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Building Customer Preference

By Robert W. Bradford, President & CEO

Strategic Planning Expert Robert Bradford

Customer preference is the currency that most of us in business seek.  But what do we know about customer preferences – and how can we manage them, strategically?  Most of us have a real blind spot when it comes to actually thinking like a customer and finding ways to set ourselves apart from the crowd in clearly discernible ways.

For an example, let’s consider how we behave as customers in the hotel industry.  When most people choose a hotel, they will do it for one of six reasons:

1.       Convenience (including Location)

2.       Price

3.       Type of lodging

4.       Atmosphere

5.       Service

6.       Habit

That’s it.  It’s not that complicated a decision, although having just the right combination of these six factors can be a complicated management challenge.  Note that the last item, habit, usually arises because a hotel repeatedly satisfies two or more of the other factors.  Also, some factors – such as service and atmosphere – can interact and either intensify the benefit of the other or detract from the other.

The reason that hotels are not all the same is that customers are not all the same.  Some customers are far more interested in price than other factors.  They routinely buy hotel rooms online, selecting by price, and may come to prefer a chain such as Motel 6 or Red Roof Inns.  Other customers may have a strong preference for lodging with certain amenities, or a high level of service.  They may tend to spend more time reading hotel reviews and might prefer a chain like Marriott or Wyndham.  Top-end customers are willing to spend quite a bit extra to get everything – atmosphere, service, amenities and convenience.  For these customers, “service” means more than “good service” – it means the hotel staff goes out of their way to make the guest feel welcome and appreciated.

Naturally, any hotel would like to offer the best of all of these to their guests, but each of these elements requires resources – both time and money.  Some hotels try to move “up” a level by putting money into the property, décor, and higher end consumables like soap.  These things do make a difference, but for the guest who expects convenience or service, they are not a substitute.  Indeed, I have encountered business travelers who absolutely hate an otherwise fine hotel chain simply because the internet service is difficult to use, or because the check-in process takes too long.

A hotel can spend time and money on any of these factors, and many do.  There is some efficiency in simply moving up from commodity to specialty strategies for quite a few hotels.  The greatest efficiency, however, lies in cultivating habit with repeat customers.  Once a specific customer has a hotel experience that fits closely to his or her ideal, the hotel has much lower costs getting that customer to book another room in the future.

The key to doing this in the hotel business – or any other business – is not to push on all fronts at once.  No hotel embodies the epitome of all six factors.  Rather, successful businesses in any industry are much more likely to find a substantial segment of the market and match, as closely as possible, the preferences of that segment.  This is why there are certain clusters of strategy in the hotel industry, with two or three chains setting up properties and operations that look fairly similar to their competitors.

Interestingly, it is unlikely you will see a breakaway success in these clustered groups, because similar strategies tend to drive commodity behavior in the customer.  Greater success can usually be found by pushing just a little farther towards one specific type of customer than your two or three closest competitors.  If you are willing to endure a little pain and actually give up advantages that draw certain customers in order to appeal to your target customer, you may actually get a lock on that type of customer in the marketplace, and start to build a group of habitual customers.  This effect explains the success of brands like Residence Inn, Four Seasons and Holiday Inn Express.  Perhaps the best indicator of the success of these strategies is the eventual proliferation of copycat brands – which, of course, may lead to the necessity of pushing your brand even farther into your chosen segment.

The dynamic  ebb and flow of customer preference can be a daunting challenge to companies that are used to resting on their laurels.  Where is your company in this process?  Are you trying to be all things to all customers or are you highly segmented?  How will you know when it’s time for a change to that strategy – or when your strategy needs to be fine-tuned?  Take the time to look at how your company matches up with your customers’ preferences, and you will likely start to pull ahead of your competitors.  To read more about unearthing customer preferences please click here.  (http://www.cssp.com/CD0912a/ListeningToCustomersForMarketShareGain/)

Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc.  He can be reached at rbradford@cssp.com.
© Copyright 2012 by Center for Simplified Strategic Planning, Inc., Ann Arbor, MI — Reprint permission granted with full attribution.