Coupons-OUT, Managed Offers-IN.

Everybody loves a discount, right?

Well, not necessarily.

People love value, and while value is often delivered in the form of a discount, it certainly doesn't make the two concepts the same.

Despite today's hustle and bustle over daily deals, coupons, and flash sales,  (I've fallen prey to them all!), this is NOT a way for brands to build value, relevance or relationships, nor is it a way to maintain long term profitability.  Continuos discounting eventually devalues brands in the eyes of consumers.  This has been proven time and time again.

Discounts and coupons also erode profitability in the long term.  Of course, coupons and discount  deals may increase short term revenues, but how can a brand know when the long term profitability needle has dipped into the red for the sake of short term gains? And what if that brand, like so many of our clients, has multiple properties and sub brands?  How could they possibly know when the short term revenues are no longer beneficial given long term projections based on aggregated cash flows and the overall valuation of the brand(s)?

Clearly, coupons and discounting are not tactics to be taken lightly and may not be a good fit for all brands. But that is not to say brands shouldn't make special offers to grow and motivate their consumer base.  So what's the solution?

Offer management might sound like it is another name for all this coupon-groupon-daily deal fanaticism.  But it's not.  We actually think it's the answer to the discount dilemma described above.

A good offer management system has an approval loop that allows the master brand to collect data on all the offers being deployed by a brand (or multiple sub-brands) and helps corporate analyze which offers work best in any given senario, while ensuring brand integrity along the way.  Based on globally aggregated information, corporate can then inform local marketers of the offers that work best for their properties, depending on a set of variables specific to that property (size, location, customer base, class, date, day of the week, etc.).

With this kind of data and guidance, local properties can hone their offers and make the most intelligent decisions that will maximise value for consumers and profitability for the brand.

For example, a local hotel can offer additional services that have been proven valuable to their target consumer base, such as free shuttle service, or complimentary hot breakfast, as opposed to attracting visitors by simply dropping room rates, or selling sets of rooms to groupon or OTAs at a fraction of the room's value.  The local marketer can access the offer management system via the web and incorporate their offers into brand compliant marketing and advertising materials, reducing production costs by simplifying the supply chain, thus further enhancing profit margins.

Value is feeling like your net benefit exceeds your loss.  So, brands can create value by charging less, or providing greater benefits.  Finding the right balance between the two for your product/service and your target market is the key.  Offer management systems that educate marketers on what works and makes that information available to every brand marketer who needs it, is a great way to strike that balance.

Does your brand use discounting to drive trafic or have you in the past?  What is your experience?  If you would like to learn more about offer management, visit our website.

Hotels and Hospitality - Another Great Year?

2010 has been a fantastic year in the hotel and hospitality industry.  Based on our analysis of publicly available financial information, few hotels have had trouble reaching or maintaining growth across RevPAR and revenue overall.

But the success of 2010 did not come easy.  In today's OTA-obsessed environment, finding alternative sources of revenue is necessary.  Driving group business, banquet business, F&B outlets and other local, property-level revenue streams was key in 2010 and will continue to be in 2011.

One of the benefits hotels realize when focusing on property level marketing is the abundance of raw data they collect on their property owners and end consumers.  When analysed, this data can lead to smarter local marketing campaigns in the future.  When aggregated, this data leads to keen marketing insights that make the brand more responsive and relevant to consumers and to franchisees alike.  

Because of the complexity and sheer amount of information involved with property specific marketing, more and more hotels have realized the need to automate the process.  Naturally, there are complex creative challenges that hotel brands bring to the table.

For example, how can the brand control what the franchisees do to maintain brand compliance without strangling their local expertise?  And once those brand rules or guidelines are established, how are they maintained?  How do the franchisees access brand appropriate assets and information, customize it for their property, and deploy it in a meaningful way to a targeted audience?  These questions merely scratch the surface of the complexity of local marketing automation in the hospitality industry.

The integration points between local marketing and larger hotel IT infrastructure can be a concern for some companies, but only the inexperienced avoid it and head for cover. Those who embrace the challenge head-on build brand loyalty and discover increasing sources of cost savings and revenue.

Is the Whole Greater than the Sum of it's Parts?Creative Agencies and Marketing Automation

Traditionally, hotels and restaurants have hired creative agencies to develop marketing campaigns and creative collateral.  The process of deploying marketing materials was time consuming and expensive, especially on a property level.

With the emergence of local marketing automation technology, new vendors presented hospitality brands with the opportunity to streamline this process.  But how does this new technology work within the current system? What happens to the development and deployment of creative? What is the relationship between the client, agency, and the marketing automation vendor? Are local marketing automation software companies out to take down creative agencies?

While creative agencies originally saw marketing automation vendors as a threat, the reality of the situation has proven to be much different.  At Pica9, we like to think of ourselves as a marketing engine, and agencies are the high-octane fuel that keeps the engine running for the client. We believe that when local marketing automation firms work in conjunction with agencies, everybody wins.

Here's why.

Local marketing automation platforms are deployment mechanisms for the creative materials generated by an agency.  While many agencies offer their own solution for this process, it is often dated and over-simplified.  After all, agencies are known for their creative genius, not their experience in software and technology development.  So, when an expert local marketing automation firm teams up with an agency, the client ends up with software that is comprehensive, cutting edge, and ever-improving.  In the end, the client's creative has further outreach and greater flexibility amongst local marketers.

Greater accessibility of creative, leads to increased usage of the system and the creative marketing materials that fuel it.  Increased usage results in a better consumer response to the marketing materials generated by the system.  That positive response encourages end users to return to the system to find and utilize more creativity.  This leads to more business for the agency, as well as an overall more efficient and effective system for the client.

In the example below, the brand is pointing local users to the most current, popular, and proven effective creative materials in the "What's Hot?" section of the user interface.

Based on the relationships created by this integrated, creative cycle, it is clear that local marketing automation software does not devalue agencies, but rather elevates their value and impact.  And in the end, the hospitality brand gets a more powerful and affordable mechanism for deploying their marketing materials on a local level.  When all parties work together, the whole is greater than the sum of it's parts.

Are you with an agency? Do you work for a major brand that uses agencies and technology providers for marketing automation?  We would love to hear your experiences with this process and the nature of the partnerships you maintain to keep it going.