Of all the changes we’ve observed in the hospitality and leisure (H&L) sector over the past
10 years, perhaps the most interesting has been the evolution of the marketing function and the
chief marketing officer (CMO) role. A host of factors, largely technology-enabled, are making the
life of the CMO increasingly complex. For starters, the shift from mass marketing to highly targeted
customer outreach and interaction, the emergence of online aggregators and the growing
importance of direct distribution channels have all upped the demands on marketing leaders and
their teams. In addition, with the increasing ability to mine and analyze data to drive pricing
and revenue management, the marketing function now has a much stronger impact on operational
performance. And hospitality companies today operate under the relentless scrutiny of
social media, which has enormous implications for brand management, communications
and customer relations.
To get a sense of how CMOs are grappling with these challenges, we spoke with seven marketing
leaders representing a variety of H&L businesses —hotels, airlines, car rentals, gaming, and online
intermediaries. Here’s what they had to say about how their role has changed and the skills,
relationships and mindset required for success.
Getting personal, going direct
When asked about the biggest changes in the marketing
function and their own roles, most of our interviewees zeroed
in on the growing personalization of marketing activity and
the shift to online — and increasingly direct — distribution
channels.
Both Mike Senackerib, senior vice president and CMO of
Hertz, and Tom O’Toole, senior vice president and chief operating
officer of United Airlines' Mileage Plus Holdings and
former CMO of United Airlines, cited the shift from mass
marketing to highly data-driven, highly targeted marketing
and customer interaction as the biggest change during their
CMO tenures. As Senackerib put it, “The ability to drill down
to an individual customer level is becoming much more
prevalent, driven by the way people consume media and get
information.” Noted O’Toole, “The rise in data-driven, realtime
marketing and customer interaction is enabling us to
change our marketing based on real-time events and operating
dynamics.”
O’Toole described the four phases of what he called a huge
shift toward direct distribution channels: “First came the shift
to online travel agencies. Then the travel players attempted
to drive traffic to their own websites. Next was the rise of the
meta-search players or online aggregators (e.g., Travelocity,
Expedia, Kayak). And now we’re seeing a renewed concentration
on driving direct bookings by the travel providers themselves.”
For Hertz, this shift has prompted a dramatic increase in
online marketing support relative to offline. “Both online
display and search are a much, much bigger part of the mix
today than even three years ago,” said Senackerib. While
acknowledging the importance of the online aggregators,
he admitted frankly that “the best thing in the world is for us
to get consumers direct on our website, for a lot of reasons,
besides superior margins. It’s the most efficient. They become
the most loyal. We can give them the best information.
We can have the best dialogue with them because they can
interact with us directly, one to one.”
Michael Hobson, CMO of the Mandarin Oriental Hotel
Group, agrees: “Nobody can represent yourself better than
you yourself can. If you’re going for an interview, you don’t
ask me to go for you; you have to go yourself. In the online world, the more you can represent yourself, in your own style,
with your own look and feel, your own pictures, your own
pricing, your own booking engine, the better. That should be
the end goal at all times. That said, you can’t ignore the online
aggregators. We are very careful about not allowing them
to offer pricing that is better than our own website pricing.
It’s all about consistency and trust: if consumers can find
better deals through online aggregators, the trust in Mandarin
Oriental would be destroyed over time.”
The next big thing:
convergence of online and mobile
It’s no secret that over the next few years, handheld devices
will become the main point of entry to the Internet. O’Toole
believes we’re only about a third of the way there. Senackerib
says Hertz is working hard to get ahead of the curve: “We’ve
seen a dramatic ramp-up of mobile reservations since we got
the platform up and running on all the different devices. But
mobile is still a relatively small piece of the overall pie.”
“The travel business is made for social media and for mobile,”
says Tom Seddon, CMO of InterContinental Hotels
Group. “Customers use them both while researching and
making the purchasing decision and while they’re in the
experience.” Although he sees H&L companies as being well
ahead of consumer packaged goods companies in this
regard, they still have much to learn: “No one has figured
out the secret formula yet. Right now there’s a weird balance
of a bit of control and lots of experimentation. Loyalty we’ve
got pegged, but not this.”
Under the microscope, 24/7
For many hospitality CMOs, social media is a double-edged
sword. Travel companies are getting more customer feedback
and higher visibility than ever before, which can be either
good or bad. “Consumers can make or break hotels with the
opinions they are sharing,” says Christine Petersen, president
of TripAdvisor for Business and former CMO of TripAdvisor,
which contains 45 million reviews and opinions in 14 languages,
and receives 25 new pieces of content every minute
of every day. “Today, no hotelier can afford to not pay attention
to user-generated content.”
The same goes for airlines, car rental companies and anyone
else in the service business. Every flight delay, every botched
reservation, every case of food poisoning is fodder for Facebook
and Twitter. Indeed, United’s O’Toole claims that airlines
are second only to banks these days in the intensity of
scrutiny they are under: “It’s much like the political news
cycle. Internal changes, even relatively minor ones, have immediate
feedback through social media — within an hour.”
Operating under the social media microscope makes the
need for alignment between what you say in your marketing
and what you do absolutely essential, notes Carmen Lam,
senior vice president for leisure and branding, marketing and
sales of Hong Kong and Macau-based Melco Crown Entertainment:
“It all comes back to alignment. If you’re claiming
X in your advertisements, then you’d better deliver X when
people come to the property; otherwise, the negative information
will go out straightaway.”
David Norton, until recently senior vice president and CMO
of Caesars Entertainment Corporation, sees social media in a
more positive light, as an important emerging channel in the
gaming industry: “While it’s clearly a rounding error at this
point in terms of the revenue that it generates, we want to
monetize it as well as we can.” Norton cited an example of
how Caesars tracks results in this new channel: “We did a lot
at this year’s CES, the consumer electronics show, to capture
the chatter and encourage people to visit our properties, and
that worked out very well.”
Coping with two worlds
Although it may seem at times like the whole world is online,
several interviewees noted the need to cater to tech-savvy audiences
as well as those who have yet to embrace technology
and/or lack Internet access. “This has added a lot of complication
for the marketing function,” says Lam.
“We’re coping with two worlds right now, and we really need
to understand the differences in what interests them and in
how they learn about and buy products. We have to do
old-world marketing and new-world marketing all at the
same time, and ensure that our message and methods are
consistent across multiple channels and all aligned towards
supporting the brand.”
It’s not about the number-crunching,
it’s about the insights...
The growing importance of analytics to enable decision making
is a critical issue cited by many of our interviewees. The
challenge, however, is that much of the data collected today
by car rental, airline and hotel players is based on transactions
rather than customers. To drive more revenue growth,
companies need to translate that data into insights at the
customer and customer-segment level. That means revamping
the fundamental customer relationship marketing (CRM)
and loyalty programs as well as legacy systems used to manage
those programs, a transformation now under way at
Hertz, United and many others.
Mike Senackerib described the vision: “We need a customer
database that has all the information we want and that links
back into all the different points of contact — on the phone,
on the Web, at the counter, wherever — so that at any point
in our system I can recognize the customer and their
behavior.”
...and who owns the results
The rise of marketing analytics also has implications for
marketing’s relationships with other functions as well as for
accountability. Norton describes Caesars as “an extremely
analytical company.” That stems from marketing, he says,
“because we have so much information coming through our
rewards program. From an analytics and direct marketing
perspective, the operations people are bought in because
they can run their businesses more effectively with the tools
we have. They know this is the lifeblood of the company.”
Looking forward, Norton says Caesars is working toward
even greater centralization of marketing decisions based on
analytical rigor: “In my view, collaboration between the properties
and the marketing function is at an all-time high.
But going to the next step will require a very interesting
dialogue around accountability and who owns the results.
Because part of what’s been successful, not only in our
company but also across the industry, is that the property
has that P&L and they have accountability. If you shift the
revenue generation piece somewhere else, how does that all
work from a measurement and accountability perspective?”
For Hobson, responsibility for performance measurement
and accountability for results rest squarely with the CMO:
“We measure everything. While performance against budget
is very important, performance against competition is what
really drives us. At the end of the day, I feel as though I am
responsible for revenue. I think the chief marketing officer
could easily be called the chief revenue officer.”
The changing marketing skill set
The changes in distribution channels have altered the skill
requirements for the marketing team. Hobson described
those changes: “Historically, apart from advertising and
public relations, the marketing skills in this industry have
always been focused on relationships with travel agents,
bookers and planners. Because we were working through
third parties to reach the end consumer, it has really been a
sales and relationship game as opposed to a consumer
marketing one.”
According to Hobson, the challenge nowadays is that distribution
is incredibly complex — the ways in which people can
find information about hotels, how they can make bookings
— and the ability to have direct B2C relationships is growing
by the day.
“So one of the things we’ve recognized,” he said, “is the need
for well-rounded consumer marketing skills. We need to find
and develop people who have direct and partnership marketing
flair as well as those who are well versed in distribution,
pricing and revenue management — because, if you’re going
to keep your brand consistent, whatever you do in one channel
must be mirrored in another.”
Senackerib of Hertz echoed the need for cross-functional
skills: “Of my nine direct reports right now, five are from
outside the industry. I realized we needed more proactive
marketing leaders, people with a broader set of skills, who
are aggressively growth-oriented and thinking about the
latest techniques in the marketplace. The marketing group
must be able to bring the insights from our customer
research to operations and help then take advantage of
what we’ve learned.”
Seddon of IHG explained the skill requirements across three
big domains within the marketing function: (1) managing the
brand, including the design experience and classical brand
marketing; (2) managing the big-scale delivery platforms,
both B2B and B2C, and (3) applying the brand and the platforms
to drive performance in a particular geography — for
example, “simultaneously solving and coordinating across
the Holiday Inn brand and the Web in the U.K. all at once.”
In terms of brand management, Seddon said that IHG is becoming
more sophisticated and more disciplined: “There’s a
transformation under way here. For example, we just split our
brand leadership into two roles: guest experience and design
(across the whole brand portfolio) and classical brand management.
It’s a rare human being who embodies both of
these skills at a world-class level.”
In Seddon’s view, successful brand management people have
three qualities: a strong commercial understanding of the
hotel business, a great sense of classical brand discipline and
the ability to evangelize both inside and outside the company
(i.e., with employees as well as hotel owners). “It’s a tough
role if you’ve only got two of these three skills,” he says.
Regarding the “big machines” (B2B, B2C), Seddon spoke of
the need to keep driving this integration of all touch points:
“We combined distribution with relationship marketing
because the separation was hindering our ability to take
advantage of all touch points with customers.” IHG also is
taking a holistic view of B2B relationships: “Sales is radically
differently now than it was 10 years ago — the customers
are changing and so are the ways of buying,” notes Seddon.
“There’s less need to see customers in person, and more
need for greater responsiveness. We have restructured sales
to be more like world-class sales companies such as IBM
and the pharmaceutical players in how we go to market, with
more focus on global and regional accounts and less ‘muffin
dropping.’”
Lastly, IHG is getting more disciplined about moving people
through the three domains rather than just bringing them up
through the sales ladder. “The more we move people across
functions, across regions, the stronger it makes the company,”
said Seddon. “You pay a price early on, but the payoff
is quick — and the relationship payoff is huge.” He underscored
the need to invest in relationships: “It’s not just about
frameworks or processes. We spend a surprising amount of
time and effort connecting people and teams from all over
the world.”
For Melco Crown’s Lam , channel management and analytics
are two skill sets that were not priorities a few years ago but
are top of mind now because of the proliferation of marketing
channels, activities and metrics. In her view, “you need an
overall channel manager who looks at all the channels and
ensures integrity in your pricing, in the way you’re doing
things, in the way you’re projecting your brand. Likewise,
because of all the additional activities that marketing is undertaking,
the analytics of looking at return on investment,
action generated out of different campaigns and so on, has
become much bigger.”
Hiring from outside the industry
In building her marketing team at TripAdvisor, Petersen is
looking for people who know how to leverage Facebook and
mobile applications: “Facebook is an incredibly important
vehicle for any marketer. We need to get better at leveraging
other people’s applications and at distributing and getting
people to engage with our content on mobile. I’m looking
at people from outside travel who are knowledgeable about
the vehicles.”
Norton also looks outside the industry: “I know that Caesars
has been trying to infuse the company with new talent to
push the ball forward, and I never hire direct reports from
within the industry into marketing. Consulting or financial
services are good places to recruit from, because I look for
people who have strong analytical skills and are comfortable
making recommendations based on analytics. They must
have good interpersonal skills to be able to communicate
across the functional lines within the marketing team, but
also with the field and other functions, especially IT.”
Beyond IT, Norton emphasized the need to work closely with
HR because employees play a critical role in upholding the
brand: “I always think about not only the customer message,
but about how that correlates with an employee message,
so that employees can express the brand in all their different
interactions with the guests. A lot of the marketing capabilities
we generate go right down the field, most notably to our
VIP hosts. In some instances, we even get involved with
developing performance appraisals and talent management
assessments for hosts, looking at whether they have the
right skill set.”
The new marketing mindset
In closing, Senackerib emphasized the need to make sure
that the thought process on marketing isn’t just about the
brand equity, advertising and the like: “While those things are
important and part of what we do, thinking of the marketing
function as a key driver of growth for the organization requires
a different mindset. It means that we tie all of our
activity to growth initiatives.”
One of the things he does at all board meetings is summarize
the top 10 revenue growth initiatives for the company: “I
measure them against how we’re doing year to date, how are
we doing against plan, how are we doing in aggregate and
how much revenue the group is adding. Even though some
of these initiatives are not driven by marketing, the view from
the board and from the senior team is that marketing sets
the growth agenda now.”
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