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eBook | Success Through Segmentation 1 Success Through Segmentation How to Drive Higher Conversion Rates and ROI in the Travel and Tourism Industry
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Page 1: Success Through Segmentation - Infutorinfo.infutor.com/rs/618-LOH-235/images/Market-Segmentation-Ruf... · eBook | Success Through Segmentation 8 How to Find the Best Segmentation

eBook | Success Through Segmentation 1

Success Through Segmentation

How to Drive Higher Conversion Rates and ROI in the Travel and Tourism Industry

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eBook | Success Through Segmentation 2

“Take nothing but pictures,leave nothing but footprints.”

This timeless philosophy resonates deeply with travelers around the world who seek to leave no trace of their stay while keeping their destination in pristine condition.

But while travelers strive to leave only their physical footprints, they also leave behind “footprints” of their life journeys in the form of consumer data – and those tracks can be far more telling. Where they’ve lived and traveled, how many children and differ-ent jobs they’ve had, the media they’ve used: this intelligence provides deep insights into behavioral data, interests, de-mographics, lifestyles, purchasing patterns, and more.

The amount of consumer data created by travelers and those seeking new adventures is immense. According to the recent “State of American Vacation” report by Project: Time Off1, the av-erage American took 17.2 vacation days in 2018. However, while this number may appear high, there is still ample opportunity for Travel and Tourism organizations to convert more travelers.

In the same report, Project: Time Off found that 52% of American employees left vacation days on the table in 2018. That unused time totaled a staggering 705 million days – up from 662 million the previous year.

This statistic makes it all the more important for those in the Travel and Tourism industry to inspire trips to their respective destinations – both by those still in the planning stage, and those who otherwise might have simply left the vacation time on the table. A key factor in achieving this result is for organizations to ensure that they are speaking to the right audiences. And to do this, they need to follow the consumer data "footprints."

In this guide, we will look at market segmentation – the process of grouping consumers with similar demographics, behaviors, and lifestyle preferences – and examine how it can be used in the Travel and Tourism industry to positively impact marketing efforts by following the journey of top performing customers. We will also discuss what is needed to implement a market segmentation plan and how to find the right strategic partner to ensure success.

52%

1 https://www.ustravel.org/sites/default/files/media_root/document/2018_Research_State%20of%20American%20Vacation%202018.pdf

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Here’s a brief example:

A DMO is planning to send a visitor guide to an audience that it hopes to convert into visitors to its destination. It wouldn’t make sense to send each person the same message because their lo-cation, likely time of travel, and interests would vary wildly. One message to this many consumers with different priorities will have far too little ROI.

On the other hand, with audiences numbering in the hundreds, thousands, or even more, it’s likely not possible to send each per-son a unique, personalized message. This is where segmenting can make an immediate impact. Market segmentation splits the difference in the two scenarios above by is splitting the audience.

Segment for Marketing Success

DMOs (destination marketing organizations), travel and tourism

marketing agencies, as well as companies such as cruise lines and

hotel chains, all make sizable investments in travel promotions

– and with good reason. Generating awareness of a destination

brings more visitors and revenue, which creates jobs and infuses

local economies with revenue.

However, it’s crucial that travel and tourism organizations avoid the common “spray and pray” method and spend their

marketing dollars intelligently to convert customers and maximize

ROI. In order to do this, many now rely on market segmentation.

Put simply, market segmentation is the process of breaking a

consumer base into different groups based on

• Location data

• Demographics such as age or income

• Psychographic data like behaviors or lifestyles

• Technology usage

In grouping by these or other relevant shared characteristics,

travel and tourism organizations are better equipped to home in

on the best performing lookalike prospect segments. This can be

further segmented by other key criteria, such as the best looka-

like segments by season, and other similar characteristics.

44% of Travel and Tourism industry members plan audience segmentationSource: TTRA Censtates: 2019 Focus Paper

44%

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Segment for Marketing Success Continued

There are many ways market segmentation can be implemented. Here are some of the most commonly used categories that are used to group consumers:

• Geographic: Locations such as cities, counties, regions, coun-tries, and international regions

• Demographic: Age, gender, family size, ethnicity, income, and education

• Psychographic: Attitudes, values, personalities, lifestyles, and communication preferences

• Technographic: Tech ownership, use patterns, and preferences

Once consumers have been segmented by these or other rele-vant categories, organizations are armed to tailor marketing com-munications to each group based on their characteristics. This will help travel and tourism organizations determine where to market and how to spend marketing dollars as well as maximizing the campaign’s effectiveness in generating leads and conversions, and identifying the best performing traveler segments.

However, before reaping the benefits of segmentation, organiza-tions need first to fully understand their best performing customers.

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• Currency: Out-of-date data can degrade your results. Update

your key consumer information, such as name, address, phone,

email, to ensure the profiling of your consumers is as accurate

as possible.

• Deterministic and probabilistic: Deterministic data is ob-

tained from authoritative sources and is known for accuracy,

but can have a limited availability. Probabilistic data is more

widely available, but can be associated with an individual only

by inference. It’s important to be as close to the deterministic

source of truth as possible to ensure the most accurate data.

• Sourcing and corroboration: Authoritative sourcing is essen-

tial to data reliability in critical applications, such as accurately

identifying and reaching consumers. Corroboration through

multi-sourcing of data helps prevent inaccurate and duplicate

entries. Ensure your data is sourced from top authoritative

sources and corroborated through multiple sources to main-

tain the highest accuracy.

There are countless data points and factors that can be useful

to a Travel and Tourism organization. The more boxes you can

check, the more solid the foundation for your market segmen-

tation strategy will be. You may also want to consider identifying

a consumer identity partner that can help you create a process

to normalize, complete, and continuously update consumer data,

and provide the capability to append missing data to all customer

records, consistent with your marketing segmentation strategies.

The Foundation of Segmentation

An accurate and complete repository of first-, second-, and/or third-party data is essential to market segmentation. The more thorough and the higher the quality of your consumer data, the more effectively you will be able to segment consumers.

Here are some of the characteristics of the travelers’ in a data-base that are often used to successfully segment audiences:

• Life stage

• Gender

• Motivation (business, leisure, extended stay)

• Geography

• Overall trip spend

• Number (and ages) in the traveling party

• Nights stayed

• Date booked

• Date visited

Travel and Tourism organizations should also be sure that their data is current and accurate, as unreliable data can sabotage any effort. Here are some data qualities that should be sought:

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The Process of SegmentationOnce you’ve laid the groundwork of your strategy with the best possible data, you will need to build your segments and identify which audiences you should target, re-engage, or possi-bly suppress. A qualified segmentation provider will guide you through this next stage by performing a complex analysis of your consumer identity information and unique KPIs for success.

By combining data points such as top customers by spend, length of stay, or life stage, your provider will perform a detailed analysis of the groups of customers that are most important to your indi-vidual goals. Once this analysis is complete, you will receive a re-port of top ranked clusters (groupings of consumers who exhibit similar characteristics) as well as how these clusters index against the baseline.

In some cases, top clusters can outperform the baseline by 7-8x, indicating these segments are likely to be highly responsive with a strong propensity to convert. These valuable clusters provide you with the data-driven foundation to help you quickly:

• Pinpoint your best-performing customer segments

• Discover cross-selling opportunities

• Develop strategies to convert underperforming segments

• Find lookalike audiences for future marketing engagements

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The Benefits of SegmentationIn the marketing world, the Pareto Principle is often cited. This is more commonly known as the 80/20 rule, which suggests that 80% of sales come from 20% of a company’s customers.

And while it is certainly not an exact science, this rule serves as a reminder of the potential benefits of a more targeted marketing focus. Effective market segmentation allows Travel and Tourism marketers to do just that and, in the process, deliver benefits such as:

• More efficient marketing spend by targeting the best per-forming segments and avoiding underperforming consumer audiences

• Improved conversion rates by reaching the audiences most likely to convert

• More effective personalization by providing the most rele-vant messaging to your key groups of consumers, resulting in overall higher conversion rates

• Higher RevPAR (revenue per available room) and ADR (aver-age daily rate) as a result of reaching the right travelers during the right season

• Increased satisfaction and return visits by understanding why travelers visit

• Better understanding of media consumption to engage consumers in their preferred channel

20% 80%

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How to Find the Best Segmentation PartnerOnce you have decided that segmentation is the right strategy for your organization, it’s time to evaluate potential partners. Choosing a vendor that understands your needs and challenges is crucial to successful market segmentation.

The ideal partner should be able to:

• Understand how to solve your unique business issues and how to meet specific goals

• Provide a value differentiator against competitive products and provide value for the investment

• Be able to project the results across a market area or the entire United States

• Demonstrate experience solving similar needs for similar cli-ents (for example, references and relevant case studies)

After identifying a potential fit, here are the questions that you should be prepared to answer:

• Do you have any data that can be used to profile? (History makes for a great teacher and starting point)

• What data elements can your organization provide for use in profiling? (For example, name, address, phone, email)

• What are you trying to accomplish with this exercise?

• How will you ultimately measure short and long-term success?

Choosing a market segmentation partner can be a daunting task, but with thorough vetting and by answering the appropriate questions, the choice will become much more clear.

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The Final Step: ActivationOnce you have found a partner and have successfully segmented your audience, it’s time to get the most out of your new data. To do this, you should be able to accomplish some or all of the following:

• Prioritize customer segments by marketing to the most re-sponsive/productive clusters

• Acquire new customers by targeting lookalikes of your best-performing audience segments

• Maximize conversion with meaningful messaging and offers (personalization)

• Identify and target untapped markets

• Convert best prospects with campaigns delivered via their preferred channel

• Cross-sell and up-sell services based on consumer lifestyle traits

• Strategic media buys to prioritize “hot zones”

Key TakeawayIf you’re considering market segmentation, you are likely among the Travel and Tourism organizations who won’t settle for the sta-tus quo. You’re looking for an edge in finding the best visitors as well as enticing them to return. Once you have compiled the nec-essary data and established the KPIs for success, you will need to find a partner who can help you achieve those successes. From there you will be well on your way to maximizing your organiza-tion’s conversion rate and ROI.

Ready to get started? Perform a segmentation analysis with Ruf,

an Infutor company, today!

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WHY RUF?

For decades, Ruf Strategic Solutions, an Infutor company, has been helping results-oriented marketers achieve their goals with market-ing analytics and segmentation solutions that improve consumer en-gagement, drive conversions and maximize marketing ROI.

Ruf and Infutor create a comprehensive solution, integrating founda-tional consumer identity and attribute data with a powerful analytics platform to give brands a complete suite of identities, attributes and consumer intelligence in one place. The firms’ combined expertise and passion for client success continues to empower brands with essential, actionable and measurable marketing intelligence.

(800) 829-8544ruf.com

1533 E Spruce Street, Olathe, KS 66061


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