Conversion Rate Optimization – strategies for hotel sector
Introduction
“One
accurate measurement is worth more than a thousand expert opinions”
Admiral
Grace Hopper
If it is
not stated separately, the given content is taken out of the lecture from
October 17, 2017 with Joe Dreixler.
Conversion
Rate Optimization, short CRO, is essential in nowadays business, especially in
hotel business. But why is it a crucial component?
There are
many booking platforms, such as booking.com, through which customers can book
their rooms. For each booking, a commission fee must be paid from the hotel to
the booking platform. Thus, the hotel’s aim is it to convert these passive
guests, the ones who book over a third seller, into active guests, and
therefore forgo the additional fees. This is the desired action they seek: for
people to book a room through their own website. Hence, this action is called
conversion. CRO is the process of maximizing the number of people doing this
desired action.
Essential components
To reach
the mentioned aim – have more bookings directly over the hotel website instead of
over an OTA or another external booking platform such as the one of a
destination management organisation – multiple components must be taken into
consideration. The easiest way to explain this is to put all the needed
components in a funnel.
First, user
acquisition needs to be done. This is symbolized on the top of the graph: the
different traffic sources such as OTAs, SEO, display, PR, social media,
radio/TV, email, SEM, affiliates, word of mouth, and more.
Next, we
have the centre piece of any digital strategy: the website. The narrowing
funnel symbolizes a click path and the shrinking number of visitors. In the
end, only a fraction will be doing the desired action: booking through the
website.
Finally, we
have the result of the bookings: revenue. The goal is to reduce the number of
people lost during the click path, and therefore maximize revenue.
A study
from Adobe says that the interest of a customer is lost after 8 seconds, if one
fails to convince the customer to stay before that. In other words, the website
must immediately draw the attention its visitors and engage them. This is best
done using personalization tactics. This is not so much about suggesting the
right products or services, like it used to be in the past, but more and more
about creating the best possible user experience for the individual customers.
The relationship of data and design is key when it comes to creating a
successful user experience. Important is that the data should be taken from various
sources throughout the different departments within a company, so that in the
end we have collected behavioural data, corporate data, CRM data, and much more
(Adobe, 2015).
On the left
of the graph we have an arrow pointing upwards. This symbolizes the retention
of customers: we want people to come back to us, book again, and reinvest
revenue.
 |
Image 1: conversion rate funnel (Dreixler, 2017)
Conversion
As
mentioned before, a conversion is the desired action. This desired action, or
goal, can be anything: bookings, subscriptions for newsletters, or the creation
of user accounts. Often, it is the number of sales. Visits represent the number
of people who visit your website. It does not matter how many pages the user
visits during his time on the website, it counts as one visit.
Once we
have a number for the conversion as well as the visits, we can calculate the
conversion rate (Lancester 2017). The formula for the conversion rate is as
follows:
 |
| Image 2: conversion rate formula (Dreixler, 2017) |
The
conversion rate is a significant Key Performance Indicator, short KPI. A low
KPI expresses a weakness in convincing the target group to buy or book and
therefore a low revenue. Consequently, CRO should be an integrated part in
strategic management decisions and should be implemented in the DNA of a
company. An average conversion rate nowadays is around two to three percent
whereas in 1998 it was around 1.8%. Even though the number has not increased drastically,
development in the fields of web design, technology, online traffic, bandwidth,
and data analytics has led to this result.
The impact
that CRO can have is remarkable. For instance, in the US, hotels often have a
conversion rate of around 10%, which is way higher than the rates from the
OTAs. The reason for this is that the market is strongly dominated by hotel
chains, who invest a lot in CRO. In Europe on the other hand, there are more
family businesses in the hotel industry, who do not focus that much on CRO ergo
have a lower rate than OTAs. As a conclusion it can be said that one should
work and invest on one’s website - make it attractive to book, to reach a
profitable conversion rate.
Understand the audience and optimize
To maximize
conversions, one needs to understand its audience. For this reason, it is
essential to listen to reviews whether the ones the company gets directly over
the reception, the hotline or over review platforms like TripAdvisor in the tourism
sector.
Another
opportunity is to analyse the website, for example with Google Analytics, and
do user profiling with the following questions:
- From which channel do the users enter the website?
- Which is the first page they enter?
- How long do they spend on this site or another one?
- Do they find what they look for or are there a lot of search queries?
- Which are the most entered search queries?
- Which are the exit pages, that is, the last page the user was on before leaving the website?
- Which are the most mentioned problems at the hotline?
Where to optimize
- Check your exit pages
How to optimize
- Do not trust in experts-opinions, trust only in one thing: DATA!
- A/B testing (have different versions of pages and test which one leads to higher conversions)
- The web-designer will do the website beautiful and nice, but will not tell you if information is missing.
What to optimize
- Content
- Design (button colours, which pictures, etc.)
- Usability
- Technology
- Compromise the pictures on the site so that the page loading time is lower
- The longer the loading time per site, the lesser conversion rate
Overall Conclusion
Through the
above-mentioned techniques, we are now able to thoroughly understand user
behaviour. We know now how to win the battle for online booking, how to make a
website a commercial success and profitable as well as how to be a competent
tourism marketer.
Alexandra,
Linda and Nico
References
Adobe
(2015). Experience design optimization.
Retrieved from https://www.adobe.com/experience-cloud/use-cases/conversion-rate-optimization.html#x
Dreixler,
J. (2017). Digital Strategies for the
hotel sector. Lecture.
Lancester,
J. (2017). What are visits, visitors, and
page views? Google Analytics For Beginners. Retrieved from http://sporkmarketing.com/376/what-are-visitors-unique-visitors-and-page-views-google-analytics/
Qualaroo
(2017). The Beginner’s Guide to
Conversion Rate Optimization. Retrieved from https://qualaroo.com/beginners-guide-to-cro/
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