into play. Any improper or careless use may have major implications. Computer game manufacturer Sony is a glaring example: the leakage of personal information from its Playstation Network came at a cost of a 171 million dollars - and counting. And that is without considering the damage to its image. A transparent approach towards consumers is vital for working with personal data. As long as trust and relevant added value are core values, consumers will nearly always be willing to surrender part of their privacy. If consumers are clueless about what companies might or might not use their data for, such quid pro quo is doomed to fail. This equally applies if companies are ineffective in clearly communicating the added value of the privacy that consumers have handed over. That said, companies will see the loyalty and expenditures of their customers grow rapidly if they meet these conditions. Deloitte and ABN AMRO now present the inspirational and successful cases of three leading players in the Dutch leisure and hospitality industry: KLM, Center Parcs and Tjingo. Their intelligent data use has reinforced the relationship with their customers and has resulted in a personalized range of products, a higher occupancy and likewise margins. Through these cases this publication seeks to offer inspiration for writing your own Big Data success story.You are obviously welcome to call on the joint, in-depth expertise available at Deloitte and ABN AMRO. Stef Driessen Sector Banker Leisure at ABN AMRO Bank Stefan van Duin Director Business Analytics at Deloitte Consulting 6 Big Data: Game Changer of Leisure- and Hospitality-branch
  7. 7. “The market forces us into the tour operators’ seat,” says Robert Schmidt, manager of online travel provider Tjingo. “Their network of providers has taken many years to build. Dynamic packaging is the automated alternative for this essential network. This new technology profits from the rise of vast databases in the international travel world. In layman’s terms, it creates a platform for providers from various travel clusters where they can interlink their offers. Carriers and local travel experts linked to real time accessible databases offer a mix of millions of hotel rooms, flights, excursions, transfers and other travel services. Examples are the well-known hotel booking site and large flight generators such as Amadeus and Saber. Virtual Tour Operators Consumers can use a dynamic packaging platform to cluster these separate travel services, ‘On the Fly’, which services are carried out by different providers. No longer are they bound by the tour operators’ preassembled standard packages. They can arrange a trip based on what they prefer. Organizations like Tjingo, which facilitate this, are called Virtual Tour Operators. The technology is quite complex. It involves searching the gigantic hay stack hiding, which contains a myriad of travel components. Only a few tiny puzzle pieces need to be selected and they need to fit hand in glove, at a competitive price. Schmidt: “Bear in mind that the applications often run into the thousands per second. You will then understand just how big of a challenge it is to offer impatient consumers the trip they are looking for within mere seconds.” The major changes in the travel industry have yet to settle down. Experts estimate the value of the European travel market as a whole at 250 billion euros. As research by McKinsey shows, some 40 per cent of this turnover is realized online, while in America this is already well over 50 per cent. So, the online travel industry still has an enormous growth potential. The pressure on traditional tour operators, though, is mounting. And this is felt throughout the industry. Since many of the providers do not purchase and package hotels and flights themselves, they depend on travel packages offered by tour operators. And as more tour operators vanish this well runs dry. What’s more, the fees are dropping. Tjingoputstogethervirtualtravelsfrom internationaldatabases 7
  8. 8. Various distinctive options are available to utilize the fast connection and analysis of large quantities of data. Using the data collected from transactions booked earlier will considerably increase the speed of the service. Every time the platform puts together a trip for a customer, the specific data, whether this concerns the price or otherwise, is recorded and analysed in the in-house database. Thanks to the knowledge collected in these so-called price grids, each subsequent application will result in a more effective search while the customer service is accelerated as well. “And the faster the service, the higher the conversion,” Schmidt emphasizes. Trumping the competition As more and more parties have access to this technology, providers will have to look for new possibilities to be distinctive. “A detailed insight into the customers’ wishes and interests is vital to that end,” says Schmidt. “We closely collaborate with our sister companies Zoover and HolidayCheck and – each and every day they receive thousands of travel reviews and related content.” A link with this information to its own well-stocked booking database, means Tjingo can identify inchoate travel trends among consumers, and their relevant preferences. It can anticipate this quicker than the competition does. This may involve the rising popularity of a region or accommodation but other elements, too, through which a travel provider can distinguish itself. Analysis of price developments and search questions in Google make travel providers highly capable of producing well-defined forecasts about how air travel will develop. An American travel provider has recently started to share this knowledge with its customers through a ‘price forecast’ incorporated into the website. Customers can use this information to determine whether they will book their trips immediately or whether to wait until the price has dropped. “This creates a fiendishly complex little game,” Schmidt says. “The abundance of variables that could directly impact the margin you may charge as a provider is partly to blame. The main lesson is: check your data extremely well and then determine your strategy. Anyone who is not rigorous about this will see their margins melt away or their customers go over to the competition in a heartbeat.” 8
  9. 9. Center Parcs applies complex real time technology to ensure the communication with its – potential – customers is as relevant as possible. “The average internet user has a rather limited attention span,” says Rob Boeyink of IQNOMY, the company supporting Center Parcs in personalizing its online customer communication. “Since the time they are likely to spend on your website is relatively short, the trick is to provide them with as much relevant information in the shortest possible time slot. Fail to do so and they will usually be gone in a flash.” All visitors of the Center Parcs website are profiled anonymously in real time to prevent this from happening. In a split second all signature features are linked to a database of hundreds of thousands of earlier visitors. The information examined includes the preferred date of departure and the number of persons. Other websites visited, any interests that can be derived from this, and the behaviour during any earlier visits to the Center Parcs website – all of this is scrutinized. Have internet users visited the homepage only briefly, or have they looked at information on specific recreational parks or preferences? Smart algorithms All available information is immediately added to the anonymous interest profile of the visitor. IQNOMY has coined this process real-time multidimensional profiling. Smart algorithms use this profile to select the most relevant information for each visitor. The website is divided into separate fields, into which variable content can be uploaded. This creates the option to provide certain visitors with information on the many recreational possibilities for children. customerprofilesCenterParcs increaseconversionofitswebsiteandmarketingcampaigns The selectiveness of online consumers is rising and their filter options are expanding. Many consumers have even become blind to the profusion of ads they are offered through online channels. The marketing world refers to this phenomenon as ‘banner blindness’. Hence the rising need to offer consumers relevant information. As yet few Dutch companies use the power of personalized communication through the internet. 9
  10. 10. Other visitors, on the other hand, may thus obtain information on water sports facilities, the lush nature surrounding a specific bungalow park, or the possibilities of a romantic weekend. Boeyink: “Each visitor will thus get to see a unique website, geared to their specific preferences and interests as much as possible.” Real Time Bidding The technology behind all this is called Real Time Bidding (RTB) or the automated, real time auction of online ad space. Advertisers and website owners subscribe to a high tech bidding platform. When an internet user visits one of the subscribed websites, the ad space available is auctioned off in seconds. So, showing a single ad to a single internet user – a so-called impression – is what’s at stake during the bidding. The platform offers advertisers all the information they need to assess the value of the impression available. Once again, visitors’ demographic data is linked to knowledge about the interests and the surfing history of internet users gathered from various databases. Refined algorithms weigh the data available and determine whether Center Parcs will join the bidding and up to what amount. Similar algorithms separately align the content of the ad with the preferences recorded during an earlier visit to the Center Parcs website. “Ever since the relevance has been enhanced the number of people who have clicked on to personalized content blocks has risen by an average 460 per cent,” Boeyink states. “This has considerably increased the number of bookings.” More turnover, greater customer loyalty He expects personalized communication to have an even more significant effect in the longer term. “New insights enable organizations to gear their entire product and services to the customer,” is his prediction. 10 Customer profiles Center Parcs increase conversion of its website and marketing campaigns
  11. 11. “It allows Center Parcs sharper anticipation of the customers’ needs embedded in hard data instead of having to go by hunches of responsible managers. This data may be tapped from the location data of mobile telephones, as they show which areas and attractions of a recreational park are visited most. This is still a major leap of faith for many organizations. One that will, however, be rewarded with extra engagement, customer loyalty and, thus, profit.” 11
  12. 12. Maintaining contact with the passengers throughout the customer journey is the key issue. Offer service, inspire, continue to be top of mind and, above all, get to know customers better. Social media offer the perfect opportunity to that end. Before April 2010, KLM still only used its Facebook and Twitter accounts mostly as experimental marketing tools. And then, as an Icelandic volcano erupted and spewed out a giant ash cloud, these channels provided entirely new avenues to explore: an effective source of information for the tens of thousands of stranded travellers. “It goes to show that a crisis often generates new opportunities too,” says Robertjan Groeneveld, KLM’s Social Media Hub Manager. “Making the initial business case for an integrated social media policy is usually a tough thing to do. Now though, nobody within KLM has any doubts about the added value.” Platform for flow of information Facebook and Twitter have by now become the platforms on which 130 agents respond 24/7 to the 30,000 odd KLM related reports per week, in ten languages. Without the proper technology this would be an impossible task. KLM closely collaborates with Salesforce since 2011. Just like a growing number of other technology parties the American market leader provides a platform for collecting, linking and analysing huge amounts of data – personal and otherwise. As this platform spots urgent messages early on, too, priority processing is possible. Using this scalable solution, KLM can process some 3,500 cases involving issues like delays, changing flights and lost luggage. Agents can respond within the hour, thanks to a colossal database of cases handled. “Nevertheless, our goal is to shortly reduce this to thirty minutes,” Groeneveld emphasizes. This is merely the visible part of KLM’s social media strategy. Behind the scenes, the airline company combines all passenger and related data. The resulting database has some hundreds of thousands of customer profiles by now. When passengers log in, for example, through the Flying Blue loyalty program or their social log-in, a Customer API supplements the profile with personal preferences, interests and other relevant data. Do customers have many Facebook friends in a certain country? Do they open special-offers mailings? Does their click behaviour in iFly – KLM’s digital magazine – indicate a strong preference for tropical beach holidays? If so, the platform will provide this information to the marketing department, where the information is put to use for specific offers that appeal directly to the experience of individual passengers. combiningcustomerdataandsocialmedia makesKLMflyhigh Few industries are caught up in such fierce competition as the aviation industry. And while the need to offer added value is strong, the opportunities to do so are few and far between. Passengers often check in at the same counter, board the same type of plane, their seats are almost identical and they more or less enjoy the same meals, services and inflight entertainment. Air travel thus threatens to become a commodity and the only thing left for providers to do is compete on price. To avoid that scenario, the battle grounds have moved beyond the planes. 12
  13. 13. Online service continues inside the plane Any issues or complaints passengers may have can likewise be tackled in an efficient and relevant manner. “In the old days, if passengers had trouble checking in, we first had to ask for their booking code,” Groeneveld relates. “Now we can immediately send them an email that we have checked them in online: ‘Your boarding pass is in your mail box.’ What’s more, our cabin staff is equipped with iPads nowadays, so we can send them relevant information about passengers. Hence, thanks to these on board iPads our online services are now available inside the plane, if necessary.” KLM’s comprehensive data strategy affects the organization at several levels. Groeneveld: “Our customer-oriented communication has increased the brand awareness tremendously, especially with our target groups in Asia and the United States. Apart from the media attention generated, this is largely due to numerous positive customer responses. They spread through the various social media like wildfire – in parts of the world where our name sounds less familiar.” A great world stage performance for a relatively small Dutch player. Using Salesforce, KLM immediately channels this feedback to the departments involved. They experience this as highly motivating. “Where departments used to operate in silos, this binds them together,” says Groeneveld. “Many new campaigns and initiatives have now become a joint effort.” 13
  14. 14. Anticipate future customer preferences now Analysis of the total quantity of data collected produces a great variety of important insights too. It encompasses issues like how the organization functions and how customer preferences and behaviour can help optimize the turnover. Among the tools available to that end are smart algorithms: they can calculate the best possible seat capacity for each flight and the best possible ticket price for each specific customer. Groeneveld: “Over time we create a ‘360 degrees view’ of our customers – knowledge we will increasingly use proactively. This will result in seamless customer journeys, during which we offer each separate customer the most relevant content available at the right time, for the right destination. It likewise allows us to right now anticipate future customer preferences and needs.” 14 Combining customer data and social media makes KLM fly high
  15. 15. 15 Disclaimer ABN AMRO considers the opinions recorded in this publication to be based on reliable data and information, which have been carefully processed in our analyses and forecasts. Neither ABN AMRO, nor any of its officers may be held responsible for possible inadequacies in this publication. The opinions and forecasts reflected represent nothing more than our own vision and may be changed without any prior notice. © ABN AMRO, February 2014 This publication is solely intended for internal use. The use of text parts and/or figures is permitted, provided the source is clearly mentioned. Multiplying and/or disclosing this publication is prohibited, unless written authorization has been obtained from ABN AMRO to do so. Texts were closed on 4 February 2014. Thanks to Gert Wim ter Haar and Robertjan Groeneveld (KLM Royal Dutch Airlines) Robert Schmidt (Tjingo, de Vakantiematser) Christian Vriens (IQNOMY) Fleurine Mijinke, Kees Schilder and Hidde Rijntjes (Deloitte, Tourism, Hospitality Leisure). Wouter Sterk, Jan Hein Endlich and Pieter van Ginkel (ABN AMRO) Commercial contacts Stef Driessen, Sector Banker Leisure at ABN AMRO, tel. 06 539 853 29 Stefan van Duin, Director Business Analytics at Deloitte Consulting, tel. 06 - 12 34 44 57 Editorial staff Arnoud Groot Read more Check out
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