Robert McCann, senior partner of Ecovis Wingrave Yeats, explores Big Data. This brave, if not exactly new, world is not just for big business, it’s the future for all business, so don’t get left behind
Once the preserve of conglomerates, data-rich businesses such as financial institutions and airlines have been at the leading edge for years. They have made use of complex algorithms to learn from customer datasets and make predictions.
Take an airline as an example, with years of customer demographic and flight data contained in their loyalty programme. They use their knowledge to identify the perfect mix of customer variables (demographic, age, flight patterns, etc.) that denote the likelihood of today’s customer being a high-value customer in the future. Did you think that at check-in, customers receive first class upgrades at random?
Today, with millions of internet-enabled devices and evolving interaction, IBM tells us that 90% of all the world’s existing data was created in the last two years. With estimates of around 30,000 GB of data being produced daily, worldwide, that is an incredible statistic. But what does that mean for hospitality? Hotels have the potential to gather data on customer check-in time, check-out time, selected room type, length of stay, drinks taken from the minibar, bars visited, food consumed and gym usage.
In restaurants, it can record site-specific data on what food and drink is typically ordered at what time and on which days. This kind of knowledge enables targeted marketing and bespoke menu choices. What this affected demand in the past? What was the weather like? Did you receive any complaints, and when? Alongside data from other customers and other visits, recording the customer demographics behind them gives operators a veritable goldmine of potential insight at their fingertips.
But why does it matter, and what can be done with it? The answer, of course, is anything. You can explore extracting hidden trends (can you identify high-value customers before it’s obvious?), make predictions (key variable in a customer’s experience that secures their loyalty?), utilise it to enhance customer experience (customer always takes X lager from the minibar, offer a complementary – and complimentary! – alternative). It allows you to conduct controlled experiments, to understand the effect of a change in approach to sales with analysable results (for example, menu layout A vs menu layout B). Of course, the delivery of these actions, and how they’re communicated, must include a consideration of how a customer reacts. We must understand the line between a welcome enhancement of service, and being cast as ‘big brother’.
The outcome of a data-driven strategy can be used to directly impact the bottom line. Predict your demand in restaurants and bars based on booked guests, allowing lean, yet sufficient, resource planning, while ensuring quality of service. Minimise your uncertainty in stock procurement, management and wastage, based on the specific demand that the customer data predicts. In 2013, a US restaurant chain used an interconnected data-driven strategy to identify an ingredient quality issue, based on real-time customer complaints from each of its sites. This predicted a wider supply issue and allowed them to withdraw the product from all sites to prevent a negative customer experience landslide before it happened. It’s easy to see how this protects customers in the context of food safety, too.
The possibilities for service enhancement, efficiency, risk management and targeted growth are seemingly endless.
The hospitality industry is well poised to access the vast volumes of data produced from every process. As accountants, we’ve long known the value of using technology to maximise efficiency, automate processes and accelerate the availability of financial information to business managers. But it goes further than that now; with the correct infrastructure, culture, strategy, and a little expertise in unlocking the data’s secrets, it’s safe to look behind the curtain and see what else data can do for you.