The Moneyball Effect
October 23, 2018
How Hotels Can Drive Home Runs Using Baseball’s Winning Strategy
Other than overnight accommodations during away games, Baseball and hospitality are seemingly unrelated entities. But believe it or not, the same strategy that forever changed the game of baseball can also transform the hotel guest experience and propel incremental revenue for your business.
Moneyball, a best-selling book based on true events, chronicled the penny-pinching Oakland Athletics’ extraordinary run to win their division championship using a statistical analysis called sabermetrics (Moneyball). Competing with deep-pocketed teams, the A’s made a game-changing move that completely altered their business model; they began basing all of their recruiting and game-time decisions solely on a statistical analysis of measurable factors like a number of runs and on-base percentages, rather than star quality, scout instincts, or overall athleticism.
By analyzing objective, fact-based data on player performance, the A’s won back-to-back championships—not with League MVPs and first-round draft picks, but with cast-off veterans and affordable rookies. They built a winning strategy that permanently shifted the way front office management evaluates players. Fifteen years later, the vast majority of professional sports teams employ statisticians and analysts to turn player data into actionable coaching insights.
Wouldn’t it be great to have that level of insight at your hotel properties? Imagine what you would learn if you had a full-time statistician analyzing your employees, guests, and product offerings, and then developing a plan based on those daily insights. What might they find, and what might you decide to do differently?
Incremental revenue consulting firm Frontline Performance Group (FPG) conducted a case study at client property Boca Raton Resort & Club A Waldorf Astoria Resort that validated the Moneyball Theory. The property implemented IN-Gauge, FPG’s revenue optimization, and performance management software, to collect real-time data analytics from its most critical customer touchpoint—the frontline. By leveraging actionable data, the property eliminated subjectivity and relied solely on facts to successfully make certain key business decisions.
The following managerial actions have been scientifically proven more effective using hard data than by relying on other factors. Each action below is followed by actual results from Boca Raton Resort & Club A Waldorf Astoria Resort case study—in true Moneyball fashion, the numbers speak for themselves.
1) Accurately quantify the value of each employee:
Build the ultimate team, free of subjectivity or bias. Evaluate the effectiveness of your agents, not on immeasurable qualities like personality, appearance, or likeability, but based on hard numbers like conversion, average revenue per product, and total sales. These objective statistics allow you to identify top and low performers, understand their strengths and weaknesses, and measure their overall contribution to your bottom line. After analyzing these insights, you can properly recognize and reward your highest-performing agents, and develop your lower-performing agents through tailored coaching and training FPG has seen a strong correlation with top performers also generating the most positive service scores.
- Case Study Results: Through a targeted focus of development, mentoring and training utilizing IN-Gauge, the resort has seen over 700% improvement YOY in the average incremental revenue generated by its front desk team.
2) Intelligently implement dynamic pricing strategies:
Meeting customer needs while maximizing profit is a fluid process; it requires the flexibility to change pricing and product offerings based on customer preferences and behavior, which can change monthly, weekly, and even daily due to a number of external factors. Management must quickly and continuously adapt.
IN-Gauge delivers real-time reports detailing sales and ancillary revenue at the product level. Wouldn’t it be great to instantly know how you’re converting on late check-outs, room upgrades, and executive lounge sales? IN-Gauge provides a guideline for what products to offer and at what price, and can dynamically adjust rates throughout the day based on those numbers. By creating an automated product pricing model driven by real-time analysis, you will identify the right service offering and pricing for maximum profit.
- Case Study Results: As important as it is to properly price your room rates in the market, it is equally as important to ensure the strategy doesn’t stop in reservations. Properly pricing your products including room upgrades will allow the hotel to maximize ADR. Partnered with FPG and IN-Gauge, the resort has realized over $10 consistently in ADR generated by the front desk through its strategic pricing of products that took the ADR of room upgrades up over 200% YOY while increasing room upgrade conversion proportionately.
3) Strategically motivate frontline agents with complete transparency:
Granting the visibility to track and analyze their own performance, as well as the performance of their team, keeps agents actively engaged and motivated to improve their skills, sales, service levels, and income. Agents can intelligently set goals based on actual data, measure their progress, and identify KPIs. This level of total transparency across the entire team instills a sense of ownership and accountability, which dramatically improves overall numbers.
- Case Study Results: Our analysts have measured the impact of engagement through our IN-Gauge software and found favorable results in multiple categories. The performance impact through actively using the IN-Gauge software has a 3 to 1 ratio in sales performance to those who are not. We have also seen our recognition features double a sales agent’s performance after the recognition, and triple when the recognition is personalized. Similar results can be seen with goal setting, coaching features and our virtual training.
Unfortunately, such detailed insights typically require hours of tedious data entry and spreadsheet reporting, which can be counterproductive and unappealing. To realize the power of this transparent methodology without overwhelming agents with administrative work, hotel properties can deploy software like IN-Gauge to simplify the process with automated sales tracking and metrics calculation.
Reduce your margin of error on important business decisions by eliminating subjectivity and relying on straightforward, unbiased data to strategically align your targets with business patterns in sales performance. Incorporate sabermetrics into your sales strategy. It will be a game-changer.
What are the sabermetrics in your business? Find out by requesting a demo of IN-Gauge, FPG’s performance management software. Email email@example.com for more information.