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| How analytics can help the cruise business |
| By Sanjit Bhoumick on 2/9/2010 3:56:10 AM |
"Once you understand who you are, it is not so difficult". This is not a quote from some Hollywood flick, but what Gerry Cahill, president and CEO of Carnival Cruise Lines (CCL), one of the largest cruise brands in North America, recently said. He was talking about the definition of the firm’s core customer segment, and differentiating its products, services and customer experience with respect to that segment.
He listed two objectives:
First, "We want people to come back more often. We measure if they come back and how often they come back, and we are seeing an increase. It is the way we do the product. We all know there is huge pressure on pricing, but we have not cut back on the product.”
Second, "We want to attract new people – what our marketing department calls ‘cruise rookies’ – we want them to come and try the product for their first cruise – so we need something to catch their eyes – such as waterslide or serenity area. Once onboard, we will win them over through quality.”
Focus on a core segment of customers -- market-leading cruise operators around the world are now using this strategy to define themselves. And this is where they can benefit from the deployment of cutting-edge analytical tools and techniques. After all, their counterparts in the hospitality and airlines industries started using analytics a long time ago to establish market leadership positions and suss out the competition.
To be fair, the use of customer analytics in the cruise industry is still quite a new phenomenon. It’s annoying to experience ‘pushy’ sales staff trying to load you up with pricey extras to make their margins, but making no effort to find out how much you spent the last time, or how much comparable groups with your kind of income and family size typically buy and spend on a cruise holiday. Wouldn’t you rather have them be aware of these preferences, customizing their services in advance to suit your tastes?
The cruise industry can benefit from two kinds of analytics:
- Customer-side analytics: Incorporating holiday expenditure patterns, changing consumer profiles, expressed consumer needs/ expectations, and other leading indicators of growth into predictive models that predict how different segments of consumers will behave and how much they will spend. Good segmentation will provide marketers and customer service executives with tangible data points to help refine the offering.
- Inventory analytics: Knowing how much inventory is likely to sell and how any trends will play out over time to help cruise operators and their franchisees predict demand for their services at different price and time points. Operators can then decide which pricing strategy to follow - by how much, for example, to drop prices during lean times and what “extras” to offer and when.
In summary, by using analytic techniques like customer segmentation, demand forecasting and inventory analytics, cruise operators like CCL and others can obtain a better understanding of their customers, design more relevant and custom products/offerings, and eventually make more money without losing out on customer service or quality. The days of developing strategy based solely on “gut-feeling” and “experience” are fading fast, and the cruise business is beginning to catch up quickly on the use of analytics. |
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