This document summarizes the results of adding a customer service metric called the Service Engagement Index to Alpha Hotels' marketing optimization models. The SEI was found to highly correlate with revenues and significantly interact with marketing spending to increase returns. Optimizing spending to focus more on campaigns and media with higher returns could boost Alpha's revenues by 17%. Customer satisfaction plays a key role in performance and enhancing it also improves marketing impact and insulation from competitors.
2. Discussion Agenda
• Purpose and Key Questions
• Methodological Approach, Definitions and Context
• A New Model Metric: Service Engagement Index (Service-Engagement)
I. Derivation of Service-Engagement Metric
II. Service-Engagement & Other Customer Satisfaction Metrics
III. Service-Engagement Correlated with Revenue Bookings
IV. Impact of Positive & Negative Service-Engagement on Revenue Bookings
V. Service Engagement & Marketing Synergies
• Detailed Findings
I. Decomposing the Importance of Marketing & Service-Engagement Drivers
II. Marketing Variance & Influence of Service-Engagement Driver
III. Marketing Revenue Returns by Fund-Type, Media, Campaign & Media Message
IV. Marketing Spending Optimization
• Conclusions & Next Steps
• Appendix
2
3. Purpose
Advance Alpha Resorts’s marketing optimization model by adding a variable on
customer satisfaction.
1. For transient revenues, what were the key marketing drivers, and how did these
contribute to Alpha Resorts performance? What role does the Service
Engagement Index play in driving revenues.?
2. How does customer service interact with media in driving Alpha Resorts’s
revenue and growth? Are there significant and measurable synergies between
the Service-Engagement and Alpha Resorts media?
3. What are the revenue returns across media-fund types, media channels,
campaigns and media messages? Does adding the Service-Engagement
metric fundamentally change media revenue returns for Alpha Resorts?
4. What specific impact do positive and negative customer reviews have on Alpha
Resorts revenues?
5. What is the optimal mix of marketing spending that will maximize revenue for
Alpha Resorts in 2012?
Key Questions
3
4. Methodological Approach
The journey continues. In this model, we add a metric that measures customer positive
and negative reviews (Service Engagement Index) of each of Alpha Resorts’s
properties. This metric was derived from online hotel review sites such as Trip Adviser.
4
Two total models were constructed: Total Full Service(MAPE +/- 2.0%) and Select
(MAPE +/- 1.3%) transient bookings, 2008-2010 by week
Property Group: FS,
& Select
WEEKLY
REVENUE
TOTAL Alpha
Resorts
TRANSIENTS
1. National-Chain Media by Message
(TV, Print, Radio, OOH)
2. Travel Card Offer Media
3.Coop Media
5. Room Capacity
8. Macro-Economy
9. Competitive Media (Key Competitive
Chains)
6. Avg. Daily Rate (ADR)
7 Customer Service Engagement
Index (Service-Engagement)
4. Local Media
6. Developing the Service Engagement Index
(Service-Engagement) from Online Hotel Reviews
6
Net Positive Service-Engagement Index
Positive
Reviews
Negative
Reviews
Positive
Scores
Negative
Scores
1. Mine online travel reviews for
all Alpha Resorts properties
2. Parse into positive & negative
review groups
3. Apply Service Engagement Index
algorithm to “score” reviews
4. Time code by week & aggregate metrics
7. Service-Engagement & Alpha Resorts Satisfaction
Metrics
• We use the Service-Engagement metric for customer satisfaction because it
was found to be stronger than alternative metrics.
• We compared our Service Engagement Metric to Alpha Resorts’ own
Customer Satisfaction tracking metrics* and found Service-Engagement
with significantly higher correlations to revenue bookings
7
Full Service Select Service
Loyalty* 22.3% 21.8%
Willingness-to-Recommend* 22.3% 23.1%
Overall Customer Experience* 21.3% 22.1%
SEI Ratio 79.7% 76.9%
8. Revenue & Customer Service: Full-Service
-
2.0
4.0
6.0
8.0
10.0
12.0
-
20
40
60
80
100
120
140
SEIPos/NegRatio
BookingsIndex
Alpha Resorts Full-Service Revenues & Customer-Service Net Positive Ratio
Alpha-FS Rev SEI.Ratio 8
Correl = 84.7%
• The Service-Engagement Positive/Negative Ratio has about a 85% correlation with revenue
bookings for Full-Service. This strong correlation suggests that customer service plays very
important role in driving hotel demand.
9. Bookings & Customer Service: Select
(2.0)
-
2.0
4.0
6.0
8.0
10.0
-
20
40
60
80
100
120
140
SEIPos/NegRatio
BookingsIndex
Alpha Resorts Select Revenue & Customer-Service Engagement Index
Alpha-Select rev SEI.Ratio 9
Correl = 85.4%
• The Service-Engagement Positive/Negative Ratio likewise has about a 85%
correlation with revenue bookings for Select.
10. Total Alpha Resorts Revenues and Service-
Engagement Satisfaction Ratings
90
95
100
105
110
115
120
125
130
-60% -40% -20% 0% 20% 40% 60%
SalesIndex
Positive Rating
Negative.Rating
10
• Both the positive and negative Service-Engagement metrics have expected relationships with
Alpha Resorts revenues. Negative customer engagement has a significantly larger absolute
impact on revenue bookings.
11. Alpha Resorts Properties and Service-
Engagement Satisfaction Ratings
11
• The Service Engagement Index (Service-Engagement) was generated for each of the 412 individual
Alpha Resorts properties
12. 12
Marketing Synergies
111
-
50
100
150
200
250
300
350
400
Separate Effect Combined Effect
Chain Media & Service-Engagement
Synergies
Combined
Execution (Synergy)
50% Incr. Chain
Media
50 % Incr SEI
98
-
50
100
150
200
250
300
350
Separate Effect Combined Effect
Competitive Media & Service-Engagement
Synergies
Combined
Execution
(Synergy)
-50% Comptv
Spend
50 % Incr SEI
49% lift
52% lift
Marketing synergies signifies that the simultaneous activation of 2 or more media. Marketing activities
generate greater total revenues than when each activity is activated separately & independently. Synergies
clearly underscore the importance of multiple touch-point marketing and the necessity for truly integrated
marketing messaging & strategies. There were significant “synergies” between the Service-Engagement
metric and various Alpha Resorts media.
13. 13
Marketing Synergies (continued)
87
-
50
100
150
200
250
300
350
Separate Effect Combined Effect
Paid Search Media & Service-Engagement
Synergies
Combined
Execution
(Synergy)
50 % Incr Paid
Search
50 % Incr SEI
135
-
100
200
300
400
500
600
Separate Effect Combined Effect
Ecommerce, Online, and Service-
Engagement Synergies
Combined
Execution
(Synergy)
50 % Incr Online
Media
50 % Incr E-
Commerice
50 % Incr SEI
38% lift
65% lift
145
-
50
100
150
200
250
300
350
400
450
Separate Effect Combined Effect
Service-Engagement and Online Media
Synergies
Combined Execution
(Synergy)
50 % Incr Online Media
50 % Incr SEI
51% lift
84
-
100
200
300
400
500
600
Separate Effect Combined Effect
Paid Search, Online and Service-
Engagement Synergies
Combined Execution
(Synergy)
50 % Incr Paid
Search
50 % Incr Online
Media
50 % Incr SEI
38% lift
15. Decomposing 2009 Total Bookings
15
76.9%
4.4%
2.8%
14.2%
0.4%0.2%1.2%
23.1%
Total Select + FS
Base SEI Impact SEI x Media Synergy
National Chain Media Travel Card Offer Media Coop Media
Local Media
By adding the Service Engagement Index (Service-Engagement) to the model,
total marketing contribution expands from 22 to about 28%. Chain-funded media
remains the dominant media driver.
16. Decomposing 2009 Bookings by Group
88.3%
4.1%
1.3%
5.5%
0.2%0.1%0.5%
11.7%
Full Service
Base SEI Impact
SEI x Media Synergy National Chain Media
Travel Card Offer Media Coop Media
Local Media
16
The Select group shows a significantly greater dependence on marketing than the
Full-Service group.
47.1%
5.1%
6.8%
37.3%
0.9%0.4%2.4%
52.9%
Select Service
Base SEI Impact
SEI x Media Synergy National Chain Media
Travel Card Offer Media Coop Media
Local Media
17. 2010 v. 2009 Marketing Variance
-10% -5% 0% 5% 10% 15% 20%
Full Service
Select
Total
Base Momentum SEI Impact Media x SEI Synergy National Chain Media
Travel Card Offer Media Coop Media Local Media Room Cap
ADR Economy Competv.Media
+11.2%
+6.7%
17
+3.8%
The Service Engagement Index (Service-Engagement) & its interaction or synergy with Alpha
Resorts. Media was a significant positive growth driver of revenue bookings.
19. 19
Marketing Efficiency by Media
Average Revenue Returns per Dollar
$0.95
$2.09
$4.36
$5.92
$6.78
$7.81
$8.02
$9.03
$9.23
$14.42
$0.00 $2.50 $5.00 $7.50 $10.00 $12.50 $15.00 $17.50
Direct Mail
Airport
Magazine
Ecomm
Paid Search
Newspaper
Outdoor
Online Banners
Social Media
Total Hotel
MROI per $ Spend by Media
Due to the synergies across media, Alpha Resorts’s total marketing ROI is greater than the
individual components. The addition of Service Engagement Index has changed the order on
media returns, with Magazines and Online showing the strongest revenue per dollar.
20. 20
Marketing Efficiency by Campaign
Average Revenue Returns per Dollar
$0.48
$3.65
$4.07
$5.03
$7.39
$11.44
$19.41
$14.42
$0.00 $2.50 $5.00 $7.50$10.00$12.50$15.00$17.50$20.00$22.50
Hotel Card
The Great Times
Business Traveller Campaign
BWB Campaign
Entertainment Campaign
Great Day Campaign
Awaken Senses Cmapagn
Total Hotel
MROI per $ Spend by Campaign
The Awaken & Great Happens II campaigns generated high revenue returns.
By contrast, Alpha Resorts Chase & the Great 10K were the weakest
campaigns.
21. 21
Marketing Efficiency by Media Message
Average Revenue Returns per Dollar
$4.51
$6.48
$7.37
$7.49
$9.15
$9.22
$11.44
$14.42
$31.67
$0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00
Bus.Traveller
Loyalty
Entertainment
Rewards & Value
Experiential
Family
Business. Productivity
Total Hotel
Brand
Rev. Returns per $ Spend by Message
Business Productivity & Brand messages generate the highest revenue per dollar,
while Rewards & Value messages tend to be the weakest.
23. 23
Revenue $ Contribution Current Spend Optimized Spend
Local Media $36,179,583.73 $10,559,653.26 $11,465,149
Coop Media $49,802,153.76 $7,293,334.99 $5,305,744
Hotel Card Offer Media $4,859,804.74 $11,303,384.00 $5,696,366
National Chain Media $231,312,183.92 $14,632,626.88 $21,321,740
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Optimization by Fund Type
Spend Optimizations:
By Fund Type
• Spending optimization moves dollars from less to more productive media
in order to maximize revenue and growth. This solution has identified a
plan which can boost Alpha Resorts’s revenues by +17% and calls for
moving more dollars into chain-funded media.
24. 24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Revenue $
Contribution
Current
Spend
Optimized
Spend
The NBT
Campaign
The Great Times
BWB Campaign
N/A
Hotel Card
Great Day
Awaken Senses
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Revenue $
Contribution
Current
Spend
Optimized
Spend
Paid Search
Outdoor
Online
Banners
Newspaper
Social Media
Magazine
Ecomm
Direct Mail
Airport
Optimization by Campaign
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Revenue $
Contribution
Current
Spend
Optimized
Spend
Reward
& Value
Brand
Loyalty
Family
Experien
tial
Bus.
Producti
vity
Bus.Trav
eller
Entertain
ment
Optimization by Media Optimization by Message
Spend Optimizations:
By Campaign, Media and Message
• Across the campaigns, media & messages, more investment is indicated
for Paid Search, the Great Day Promotion campaign and Brand/Business
targeted media messages.
26. • This model illustrates and demonstrates the relevance and importance of adding a
customer service metric to Alpha Resorts’ marketing mix optimization models.,
• The metric used in this model is called the Service Engagement Index (Service-
Engagement). This metric was found to be stronger than alternative service tracking
metrics and is derived from a scoring algorithm applied to Online Review Sites
individual hotel property reviews from 2008-2010. This metric was found to be highly
correlated with Alpha Resorts revenues at 75% + and illustrates the importance that
customer satisfaction plays in driving Alpha Resorts’ revenue.
• When including the Service-Engagement metric into our models, we found a
significant interaction and synergy with Alpha Resorts & competitive media spending.
The net effect of these interactions actually increased the overall impact of Alpha
Resorts’ media and also increased revenue returns for media by over $3 per dollar
invested.
• From a strategic standpoint, we have learned that:
– Customer satisfaction is an important driver of Alpha Resorts’s business and plays a key role in driving
overall growth for the Alpha Resorts brand.
– That improving customer satisfaction interacts and enhances the impact and productivity of media and
marketing.
– Improving customer satisfaction also insulates Alpha Resorts from some competitive media effects.
– That negative customer reviews have a larger absolute impact on Alpha Resorts’s revenues than positive
reviews and that minimizing the negative is an important task and strategy going forward 26
Conclusions & Next Steps
30. Michael Wolfe
CEO
Bottom Line Analytics Global
E: mjw@bottomlineanalytics.com
M: 770.485.0270
www.bottomlineanalytics.com
Masood Akhtar
Managing Partner, (EMEA)
Bottom Line Analytics Global
E: ma@bottomlineanalytics.com
M: +44 7970 789 663
www.bottomlineanalytics.com
EMEA USA