Upselling strategy to boost revenue from each guest
In the hotel and restaurant business, with costs growing and margins being squeezed, it’s imperative for hoteliers to drive spending per guest and boost profits - all whilst maintaining value for money and delivering a memorable guest experience.
That’s a lot of boxes to tick – which is where upselling can prove invaluable and an effective enabler for driving ancillary revenue and building guest loyalty.
When done right, upselling techniques, especially when tailored to the specific needs of the guest, can increase guest spend pre and during the guest stay, putting the guest in charge of their stay with enticing add-ons and value-for-money upgrades.
Let’s dive into how upselling in hotels can delight guests and drive incremental revenue.
Identify the right customers for upselling
Identifying customers that would be a good fit for upselling is recommended as not all customers would be worth pursuing. You can better understand your customer's needs and preferences by performing market research or looking at previous data.
Identifying the right customers is crucial as suggesting a promotion or deal catered to a specific customer is more likely to succeed. Moreover, targeting customers with a history of spending money on extra purchases is ideal for upselling as this indicates they are comfortable with spending extra.
For example, do you have a customer that often books a spa day? Or do you have a couple that likes to order a specific drink from room service?
Identifying and understanding trends in your customer's spending habits would help tailor your messages, boost your ancillary revenue, and augment the guest experience.
Segment customers for personalised upsells
Dividing your customers into separate groups based on demographics, behaviour, and other criteria can be used to create a sophisticated understanding of your audience.
As mentioned before, understanding your customers for an upsell strategy is highly important: a study by Bain & Company discovered that 81% of executives found that market segmentation had created significant advantages and boosted growing company revenue.
The different types of criteria you should consider are:
Geographic segmentation: this considers the customer's geographical background. It should be noted that countries, cities, and towns each have distinct cultures and societal norms, which leads to differences in individual values and preferences. It's important to recognise these differences and adjust accordingly.
Demographic segmentation: this classifies your customers based on individual attributes, such as age, education level, gender, occupation, income, and ethnicity.
For example, if the guest is staying on their birthday, anniversary or booked a stay with children, send relevant, personalised offers.
Psychographic segmentation: this refers to segmenting your customers based on personality, lifestyle, values, aspirations, and attitudes. Offering products and services should be accustomed to the customer's psychographic profile.
Behavioural segmentation: Behavioural segmentation classifies your customers based on their behaviour. As mentioned, targeting customers based on past purchases is crucial for your upselling strategy.
Use a Hotel Guest app
Using a hotel guest app can lead to revenue boosts. For example, they can act as a digital concierge to book in-hotel services, such as spa and restaurant bookings and in-room food and beverage orders. Messages can be forwarded immediately to the team or staff member who is best able to help. Hotel apps provide a great means of upselling services and facilities by direct engagement with the customer’s immediate needs.
Promote upsells on your hotel website
Even before they book a hotel room or event, customers will be searching for a product on your website that best suits their needs. Including relevant upsell offerings, which allow customers to upgrade or customise their stay, alongside their room reservation, can lead to an increase in revenue and may even tempt them to extend their stay.
Pre-stay guest communications
The data obtained at the hotel booking stage provides a great opportunity for tailoring a personalised experience. Sending your guest customised upsell offers via email or the hotel app before they check in targeting that second wallet can yield the best results - tempt your guests with an early check-in, a room upgrade, a bottle of Champagne in their room or discounted rates on a meal or cocktail in the bar for example. Make it an easy process – a couple of taps on the app and it’s all booked! Not only will this boost your revenue, but it will result in a more memorable stay for the guest.
Check-in opportunity for upselling
Another time to upsell is during the check-in process – either at the front desk or on the Hotel app.
Prompt them with the suggestion of additional products or services that would enhance their experience e.g. a late check-out or breakfast in bed. Mentioning that you provide spa and wellness offerings and any other hotel amenities and activities like yoga, cooking classes or a local tour for example, that may interest them can be very beneficial for your upselling strategy.
Improve guest loyalty when customers are checking out
Upselling hotel guests when they are checking out or have already left is possible!
The Pareto principle states that 80% of your revenue comes from 20% of your customers. As a result, retaining loyal customers is crucial for increasing revenue.
When they are checking out, inquiring about the guest's experience, asking them to join your loyalty programme or tempting them with a re-booking discount can enhance brand loyalty. Moreover, thanking guests via email can enhance the brand relationship with the consumer, allowing you to upsell when returning.
Manage the experience with technology
Our IRIS® Guest apps also enhance hotel guest experience and brand loyalty by enabling your guests to manage all facets of their visit. To find out more, you can contact us or book a demonstration of our solutions.
