Some hotel executives meet over coffee at yet another industry conference and the conversation quickly turns to money, and in particular how to get their hands on more of it.
Mr Bold said they could say what they liked about profitability, but revenue growth was the answer to all their problems.
Mr Loud said that was all well and good, but how was he actually going to make revenues go up?
Mr Bold replied that the answer was in the question – he would use up-selling. Every one of his hotel’s services would be designed to allow for up-selling. It was the future!
Mr Slow slapped his own forehead in delight and asked why he hadn’t thought of that himself. Indeed, he’d spent around 200 nights in hotels during the past year and only one of them had tried to up-sell. What a chance to get ahead!
Mr Loud said Mr Slow was a daft pillock. Of course they’d been up-selling but Mr Slow was too dozy to notice it. He said if customers fully realized what was happening they might take offence. You had to be subtle.
Mr Smart said exactly! You had to offer the customer a better value proposition having first drawn them in with a cheap basic offering. For example, instead of offering a room with breakfast at $79, you could tempt customers with a room-only offer of $59, and then up-sell the breakfast for just $20 more. Furthermore it was psychologically advantageous to have prices ending with a nine, but to express the price differences in round numbers.
Mr Blunt said in that case he’d skip breakfast. $20 was better in his pocket than in theirs.
Mr Smart said Mr Blunt was missing the point. It was all about manipulating the customer by presenting different options in just the right way. For example, if you were a cable TV company you could grab attention with a cheap basic package of twenty channels for $10 a month – but then in comparison you could also offer 100 channels for $25. Even Mr Blunt would have to admit that decision would be a no-brainer.
Mr Blunt pointed out that he could only watch one channel at once so it was indeed a no-brainer. If there was nothing worth watching on twenty channels, then why on earth would he want to pay for a hundred?
Mr Bold said obviously nobody would ever make any money at all if every customer was like Mr Blunt, but fortunately they weren’t. They were all different, he explained, tapping his head with his forefinger. The thing to do was figure out what additional services you could sell each customer based on their individual needs. If a fat bloke walked in, for instance, you could say you had the perfect health and fitness package for him.
Mr Smart said that wasn’t up-selling – that was cross-selling.
Mr Slow said there was a man working as maître d’ at one of his properties who sometimes liked to wear women’s clothing.
Everyone stopped and stared at Mr Slow. Mr Smart said that wasn’t cross-selling, that was cross-purposes.
Mr Bold said it didn’t matter what Mr Smart wanted to call it. The point was to give customers the chance to spend more money, just like they did in McDonald’s. They were brilliant – forever asking if you wanted extra fries. All it took was the right staff and a bit of training.
Mr Loud said the key to success was always to treat your staff better than your guests.
Mr Blunt said that didn’t mean you should treat your guests worse than your staff by constantly annoying them with attempts to up-sell.
Mr Smart said the important thing was that up-selling worked best at the moment when customers were making the purchase decision. At McDonald’s it happened at the service counter. In hotels it happened on the OTA websites.
Bastards! said everyone in unison.
Mr Bold said what they really needed were revenue management systems which would give more flexibility to up-sell. Front desk staff needed key information at their fingertips to offer the right service to the right customer at the right time.
Mr Slow’s eyes widened. He said that was exactly the kind of thing his IT vendors had been telling him about. First of all they’d offered him the usual basic software package, but when they saw he might be interested they’d started introducing all these other options that he’d have to pay extra for. It was confusing and irritating, and he was bloody well annoyed!
Mr Smart opened his mouth to comment, but as he did so the bell rang for the next session, so they all put down their coffee cups and made their way back inside.