Decoding the new economy

Losing the hospitality battle

Are smaller hospitality businesses falling behind big hotel chains?

Travel review site Tripadvisor released its 2012 Industry Index examining the 25,000 responses from hotels around the world and 1,000 Australian hospitality businesses who took part in the survey.

The index covers a wide range of areas of how the hospitality industry is dealing with connected customers, the web and how hotels are dealing with the relative performances of markets in Europe, North America and Asia.

A disturbing part of the survey was how many smaller businesses are falling behind their bigger competitors with less than half of Australian Bed & Breakfasts agreeing the statement that an “ability to book via my property’s website on a mobile device is ‘very important,” while 70% of hotels agreed.

The failure of smaller properties to engage online is borne out anecdotally as well, at a recent business breakfast a B&B owner – whose main business was furniture retailing – moaned about the negative TripAdvisor reviews his place had.

When it was suggested he might want to engage with the unhappy customers, the proprietor threw his hands up and said “our solicitor told us that it was too expensive to sue.” He wouldn’t accept that the dissatisfied guests might have a legitimate complaint that should be addressed.

At the same time larger hotel chains have full time teams monitoring comments on Tripadvisor, Facebook and other online forums, fixing problems that are being mentioned and then telling the world they have resolved the issue.

There’s a good reason for this. Ask someone planning a major holiday and you’ll find almost all of them are reading reviews on sites like Tripadvisor, Fodors or Lonely Planet’s Thorn Tree before booking accommodation or flights.

While many of the hotel management responses are boilerplate – repeated replies like “Thank you for your review and we appreciate you taking the time to share with us your experience as we are always pleased to receive feedback from our valued guests” is not what social media or customer service is – at least there is a perception that senior management is listening.

At many establishments senior management really is listening, a country manager of one of the world’s biggest chains describes how his three person team sends him a report each day of any complaints being listed online. These are checked out and any systemic problems they find such as surly front of house staff, poor housekeeping or incorrect billings are addressed immediately.

Having a direct line to happy or dissatisfied customers is one of the major benefits social media offers businesses. That smaller hotels aren’t doing this while their multinational competitors indicates the independent sectors of the hospitality industry are falling behind the majors.

The furniture shop owner with a B&B investment illustrated the problem, not only was he not engaging with dissatisfied customers on TripAdvisor, he had no idea whether his businesses were listed on Google Places, Facebook or any other online listing service – “my wife does that” was his dismissive answer.

Possibly the most overused quote in modern business is ice hockey star Wayne Gretzky’s “skate to where the puck is going to be, not where it has been”. Those smaller hospitality businesses not taking the mobile web, review sites or social media seriously aren’t even in the skating rink in today’s game.

There’s a lot more interesting ideas in the TripAdvisor report that should have any hospitality thinking about how customer service and marketing are evolving in a connected society. It’s worth a read.

Chasing away the astroturfers

Recent court and industry regulator rulings are good news for honest businesses using social media.

Yesterday we heard the collective gnashing of teeth as social media experts, lawyers and business owners complained about the Australian Advertising Standards Board’s ruling that companies are responsible for comments on their Facebook pages.

The ASB ruling (PDF file) was a response to complaints that comments on Diageo’s Smirnoff Vodka page breached various industry codes of conducts and encouraged under age drinking.

While the board found the complaints weren’t justified – something that most of the hysterical commentators overlooked – the ruling contained one paragraph that upset the social media experts and delighted the lawyers.

The Board considered that the Facebook site of an advertiser is a marketing communication tool over which the advertiser has a reasonable degree of control and could be considered to draw the attention of a segment of the public to a product in a manner calculated to promote or oppose directly or indirectly that product. The Board determined that the provisions of the Code apply to an advertiser’s Facebook page. As a Facebook page can be used to engage with customers, the Board further considered that the Code applies to the content generated by the advertisers as well as material or comments posted by users or friends.

The key phrase in that paragraph is “over which the advertiser has a reasonable degree of control”. Obviously someone posting on Twitter, their blog or someone else’s website is beyond the control of the advertiser.

With Facebook comments, the onus is on businesses to make sure there is nothing illegal appearing on their streams and any misconceptions or false statements are answered.

In many ways, this is common sense. Do you, as a manager or business owner, want your brands tarnished by idiots posting offensive or illegal content? Sensible businesses have already been dealing with this by deleting the really obnoxious stuff and politely replying to the more outrageous claims by Facebook friends.

What’s more important with both the ASB ruling and the Allergy Pathways case the ruling relies upon make it clear that ‘astroturfing’ on social media sites won’t be tolerated.

Astroturfing is the PR practice of creating fake groups that appear to support a cause or product. A group paid for by an interested party appears to grow naturally out of community interest or concern – a fake grassroots group so to speak and hence the word ‘Astroturf’ which is a brand of artificial grass.

Organisations like property developers and mining companies have been setting up Facebook pages and websites that appear to be community groups supporting their projects and many smaller business have been inducing friends, relatives or contractors to post false testimonials. In the run up to major elections in 2012 and 13 we’re seeing many of these fake groups setup to push various political agendas.

For a few consulting groups, astroturfing has become a nice line of business and those of us on the fringe of the social media community have been watching the development of ‘online advocacy services’ with interest.

While no-one has claimed Allergy Pathways or Diageo were posting fake testimonials on their own Facebook pages, the rulings in both cases are a warning that the courts and regulators are prepared to deal with those getting clever with social media.

For honest businesses this ruling is a non-issue, it’s timely reminder though that web and social media site are not ‘set and forget’ but need to be regularly checked, valid customer comments replied to and inappropriate content removed.

The ASB ruling reaffirms what sensible social media experts have been advising all along, and that’s good news for them and their clients.

The Olympian quest for control

The control freakery of the Olympics marks an organisation struggling with threats.

“Blogs or tweets must be in a first-person, diary-type format and should not be in the role of a journalist,” state the International Olympic Committee’s social media guidelines.

The London Olympics Committee betrays how their ignorance of how the Internet works with an unrealistic and unenforceable linking policy.

More worryingly, an army of ‘brand police’ are scouring Britain for renegade cake decorators or knitting clubs breaching Olympic copyrights. Council trading inspectors have been redeployed from their main role of protecting the community to guarding the sponsorship values of the IOC and the world’s biggest corporations.

All of this is about control – a country that bids to host the Olympics agrees to draconian rules and regulations on free speech and commerce. Athletes too find themselves subject to harsh, and sometimes arbitrary, controls.

The purpose of these controls is to enhance the commercial value of sponsorships – this is why only McDonalds can serve fries, except with fish, at Olympic venues and only Visa credit cards can be used to buy a souvenir t-shirt.

Like all major sporting organizations, the value of Olympic rights exploded with the growth of advertising and broadcasting rights from the 1960s onwards.

We’ve reached the logical end of that growth as broadcasters struggle under the load of funding massive rights payments and advertisers find campaigns based on what worked in the 1960s or 1980s have less resonance with the debt addled consumers of the 2010s.

None of this will stop the IOC and other sports administrators from enacting iron fisted controls on participants, sponsors, spectators and any one else they can bully, but their power is waning.

Just like the Soviet Union tried to control fax machines as their economy crumbled around them, the same thing is happening with the Olympics and other big ticket sports.

Top level sports administrators are very good at currying favours from the corporate Bourbons and political princelings who love to spend other people’s money to build their own egos which will allow the facade to continue for a few more years.

Eventually though the money will run out as shareholders question the value of billion dollar sponsorships coupled with executive gold passes to the VIP marquee and taxpayers will ask why governments have money to spend on stadiums or elite sports programs when their local school, hospital and police stations are being closed.

History shows that threatened leaders tighten controls when they are threatened. We can expect the next couple of Olympics to have even more draconian rules than London’s.

Eating the Old Man’s lunch

Optus’ purchase of Eatability is ironic given Fairfax’s and Telstra’s failure with Citysearch.

Optus today announced the purchase of restaurant review site Eatability for $6 million.

Eatability is one of the services that’s destroyed the business models of both the phone directory business and that of newspapers.

Thirty years ago the Sydney Morning Herald launched its Good Living section and it became the way people went found where the good places were to eat.

Diners wanting to make a reservation at the hip eating places being reviewed in Good Living picked up the phone book.

Now they do neither, they go to web sites like Eatabilty or Yelp where they get reviews, contact details and everything else they need about the venue.

Which killed the advertising revenues that newspapers and phone directories depended upon.

The sad thing is both the newspapers and Yellow Pages could have owned this space. Citysearch was setup by Fairfax to address the online market and it was sold to Telstra when the newspaper chain struggled to make it work.

Citysearch today languishes neglected and nearly forgotten under the Sensis umbrella. Optus now owning Citysearch’s biggest local competitor which must bring a hollow laugh to those involved in the early days of Fairfax’s digital experiment.

Whether Eatability thrives under Optus remains to be seen, but it illustrates just how incumbent strengths like telephone directories are being eroded in the online world.

Old men have to start moving quickly if they don’t want upstarts eating their lunch.

Connecting the data dots

The age of big data means big opportunities

One of the connected world’s weaknesses is its fragmented as various silos of data appear in the different social and cloud services.

Bringing those sources together in a way that’s useful and relevant is one big opportunity for entrepreneurs.

Sydney company Roamz is one of the businesses looking at this opportunity by bringing together a user’s Facebook, Twitter and Foursquare feeds to figure what interesting stuff is happening locally.

Roamz’s CEO and founder Jonathan Barouch has a vision to “cut out the noise” from social media services by “curating and cleaning the data”.

The idea of curation isn’t new in the online world, this is probably one of the biggest challenges for everyone on the web as we find ourselves swamped with data. To date, much of the idea of ‘curation’ has been around news sources where services like Google News try to deliver relevant current affairs to the user’s desktop.

Social media sites are particularly in need of curation, particularly given your friends in Nevada are much help when you’re looking for a good coffee shop in Melbourne.

This is the problem Roamz seeks to solve and we’re seeing this with various other services, not least the social media platforms themselves as Facebook tries to extend its reach and Google attempts to integrate their local services with the Zagat restaurant review system and Google+.

Some would dismiss these services as “first world problems”, after all who cares about twittering hipsters trying to find a single origin, fair trade soy latte in Broadmeadows?

There’s a point in that view, although there is a much bigger problem for businesses in this fragmented data world in harnessing and validating various sources of market intelligence.

For businesses that get this right, they’ll be able to target advertising and marketing much more effectively while being able being able to tap into what their customers think and want.

It’s no accident therefore that one of Roamz’s major investors is consumer communications giant Salmat, who can deliver great value to their corporate customers through supplying this data and market intelligence.

The next IT buzzphrase is “Big Data” where businesses deal with this flood of information that is swamping all of us, by being able to understand customers and their behaviour things become far more efficient and cost effective.

Bringing data together and making sense of the results is the big challenge of our times, those who can solve the problem will be among the next generation of business leaders.

The Free Myth

Free services often come at a cost of your time.

One of the biggest dangers to businesses is the belief that something is “free”.

As we all know, there is no such thing as a free lunch. When another business gives you something for free it’s safe to say there is a cost somewhere.

One of the speakers at the City of Sydney’s Let’s Talk Business social media event stated this when talking about social media saying “I can’t believe all businesses aren’t on Facebook – it’s free.”

Social media isn’t free. We all know the value services like Facebook are mining are the tastes, habits and opinions of their users.

For businesses, engaging heavily in Facebook or any other social media service hands over far more information about their customers to a third party than they themselves would be able to collect.

All of that information handed over to a service like Google or Facebook can come back to bite the business, particularly if a well cashed up competitor decides to advertise at the demographic the business caters to.

The core fallacy though is that these service are “free”. They aren’t.

Every single service comes with a time cost. Every social media expert advises the same thing, businesses have to post to their preferred service of choice at least three times a week and those posts should be strategically thought out.

That advice is right, but it costs time.

For a business owner, freelancer or entrepreneur time is their scarcest asset. You can always rebuild your bank account but you can never recover time.

Big businesses face the same problem, but they overcome this with money by hiring people for their time. In smaller businesses, this time comes out of the proprietor’s twenty-four crowded hours each day.

The computer and internet industries are good at giving away stuff for free, in doing so they burn investors’ money and the time of their users. The social media business model hopes to pay a return to investors by trading the data users contribute in their time.

While businesses can benefit from using social media services, they have to be careful they aren’t wasting too much of their valuable time while giving away their customers to a third party.

Often when somebody looks back on their life they say “I wish I had more time.” They’ve learned too late that asset has been wasted.

Wasting that unreplaceable asset on building someone else’s database would be a tragedy.

Tag: marketing

The Olympian quest for control

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