The Importance of Audience Segmentation

How dividing your audience can help you communicate more effectively and provide better guest service.

Market segmentation is an important tool that allows you to better understand your guests and to expertly target relevant messages, deals and offers to each group. Once guests walk in the door, market segmentation also can help you offer better service.

“Market segmentation can help to expand your consumer base, target new audiences, and expand your hotel business into new markets,” hospitality expert Arielle Gibson states in the UpStay How-To Guide to Market Segmentation. “More importantly, it allows you to tap into different groups of consumers with different habits and provide them with a new offer that suits their budget level and needs.”

Here are five reasons hoteliers should take advantage of the power of market segmentation to better understand guest demographics, attitudes and behaviors. By using this important tool, you can:

1. Gather key data. Making use of market segmentation can allow you to gather and drill down on important data you can leverage to keep your hotel booked and increase revenue. These data may include: booking lead time, cancellation rate, no-show ratios, price sensitivity, length of stay, total revenue per guest and per room, weekday vs. weekend stays and more. Market segmentation can allow you to collect and compare this data for different types of travelers.
2. Better understand your guests. Your list of market segments will depend on your hotel and your area, but could include: VIP guests, returning guests, corporate travelers, adventurers, couples, families and even medical tourists. Once you’ve divided your market into groups, you can focus in on the details that will help you to better understand those groups and what motivates them to respond to an offer, book a stay, return to your hotel or become a loyal fan. You can send guest surveys to different market segments to get more detailed insights to help you in your quest.
3. Beat out the competition. Refining your market segmentation game can help to put you ahead of your competition. The more you know about your target market and what other area hotels are offering, the more you can tailor your deals and perks to attract business to your hotel and away from the competitor down the street. Use market segmentation to take a granular look at the revenue you generate from each segment so you can decide where to focus more of your attention, time and marketing budget.
4. Make guests happy to hear from you. Sending irrelevant messages is one of the fastest ways to make guests ignore your communications, hit “unsubscribe” or text you with a one-word reply: stop. Worse, these overly general communiques can make your guests feel like you don’t really know them at all. With market segmentation, you can create tailored, relevant messages that customers will open, read and act on. Every welcome message will increase their affinity with your brand.
5. Provide personalized service. The better you know the different segments of your target market, the more you can tailor your service to fit each group. For example, you can offer the right perks to corporate travelers or give attractive coupons or discounts on local tourist attractions to family travelers. And when guests arrive, you can have personalized amenities and offers waiting: whether that’s yoga mats in the room, an offer of trip planning help or a guide to the five best area restaurants for foodies.

Market segmentation can be the key to better marketing, better communications and better guest service which, in turn, can unlock higher revenues for you.