As agency leaders working with travel executives and revenue managers, it’s easy to develop tunnel vision with bottom-line online metrics like bookings, room nights, average daily rate and conversion rate. If we aren’t careful, it can easily lead to a deemphasis of secondary metrics that directly impact the bottom line — metrics that I like to call “next-level indicators.”
To avoid this problem, I’ve outlined five underrated metrics below that can completely revolutionize a brand’s digital strategy going into 2019. By focusing on these variables, not only are you identifying tangible indicators to optimize your marketing campaigns, but ultimately painting a much prettier bottom-line picture come performance review time with the hotel executive team.
1. Site Speed
In the grand scheme of online analytics, site speed often gets overlooked as a luxury metric — an acceptable sacrifice for bells and whistles like cutting-edge design and attractive functionality. This is a dangerous misconception, creating a hefty imbalance that negatively impacts both conversion rate and SEO.
According to numerous studies done in recent years on site speed, a slow-performing website can drastically hamper a brand’s ability to drive conversions. In fact, according to Google, 53% of consumers will abandon a mobile site that takes more than three seconds to load. Worse yet, according to this infographic, an e-commerce site making $100,000 per day could lose up to $2.5 million in annual sales for every one-second delay in load speed.
Marketers also have to consider that site speed is quickly becoming one of the most important indicators of a site’s user experience. Given Google’s increasing reliance on user experience as a critical factor in its ranking algorithms, a slow-performing website will quickly drop a brand’s search engine presence, especially on mobile.
As a rule of thumb, if your site load speed is greater than three seconds, chances are you have a website problem that requires addressing.
2. Look-To-Book Ratio
A low look-to-book ratio (i.e., the percentage of people reaching the booking engine who complete a booking) is the first sign that your booking engine user experience is not up to par. Even if you’re doing everything right from a marketing and advertising standpoint, bringing loads of consumers to the booking engine does nothing for you if the booking engine is too difficult or complex to navigate.
In my experience with mid-tier hotels (as luxury tends to be far lower from curiosity shopping), a strong look-to-book ratio hovers between 5% and 7%. Anything between 2% and 5% could use improvement, depending on the hotel’s average daily rate. Regardless of price sensitivity, anything below 1% should be a serious cause for concern and warrant a redesign of your booking engine for user flow, functionality and design.
3. Cost Of Acquisition
While return on investment (ROI) is useful in measuring the conversion proclivity of a given marketing campaign, it doesn’t take into account the underlying “hidden” fees of operating that campaign.
Take an advertising campaign like metasearch or display ads, for instance. Because each advertising channel charges a commission per booking converted, a 10:1 advertising return is not always better than a 5:1 return using a cheaper channel like SEO (where the cost is embedded in a monthly agency fee). In competitive advertising markets where commissions exceed 20%, you might be better off allocating your budget to a different marketing channel, even if you’re seeing high ROI.
Another way to look at this is, just because other hotels are running a certain campaign doesn’t mean your hotel should be doing the same. Measure your ROI against the cost of sale to determine which marketing channels provide the most bottom-line revenue for your hotel. If you can generate a 5% cost of sale through SEO at a 5:1 return, you’re much better off than generating a 20% cost of sale at a 10:1 return.
4. Upsell Rate
As I covered in greater detail in a previous article, upselling is one of the easiest ways for travel marketers to gain additional high-margin revenue from guests who are already committed to making a booking. Not taking full advantage of this potential is the online equivalent of leaving thousands of dollars on the table.
Whether your hotel is upselling through the booking engine or pre-arrival emails, or through ancillary packages or room upgrades, keeping a close eye on upsell rates is absolutely crucial to gaining maximum revenue through online campaigns. Establish a benchmark upsell rate that constitutes a healthy conversion rate for your specific brand. Then, adjust your design, placement and creative to maintain that benchmark on a month-to-month basis.
5. Average Visit Duration
Unlike the above metrics, average visit duration is purely a traffic-related measure that doesn’t have any immediate bearing on your bottom-line revenue. That being said, few metrics are as intrinsically related to user engagement, which is one of the most foolproof indicators of a well-functioning, high-performing website.
Visit duration will vary based on the page of your website a guest is visiting. While a hotel’s homepage visit duration will generally be short-lived, deeper pages like dining, wellness, experiences or photography should have healthy average visit durations between two and two-and-a-half minutes or more. Anything below that should be a sign that guests aren’t interested in the page, and it might be time to revise its content, design or both.
While it’s tempting to only look at bottom-line metrics like conversion rate and bookings when evaluating digital performance, these measures only tell a small fraction of the underlying story. If a hotel’s conversion rate is low, its site speed or look-to-book ratio may help identify problem areas that need to be fixed.
Alternatively, if a hotel sees an unreasonably low margin on its online revenue in a certain month, measures like cost of acquisition or upsell rate will likely explain why. Ultimately, staying on top of these metrics will help maintain a holistic, analytics-driven digital strategy that generates significant online revenue on a monthly and yearly basis.