Learn how to use cross-selling in hotels to increase revenue and retain customers
By focusing on extra services, you can increase your property's net profit without burdening its budget. Read our tips and create a cross-selling strategy tailored to you!
You've worked hard to make your accommodation as attractive and profitable as possible: you've invested in marketing, you've optimized your website to increase direct bookings, you've adopted a revenue management strategy to maximize rates, and you've carefully trained your staff to provide unparalleled hospitality.
Now, your efforts have been rewarded − your occupancy rate is enviable, and booking requests keep coming in.
Yet, there is still one avenue you could exploit to further increase revenue and turn all those bookings into loyal customers: cross-selling.
If you've never done it or if you've already tried it without getting good results, keep reading this article to learn all about the benefits of cross-selling for the hotel industry, the best techniques to use, and the mistakes you need to avoid.
What is cross-selling for hotels and why is it important
Cross-selling is a powerful marketing strategy that involves offering complementary products or services to what the customer has already purchased or is about to purchase.
If you have a restaurant or spa, you have probably already applied cross-selling by offering the guest a tasting or massage at the time of booking or check-in. However, the real magic of cross-selling begins when you can make it structural, rather than occasional, by offering complementary services.
Here are what benefits you might gain from setting up a well-reasoned cross-selling strategy:
- Increased profit margin: cross-selling gives you the opportunity not only to increase revenue, but to translate it into net profit, since you won't have to invest in additional services or increase operating expenses.
- Increased customer satisfaction: cross-selling allows you to enrich your guests' stay experience because not only will they enjoy the extra services, but they will feel even more considered in their needs and well-disposed to leave positive reviews.
- Increased loyalty: increasing satisfaction can help you increase guest return rates.
- Better market positioning: cross-selling can be the key to distinguishing yourself from your competitors by offering unique services or special packages.
- Optimization of resources: by highlighting them within a cross-selling strategy, you can restore value to those extra services that you failed to make the most of or were undervalued by guests.
The rules for an effective cross-selling strategy
To make your cross-selling strategy truly successful, you will need to spend time planning it. Remember that the secret to cross-selling is not so much personalizing the service as personalizing the sale by working on the buying motivation and the type of guest. Here are some rules to follow:
Define your ancillary services
The first step is to take an inventory of all the extra services your facility can offer. These can include services such as restaurant, spa, sightseeing tours, cooking classes, bicycle rental, laundry, etc. For each of these, also make a list of the strengths and weaknesses found by customers who have used them so far, and assess the need to improve or optimize your offering.
Know your customers and their habits
The next step is to understand who your target audience is and what they prefer. The best way to get this information is to use a satisfaction survey, where you investigate approval for your extra service offering. In this step, you should also try to identify trends: what products/services are purchased together? Which extra services are chosen most frequently and by whom? The answers to these questions will help you refine the survey.
Segment the right customers for cross-selling
Once you have researched your customers and their buying paths, the next step is to create segments to which you can match the most relevant offer. If, for example, you run a hotel with a spa and restaurant, you might find that couples tend to book not only the room, but also a spa treatment. You could then create a special "Romantic" package that includes the room, a spa treatment for two, and dinner in your restaurant.
Extend this reasoning to segments that exhibit similar buying behaviors. For example, you might notice that business customers are similarly interested in spa treatments. So you might consider adding a "Relax After Work" package that includes the room, a decontracting massage, and a tasty meal at the restaurant.
Analyze your communication strategy
To be successful in cross-selling, it is crucial to stimulate motivation to buy: your guests need to be well-informed about it and not feel "burdened" by your proposals.
So take a moment to put yourself in your guests' shoes. How do they find out about your extra services? Does your website clearly present these options, with detailed descriptions and attractive images? Do you offer the extra services at the time of booking, at check-in, or during the stay?
Remember, the key to success is not only to offer useful and quality services, but also to make sure your guests are intrigued and pleasantly surprised.
Tools and techniques to use
After reasoning about the cross-selling solutions best suited to your clientele and your facility, you will need to decide how to implement them. Using only pen and paper or relying solely on the feel and sales skills of your staff could derail even the most effective strategy.
At this stage, therefore, we suggest you check out what tools you have at your disposal, what options they offer, and what techniques you could use to fully capitalize on your cross-selling strategy.
Here are some examples of useful tools for cross-selling in hotels:
- PMS: management software is essential for centralized management of reservations, guests in the facility and offers
- CRM + E-mail marketing: the CRM collects and organizes detailed data about guests, including their preferences, booking behaviors, and travel styles. This information can be used to personalize communications with guests (e-mail marketing) and make more effective cross-selling offers.
- Partnerships: if your facility is small or you have no way to offer additional services, you can form partnerships with companies or associations in your area.
Here are some examples of techniques for offering your extra services:
- While browsing your website: the exploratory phase is the best time to communicate all the value your extra services could add to their stay to the potential customer. Don't skimp on professional photos, accurate descriptions, and positive reviews from guests who have already used them.
- During the booking process: if you have set your strategy correctly through automation, you can already propose services or activities that enrich the customer's experience according to the type of stay they are selecting.
- Before arrival: once you have received the reservation, in the period before the customer's arrival, you can send an email with a proposal to purchase one or more additional services.
- During check-in: if you do not have the opportunity to communicate your extra services at the booking stage or before arrival, check-in is a key time to advise your guests on how to improve their stay.
- Wi-Fi login: if you offer it as a free service, Wi-Fi access can also be a great touchpoint for cross-selling. In this case, use very brief communication, inviting the customer to contact the front desk to learn more.
Remember that cross-selling should never become intrusive or create pressure, but should always respect guest sensitivities and preferences. For example, on all the occasions just listed you might be more persuasive by offering an incentive to purchase the extra service, such as a small discount or a gift.
Examples of cross-selling in hotels
The list of services/products you can include in your cross-selling strategy depends on the characteristics of your facility and those of your target clientele. Here are some examples:
- Reserved parking
- Early check-in / Late check-out
- Station/airport transfer
- Laundry service
- Room service
- Sports equipment rental
- Sports activities and excursions
- Courses and workshops
- Wellness packages
- Theme packages (romantic, business, children, etc.)
How to understand if your cross-selling strategy is working
Monitoring and evaluating the effectiveness of your cross-selling strategy is an essential activity to ensure you don't lose focus on your goals and make sure you achieve them. Here are some ways to do this:
Data collection and analysis
You can use your management software, your CRM or a revenue management software to collect cross-selling data. This data can include the number of times a specific service was purchased, the profile of customers who purchase multiple services, and the conversion rate of your offers. Analyze this information to understand which packages work best and which should be improved.
Collecting guest feedback is the fastest and most direct way to understand if your cross-selling strategy is working. You can train your staff to collect feedback verbally or implement a satisfaction survey.
Key Performance Indicators (KPI)
You can establish some KPIs against which to measure the effectiveness of your strategy. These might include the conversion rate of cross-selling offers, the increase in revenue from selling ancillary services, or the return rate of guests who purchased extra services.
This is a strategy of proposing two slightly different versions of the same offer to two different groups of customers to see which one works better. You can use this technique to test different aspects of your cross-selling strategy, such as price, presentation of the offer, or when the offer is made.
Here is an example of A/B testing:
Selecting a test group
Randomly select 10 guests who check in on the same day. Ensure that the selected guests are as similar as possible in terms of relevant characteristics, such as age, gender, reason for stay, etc., to reduce the risk that differences in results are due to other variables and not the service offered.
Create two groups
Divide the 10 guests into two groups of 5. To each group, you will offer a different service.
To Group A, offer a certain extra service, such as a tasting of local wines and cheeses. To Group B, offer another service, such as a massage in the spa.
At the end of the day, count how many guests in each group accepted the offer. Also note any comments or feedback they may have given about each service.
Analyzing the results
Compare the number of services sold in each group. If one group purchased more services than the other, this may suggest that that service is more popular with guests and it may be worthwhile to target that in the future.
Remember, each hotel facility is unique, and what works for one may not work for another. Our suggestion is to keep experimenting and refining your cross-selling techniques to find what works best for you.
Cross-selling in hotels: watch out for these mistakes!
Getting everything right is impossible, even if you start out with the best of intentions. The important thing is to be able to glean useful information from your mistakes and not give up when faced with the first difficulties.
Here are some of the most common mistakes that could lead your cross-selling strategy to failure:
Not knowing the customer
Don't try to sell extra services (or worse, add new ones) without first fully understanding your target customer base. You need to know your guests' motivations, needs and expectations in order to sell your extra services in a targeted way.
Even if your goal is to sell more, it is important not to exert too much pressure. Cross-selling should be a subtle art and provide added value to the customer by taking into account their deeper motivations, not plunging them into a kind of telesales.
Not training your staff
Your staff plays a key role in cross-selling through their constant proximity to guests. So they must be trained on the inventory of extra services, know how to describe them properly, and know how to collect feedback from customers.
Without an analysis of the results, whether positive or negative, you will never know if your strategy is effective and what areas might need improvement.
Cross-selling is essential to increase sales and retain customers without straining your budget. Even if your company doesn't come up with a large number of additional services, that doesn't mean you have to give up this important source of revenue.
With the right tools, you can not only implement your cross-selling strategy, but also make your day-to-day work easier to reclaim time for strategic work.
Smartpricing is a revenue management software that allows you to automate pricing. Smartpricing finds the right price at the right time for each of your rooms and automatically updates your rates for you on all booking portals.
Want to learn how Smartpricing can support your accommodation?