Hotel One, 30+ products, meaning 30 combinations of rooms and rates, for any given search entered by prospects in the booking engine.
Hotel Two, almost 50 products, most of which redundant.
Hotel Three, 80+ products, making it impossible for the prospects to perceive any given value.
Too much, simply too many options we ask customers to go through, too often times.
In the previous post I talked about and showed the offering of the 3 hotels above through their respective booking engines, and why, ideally, we should never display more than 20, max 25 products for any conducted search.
Just like the OTAs do, most times.
It’s in human nature: the less we know how to deal with a certain thing, the more we tend to broaden the options we offer, because we think that one across many will work, hopefully.
Just like in the examples above, we might not know about how to be specific and target-oriented, thus we tend to offer everything we have and that comes up to our mind: rooms, rates, we invent special offers, discounts, amenities, upgrades, variants, you name it.
So today I want to show you what you can do when you end up having too many products and wonder how exactly you should be reducing your options.
Ready? Let’s go.
Products that do NOT perform
Clearly, we first need to detect those products that do not perform, because they are the ones that we need to handle.
The important thing to know though, is that performance does NOT equal number of reservations.
When I talk about performance, the best adjective that defines good performance is appealing.
Is the product appealing? If yes, that is a good performing product.
Why not the number of reservations?
To me, one of the biggest misleading practices in Revenue: production-based decisions.
Ultimately, Revenue is pure math: change a single variable of the equation, and the final result will be totally different.
This is, mathematically speaking, the reason why I don’t trust production-based decisions: they lack certain variables.
Number of reservations is a production-based value, that doesn’t really tell us anything about the actual demand, meaning all those users, potentially interested in our hotel, who bounced and didn’t complete the reservation.
Forever gone.
So, the appeal formula is like this:
Appeal = Product Bookings / Product Views
Product Bookings is, simple as that, the number of bookings received for a specific product, whilst Product Views is the number of times that product has been viewed.
Put another way, a simpler version of the equation is:
Appeal = Product Conversion Rate
In practice
Let’s get practical though, by pulling out the following report (in Google Analytics or Google Data Studio):
The report is sorted by Product List Views, meaning that products that have been viewed the most are on top.
The list is way longer, but let’s stick to these 13 products.
Let’s now start identifying all those products the hotel didn’t have any reservation for:
6 out of 13, already and almost 50% of the top viewed products that didn’t bring any reservation, any business.
These are the first ones to be deleted, for the simple fact that prospects are not interested in these rooms and rates, at all.
Low Appealing Products
Like I said though, all those rooms&rates that are not appealing, meaning have a low Product Conversion Rate, should be deleted too.
In the screen above, for instance, number 10 (C2D-DR) is one of those, even though it generated a reservation.
Most times, when a hotel gets 1 single reservation for a certain product, even on a very long period of time, they become reluctant to get rid of it, with the fear of losing the business coming from that single booking, without understanding that, most likely, that reservation would have come through anyway.
Put differently, that product may have cannibalised another product.
The rules to filter low-appealing products.
Product Conversion Rate may be enough to assess which room-rate combinations we want to keep and which ones to get rid of.
However, if you have a product that gets few reservations (or no reservations at all) but at the same time it gets very little visibility, meaning very low number of views, you might want to test it more and wait for it to get more views.
This is why I usually consider 2 combined values to assess which products I would delete:
- High number of Views
- Low Product Conversion Rate
For instance, depending on how long the period of analysis is, and the size of the hotel, something like this may be reasonable:
Using the advance filters of Google Analytics, I can now pull out a report that lists all those products that have:
- At least 1000 Views;
- Less than 0,01% Product Conversion Rate.
Delete… Or Change Their Attributes
I keep saying get rid of them, or delete them.
Which may sound extreme to some, especially if you have been offering certain products for quite a long time, I understand you might be a little reluctant.
The point is, low-performing products are… low performing.
That is to say, they don’t (or barely) sell.
So, either we delete those rooms-and-rates, or we change them.
By changing I mean we need to change what is that makes up the real value of the product: its attributes.
What is that prospects and customers value of your products? Why do they buy them from you?
Because of their attributes and, more specifically, the value that you assign to each of these attributes, and how your customers perceive them.
Still confusing?
Let’s see them together.
Attributes are at two levels:
- Hotel Level
- Product Level
Hotel-level Attributes
Product-level Attributes
The difference between hotel- and product-level attributes stands in the fact that the former do NOT change based on the room and rate selected by the prospect.
Think about the location, or the distance of your hotel to a certain point of interest in your city: they remain the same, no matter whether the customer selects single or double room, advance purchase rate or daily rate.
The sum of the 2, hotel- and product-level attributes and the value that you assign to each of them, is what makes up your products, ultimately, what you sell.
If the values of attributes at hotel-level remain unchanged, what you can change is the value assigned to your product-level attributes.
Again, a product is the combination of rooms and rates.
You may face a situation where, for example, your Deluxe Room sells quite well in combination with the Advance Purchase rate, but it doesn’t sell at all with a special offer that you created.
That’s the reason why I always talk about products, as opposed to individual rooms and rates.
So, what do you do when you face a low-performing product?
Do you lower your price? If so, you are changing the value of the product-level attribute Price.
You see, you have already been doing it, but what I also want to say is that…
…there is not only Price!
Lowering prices is the most common thing.
Everyone does it.
It’s the first thing that pops up to our mind when sales don’t go well, right?
There is a bunch of other attributes, though, that you can play around with. And this is the exact reason of this post: Price is often times overrated.
My favorite example: myself
Take me, for example.
Breakfast, to me, is sacred.
I don’t even stand up in the morning if I know I’m not going to have breakfast.
Oh, btw, breakfast to me is not simply a cup of coffee (espresso), it’s way more. Way… more.
I am the kind of guy who would rather pay 10 bucks more for a proper buffet breakfast, rather than going on a budget and settling for a dirty-water-so-called-coffee at Starbucks.
Even 15 bucks. 20.
Don’t touch my breakfast. Give me breakfast.
You think I’m the only idiot who thinks this way?
Upgrade the bottom room.
If you think I’m the only idiot, then try with another way, for instance: upgrade, for free, to a higher room category.
Simply put, if your sales suffer, it means you have plenty of rooms, right? Upgrade then: rather than a Standard Room, offer a Superior, or a Deluxe room as your bottom-price room.
Clearly, you need to make clear mention of the upgrade as a super benefit that, eventually, you offer only to those who book direct through your site/booking engine.
Not always the lowest/cheapest attributes win.
Check again the screenshot I shared before, here below again. Not necessarily the rates with the lowest displayed price got the highest number of reservations:
Or, again, think of the Advance Purchase rates.
They usually come with the most restrictive product-level attributes of Cancellation and Payment policies (usually these rates are not cancellable, not modifiable, payment upfront), yet in most cases they outperform any other rates.
“But… what do we do this for?”
The main and most frequent argument I get in return when I suggest going down this way of deleting and changing products, is that removing rooms-and-rates seems to clash with the fear of loosing business opportunities.
Put differently, getting rid of products goes against the logical thought of offering more to get more.
As said before, the less we know how to do something, the more we tend to broaden our options by doing everything.
In this case, the less we know about our prospects and their preferences, the more we tend to offer the vastest set of options to choose from, hoping that one of these combinations suits their wishes and needs.
That’s why we end up offering 30+, 50+, 80+ products through our booking engines.
Human Brain is like a computer RAM.
In a nutshell, the RAM of your computer is a temporary memory in which all your current activities are stored.
Put simply, RAM can be compared to a person’s short-term memory.
Do you know why human’s short-term memory… is short?
Because it’s limited.
Very limited.
Plus, we who try to get our message through and stored in our prospects’ RAM, have access to a teeny tiny little part of a teeny tiny little space.
Pretending the recipients of our message to be able to store more info they can possible handle, is like trying to save a 1000 high-quality pictures on a 3.5-inch floppy disk:
This is the one and only reasons why YES, we need to delete rooms and rates as much as possible.
The Less, The Better.
Not only offering too many rooms and rates is useless, but the higher the quantity, the lower the quality.
Because quantity generates confusion in the eyes of someone who is simply interested in 1 thing only: 1 product, meaning 1 room and 1 rate.
When there’s too much, there’s too little space and RAM capacity to focus on what your prospect may be really interested in: the one product that perfectly fits their needs.
You offering 30+, 50+, 80+ products, in your prospects eyes your booking engine looks like this:
A bunch perfectly identical capsules, even though, when look at them a little closer, they might be different one from another.
Have you ever hear that people, on internet, are lazy?
I said that too, often times.
Because our 3.5-inch floppy disk we have in our heads and we call memory, being so small, makes us lazy: there is no space for storing more that its physical capacity.
That’s why when we finally reduce the size of our message (what we offer) to better fit the capacity of our floppy-disk memory, not only do prospects feel less overwhelmed…
…but they (like all humans) automatically and naturally improve their capacity to better understand and perceive the value and the difference among the few products we have been offering:
High Quantity = High Confusion.
Low Quantity = Higher Quality = Higher Value = You can higher your rates.
It’s never about the costs, it’s always about the value, unless you are being seen as a commodity.
