Both new and returning customers are important to any hotel, they are what gets your business started, and they help your business expand and grow into the business you want it to be. But what is the real difference between a returning customer and a new customer? What values does each bring to the (your) table?
We want to highlight how they can both benefit the growth of your hotel, which will help you to understand where you need to concentrate your efforts, from a marketing and acquisition perspective.
The New Customer: Nice to meet you.
No hotel (or business for that matter) can begin without prospects making their first purchase, choosing their first stay. They allow you to create the foundation of your customer base and help you understand your target audience in a lot more depth. To get new customers onboard you will need to create outreaching marketing strategies to entice these customers.
So, what are the benefits of new customers?
- An increase in sales. This may be an obvious benefit, as more customers mean more sales, however, you will need to create effective campaigns to target the right customers in the right place, at the right time.
- Customer database expansion. Having a growing database means that you can further understand who your audience is and how you can connect with them. If your database stays the same, you won’t be able to develop and grow as a business.
- Understand what campaigns work and which ones do not. Having engagement and receiving new customers through specific campaigns can help you understand what strategies yield the best results and help you evolve your marketing plan.
- They can turn into returning customers. You can’t have returning customers without new customers…
The Returning Customer: Welcome back!
We all love a returning customer. They validate that your business is growing and succeeding by showing to other customers that your brand is of high quality and is worth coming back for. The returning customer also saves your business money as they are much more likely to make a purchase again than a prospect will the first-time round.
So, what are the benefits of returning customers?
- Repeat customers are more likely to spend more money. The conversion rate of a returning customer is between 60-70% versus a prospect only having 5-20% – you can see that you’re far more likely to convert a returning customer than a new one.
- They are easier and cheaper to advertise to. You’ve already acquired their data through their first-time purchases, so you won’t have to invest in outreach strategies. What’s more, they’re a lot more willing to read the content you produce and therefore, more likely to engage with the content and ultimately, stay at your hotel.
- They help promote your business. If a customer is committed to staying with you several times then they are a lot more invested in promoting your product to other prospects. It’s your job to encourage them to leave a review and to promote their experience online.
- Businesses grow on retention of customers. If you have a stable customer base then you have more opportunity to grow and expand.
So, there you have it.
Whilst having a steady stream of loyal, returning customers is the end goal, you cannot cannot get there without finding and closing the new customer beforehand. In our opinion, you cannot give focus to just one of these, instead, concentrate on combining the two approaches to forge a truly powerful strategy.
Think of it this way – even before the pandemic which disrupted our usual travel plans (let alone repeat stays), different generations of travelers want to experience different things on their stay.
A new generation of globetrotters are on the hunt for ‘Instagrammable’ moments, for ‘TokTokable’ videos to share with their network and the wider online world. These videos will show how fantastic or unmissable their stay was and sharing these with their friends can in turn, promote advocacy and encourage new guests looking for a different experience. With this new trend, they may never stay with you again, despite how well you treat them or how hard you try to entice them back. But their promotion could itself encourage new customers.
A hotel should focus on nurturing their current database with good quality, consistent content and continuing to reach new customers through new, multimedia platforms; testing different marketing strategies to develop your business. Combine this approach with AI booking technology, and you’ve got yourself a match made in heaven.