4 Ways to Maximize Your Guests’ Lifetime Value

by usuario4 usuario4 - 25 September, 2017

4 Ways to Maximize Your Guests’ Lifetime Value

Lifetime Value (CLV) is a metric used by companies to determine which customers are the most profitable. 

This metric, however, only represents a projection of the total net profit a company can expect to get from their entire relationship with a customer. You don’t know how long a customer will stay with you, how often they will purchase from you, or how much they will spend on each of their purchases.

In hotel online marketing, there’s a lot of controversy and discussion about calculating guest lifetime value and acquisition costs. In revenue optimization, it’s necessary to keep costs at a minimum while maximizing revenue.

Hoteliers must be very careful with decisions that may affect CLV, as this could directly impact your hotel’s profitability. For example:

  • Recurring guests with the lowest customer-acquisition cost.

  • Guest loyalty and its impact on direct bookings.

  • Reduced distribution and booking costs by controlling these processes within the sales cycle.

Statistics confirm the need for control in the tourist industry and the necessity to nourish certain formulas for guest attraction. According to Sid Probsteinm, Chief Technology Officer at Attivio, it’s five times more expensive to get a new customer than to retain an existing one.  Invesp, a company that provides conversion optimization services, reported that companies continue to invest 80% of their digital market budgets on attracting new customers. Only 20% is spent on retaining existing customers. It’s important to identify a client’s Lifetime Value and cost of acquisition.

Your marketing strategy should be based on providing a better guest experience to increase the lifetime value of your guests and, therefore, your hotel’s income. Thanks to technology, hoteliers can now easily customize strategies based on guest profitability. According to Jill Griffin, from Altfeld Inc., a management consulting company, the probability of selling to an existing client is 60-70%, whereas selling to a new client is 5-20%.

When applied to hospitality, these figures make perfect sense. When guests’ perceive your hotel as a high value experience, they are more likely to return, thus reducing acquisition costs. The longer a guest stays with your hotel, the more you increase your customer’s lifetime value and loyalty. Recurring guests are also more likely to book directly with your hotel. At Beonprice, we propose 4 strategies for increasing your guests’ lifetime value:


  1. Define your guest life cycle. It’s important to outline what kind of relationship your hotel wants to establish with the traveler from the first moment of contact or slightest sign of interest. Determining how you will interact with the traveler according to their needs will be vital for communicating at the right time with the right content. For example, sending an SMS or email can be effective for a guest arriving at your hotel next week, and can be a great way to upsell to guests before they arrive.

  2. Unify registration systems. Technology allows you to centralize information about your guests, regardless of the channel they’ve chosen to contact your hotel. Integrating your property management system (PMS) with your customer relationship management system (CRM) or email marketing will help your hotel structure all guest information, and be more efficient by allowing you to automate communications. Another plus is that different departments can access and use this information. 

  3. Score your leads. Understanding who your most valuable guests are helps focus your efforts to find new guests. Lead scoring can help you nurture a relationship with guests with high growth potential and pinpoint strategies that increases guest lifetime value and generate revenue opportunities.

  4. Segment campaigns according to customer mix. Once you’ve mapped out your guest life cycle, it’s important to adapt it to each market segment relevant to your hotel. Attributing revenue to specific campaigns and tailoring messages according to guest type will improve conversion rates.

One of the challenges faced by the hospitality industry is using technology to unify processes and integrate these processes into the customer experience. Parametrizing the cost associated with your guests “one-to-one” will help your hotel offer a more personalized experience throughout the guest life cycle. Go the extra mile to keep recurring guests, as this will save your hotel time, money, and effort from finding new ones in such a increasingly competitive and fragmented market.

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