Why do commercial strategy silos persist? Here’s a perspective from a marketer, undoubtedly biased but fueled by a desire for unity and efficiency.
Constructing a Champion Football Team
Imagine if sales were the offense, the unit charging forward to score goals or points. They directly engage with prospects and clients, transforming opportunities into revenue through aggression and direct action aimed at securing business.
Marketing then serves as the midfielders, pivotal for both defense and offense. They create opportunities, set the game’s pace, and strategically position the hotel in the market to support the offense’s efforts. They bridge the gap between revenue management’s defensive strategies and sales’ offensive goals, ensuring the hotel’s message reaches its target.
Revenue management acts as the defense, including the goalkeeper, tasked with optimizing pricing and inventory to prevent losses and ensure the hotel’s profitability. Their strategic positioning and market trend analysis are crucial for informing the tactics of both offense (sales strategies) and midfield (marketing campaigns).
The success of each team is interdependent, crafting a winning playbook. If revenue management becomes too rigid or disconnects from sales, the chance to score (win business) might be missed because marketing couldn’t properly set up the play due to a lack of strategy alignment.
Silos hinder synergy, leading to missed opportunities, inefficient strategies, and potential losses in the competitive market.
Breaking down the Silos
For years, discussions have revolved around the silos separating sales, digital marketing, and revenue management. Despite claims of focus by various software products, achieving unity and defining a solid process that merges expertise toward harmony of the three distinct disciplines remains a challenge. The goal is to harmonize three distinct disciplines, each with unique skill sets and objectives, onto the same page.
Why Perspective Matters
Much of this discord stems from entrenched perspectives. Deeply ingrained in one’s role, sharing comprehensive insights with other departments challenges, as does education, which is both hard and time-consuming. Yet, assuming all parties are open to learning, sharing a marketing perspective on persisting silos is crucial.
No offense to sales and revenue management counterparts, but it’s time for marketing to claim its rightful place at the commercial strategy table.
Fallacies of Revenue Management
Booking vs Planning Window
It’s vital for my colleagues in revenue management to understand that the “booking window” and “planning window” are fundamentally distinct. Marketing needs to engage with its audience well before the booking window, often 1-3 months in advance, to make a meaningful impact. By the time your revenue management system tells you are behind pace, or the competitor is showing pick up, relying on OTA ads at the eleventh hour is insufficient.
Understanding Customer Funnel
A revenue manager has different tools in their toolbox. They rely on “rates” and “distribution” to make an impact. So, they only engage with the customer in their funnel at the bottom, when the guest focuses only on the transaction of the experience. They have already made many of the decisions leading up to the purchase and are driven to change one factor in the decision-making process: where to book. It is a short-term approach that does not focus on the whole customer journey or repeat business. Revenue Managers are my data people, so feel free to ask me for the data on this one.
Like Buying a Car
You can equate the situation to buying a car. The revenue manager of the car dealership prices the car and decides which websites to list the car inventory. But we don’t wait to start marketing when they hit the car lot. There is extensive research being done long before the consumer walks on the lot, and sometimes the inspiration starts even before the car has been physically made.
Segments vs Channel
The last nuance is revenue management and marketing do not speak the same language. A revenue manager focuses on segmentation mix whereas a marketer likes to know the channel mix. Both are important to have profitability in a hotel. One focuses on the type of business, and the other on where the business books.
Fallacies of Sales
Salespeople that do Marketing
Sales have been the foundation of commercial strategy, way before revenue management and marketing even existed. But, there are still very many prevalent Directors of Sales and Marketing, who retain that marketing in their title. There is nothing wrong with that, but do we give our DOSM’s the knowledge and training to either implement marketing strategy or manage marketing team members?
Total Revenue vs Group Revenue
Most Directors of Sales and Marketing (DOSMs) excel in capturing market share by booking group and negotiating business transient rather than leisure. Their promotions are often based on their ability to build relationships, meet quotas, and close deals. They usually focus on securing group business and business transient market share because they are fielding a volume of leads daily, interacting directly with the clients, interacting daily with the National and Global Sales team of the brand, and it’s the dominant weight of their goals and job description. Depending on the market and total hotel goals, it is in the best interest of the hotel to weigh more heavily a leisure transient structure of goals to keep leisure top of mind in their daily battle for market share.
More than Flyers…
When interacting with the marketing team, often the mentality becomes “sales support”. Marketing has tools to support sales regarding email marketing or collateral creation. Maybe there is an idea around package creation, but rarely the marketing of that package. Your marketing team can/should do more than create flyers!
A Different View on Budgets
It flows down into how budgets are viewed. When the transient target revenue may be more aggressive than the group or business transient revenue goals, the allocation of spend in terms of people resources and spend leans towards the group efforts. When will marketing be seen as a necessary investment and not an expense?
Nurture the Funnel
Sales professionals understand the importance of building relationships over time and building trust before securing a large group business contract. Despite the varying touchpoints and channels, sales understand how to build relationships and trust offline, the process is no different than how marketers need to approach it online. Sales teams need to think more like marketing teams.
Fallacies of Marketing
Now, it is important to call out our marketing team members too; we are not perfect. Some of the above scenarios were created by marketing teams. We have trained our commercial strategy counterparts to look for these misguided things.
ROAS is not the Best KPI
Many times, marketing teams will use ROAS (Return on Ad Spend) as their primary KPI (key performance indicator) as discussed in the HSMAI Titanic speech. Because there are so many touchpoints within the customer journey, generally ROAS will attribute most (if not all) of that revenue to a single source. Marketers need to train their stakeholders to ask more than for ROAS. As with revenue management, we should not focus on the transaction only and focus earlier on the sales cycle. Review the data and stop using ROAS as your crutch.
Strategy Before Tactics
Also, marketers have so many tools in our toolbox, we are inundated with many tactics we can deploy. While having an array of tactics from SEO (search engine optimization) to PPC (Pay per Click) to Social are great, they are sometimes a knee jerk to feel like we are doing something and do not support with clear goals and strategy. And, realistically, they only have the time or budget to properly implement a handful of tactics at any given time. So, create your hotel’s digital marketing strategy before jumping into tactics.
Too Much Focus on Bottom Funnel
The easiest tactic becomes OTA Ads (and MetaSearch) because it always looks good on paper with a strong ROAS. But, that creates a never-ending hamster wheel to fund bottom funnel tactics that you can never get off.
Focus on Education
I implore my fellow digital marketing people to continue to fight the good fight and continue to educate those willing to listen. Challenge your agencies to lean into commercial strategy and provide case studies; you will likely need your revenue manager to help with showing the data.
The Commercial Strategy Solution
Do you want to have the all-star, unbeatable football team?
Hiring and Training
And while all marketers believe in the branding and creative of a project, someone that focuses on creative is generally not strong in digital and vice versa. When you hire a marketing person, conduct an audit to understand what skills the team lacks. And then find 3rd party support to supplement that person and stop trying to hire someone that knows it all. Those people rarely, if ever, exist.
Then, make sure they are adequately trained and not a dumping ground or left to “figure it out”. It starts with educating the marketing team, so they can in turn educate their sales and revenue management counterparts.
Strategy and Goals
Additionally, setting strategy and goals as a TEAM. Ensure you are all aligned about the hotel’s target segments, value proposition (for both group and transient) and differentiators versus competitive set.
Then, all need to understand what the hotel’s goals, seasonality, and opportunities are. Establish key performance indicators that reflect the collective success of sales, marketing, and revenue management.
Marketing, specifically, needs to communicate where they can align their tools and tactics and truly understand where they can make an impact. Once you have a long-term strategy and how you plan to get there, you can break into smaller, more manageable sprints.
Listening and Learning
Each respective discipline needs to employ active listening and attempt to understand the other’s value and how they can each contribute. Stop being territorial, or worse, lazy. Lean into an environment of mutual understanding and appreciation.
Keep your eye on the ball! Being reactive and not communicating with a long term plan you will surely get tackled by your competition.
Originally published by HotelExecutive in April 2024