September 15, 2023 •

7 min reading

Data-driven marketing strategy for hospitality: Best practices & tools

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Today, in the best marketing teams, nothing is improvised. Data is the most valuable asset for these teams, and decisions, strategies, and campaigns are based on it. Marketers in the hospitality industry have embraced this trend, but the data and skills to use it wisely are still lacking in many teams and companies in the sector.

Just like marketing specialists, industry leaders and executives must understand data-driven marketing in order to reap its benefits. Here’s a breakdown of the trends that are shaping this practice and some tools and tips for getting the most out of the current data tsumani that the digital world is experiencing.

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What’s Changed Recently in Data-Driven Marketing?

During the COVID-19 pandemic, the retail sector experienced 10 years of growth in digital penetration in a matter of 3 months, according to a report by McKinsey, and rather than sticking to familiar patterns and brands, 40 percent of consumers tried new brands or retailers.

In this context, data-driven marketing became much more important and more complex.

As more people of all ages turn to online shopping and contactless payments, more data is being generated, and this data is extremely valuable for brands. Unfortunately, the resulting boom in data has not provided all marketers with a better understanding of their clients. The reason is that many companies' use antiquated data modeling systems that are incapable of capturing and analyzing data with the granularity and speed required.


Why is Data-Driven Marketing Important?

Understanding customers and improving ROI are the major goals of data-driven marketing, and these two goals are a high priority for most executives. According to a global survey conducted by Hospitality Technology, 86% of industry executives believe that data can help their companies become more profitable.

Indeed, they are correct! According to a study by Ascend 2, data-driven marketing:

  • Improves the ability to acquire new customers by 45%;
  • Increases decision-making effectiveness by 51%;
  • Makes new offers and product launches up to 66% more accurate, by considering the target audience.

The combination of these factors translates into higher ROI and profitability. Yet, many companies don’t allocate enough resources and budget to improve the way they collect, interpret and use data for marketing purposes. 

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What is Data-driven Marketing?

WPP plc, the largest multinational digital marketing agency, defines data-driven marketing as “a strategic approach that utilizes data and analytics to optimize marketing activities and drive better business outcomes”.

According to the Data-Driven Marketing Trends Report, the Key Objectives for Data-Driven Marketing are:

  • Targeting individual market segments;
  • Personalizing the customer experience;
  • Acquiring new customers;
  • Improving data quality;
  • Integrating data across platforms;
  • Raising level of data analytical skills;
  • Growing the marketing database.


How is Data-driven Marketing Used in the Hospitality Industry?

Data-driven marketing is a powerful tool used in the hospitality industry to enhance the customer experience, improve operations, and increase profitability.

The primary use of this marketing paradigm in hospitality is customer segmentation and personalization. These actions hold great power.

Does your marketing team already know that 78% of travelers are more likely to book services that offer personalized experiences?

This data point demonstrates the power of using data to segment audiences and provide personalized experiences.

By analyzing customer data, such as demographics, preferences, and behaviors, hotels and resorts can segment their target audience more effectively. This targeting enables personalized marketing campaigns tailored to specific customer segments, resulting in higher engagement and conversion rates. In addition to conversions, data-driven marketing nurtures relationships with current customers.


The Data Marketing Paradigm

The most efficient marketing approaches are made possible by consolidating customer data from diverse interaction points, including website activities, reservation history, and social media participation. By doing this, hotels can obtain an all-encompassing understanding of their clientele.

This empowers them to customize interactions, offer bespoke suggestions, and predict customer requirements, thereby nurturing enduring allegiance.

In addition to the main goal of enhancing the experience and taking care of customers, this marketing paradigm is used to:

  • Streamline processes: By leveraging customer data, market trends, and predictive analytics, hotels and other businesses in the hospitality sector can make informed decisions and optimize their efforts quickly. It also helps streamline customer service processes by knowing, for example, which types of breakfast are most requested, what are the most common check-in hours, and other relevant data.
  • Optimize marketing spend: Data-driven marketing helps optimize revenue management strategies in the hospitality industry. By analyzing historical data, market trends, and demand patterns, hotels can dynamically adjust pricing, promotions, and availability to maximize revenue and occupancy rates.
  • Improve online reputation: A business with a good online reputation will always have an advantageous position. Data-driven insights help hotels monitor and manage their online reputation. By analyzing guest reviews, sentiment analysis, and social media mentions, businesses can identify areas for improvement, address customer concerns, and proactively manage their online brand image.

In summary, by leveraging data-driven marketing strategies, the hospitality industry can enhance customer experiences, drive revenue growth, and gain a competitive edge in a rapidly evolving market.


What is needed for a Data-Driven marketing strategy?

Implementing data-driven marketing doesn't just require knowledge. Awareness of the importance of data is also not enough. A data-driven marketing strategy requires several key elements to be effective. Here are the essential components:

  • Data Collection: The first step is to collect relevant data from various sources, such as customer interactions, website analytics, social media platforms, and CRM systems. This data can include demographics, browsing behavior, purchase history, and customer preferences.
  • Data Integration: Data becomes valuable when it is connected and related to marketing objectives. The collected data needs to be integrated and organized in a central database or data management platform (DMP). This enables a comprehensive view of customer information and facilitates analysis and segmentation.
  • Data Analysis: Analyzing the collected data is crucial for deriving insights and identifying patterns, trends, and correlations. Data analysis techniques, such as statistical analysis, data mining, and machine learning, help extract valuable information from the data.
  • Data optimization: A data-driven marketing strategy requires continuous measurement and optimization. Key performance indicators (KPIs) should be defined to evaluate the effectiveness of marketing efforts. Testing and experimentation help optimize campaigns and identify strategies that yield the best results.


Data Quality: How to Improve It?

The reliability, accuracy, and relevance of the data are crucial in providing reliable results. In addition to fulfilling the above mentioned steps to collect, integrate, and analyze data, you must evaluate the quality of the data and seek to improve it.

According to the Data-Driven Marketing Trends Report, only 16% of companies consider the data they collect and analyze to be of very high quality. You should strive to belong to that group.

To assist you with this process, a wide range of AI-powered data analysis tools exist online, making it easy to create visual dashboards and reports using the data you have. The use of AI can provide a more agile operational model and assist you in interpreting the data. The advantage of these tools is that you can define parameters for AI to analyze, discarding irrelevant data and providing you with valuable insights for decision-making.


Don't forget legality and transparency

In addition to the strategic elements of data management, you need to consider legality and transparency. Respecting customer privacy and adhering to data protection regulations is paramount. Implementing robust data security measures and obtaining proper consent for data usage are essential for building trust with customers. Here are two key players in this arena:

In summary, data-driven marketing is essential for success in today’s competitive digital world, and it’s up to marketing managers and C-level leaders to give it the resources and the budget to make it really work.

Overall, data-driven marketing works best with extensive data collection, effective analysis technologies, and a continuous improvement approach to data handling. All these elements will allow for comprehensive data management, which supports a continuous cycle of analysis and improvement.

By incorporating these elements into a marketing strategy, your marketing team can leverage data to gain valuable insights, improve targeting and personalization, optimize campaigns, and ultimately drive better business outcomes.

For me, data-driven marketing is the mindset of tracking and analyzing data from marketing efforts to optimize marketing and business performance. To develop the mindset, start exploring available data to address small questions. Practitioners can start by understanding the data related issues (data collection, integration, data analysis, and optimization), and conducting small causal analysis (e.g., alternating the subject lines and comparing the opening rates) to improve performance. Eventually, practitioners will gain confidence in their available data and analytical skills and automate routine analysis through technology. Data-driven marketing is not a fad but will be a critical success factor for marketing professionals. The key is to think about data-driven marketing as the mindset to leverage data and technology in order to optimize business performance and start exploring.