• The Most Expensive Problems

    Problems cost money. But some problems cost a LOT of money. Not because they occur frequently, but because they have a much bigger impact on guest loyalty. (See The Most Frequent Problems May Not Be The Ones to Fix). Specifically, that means when guests experience a problem, fewer of them come back, and fewer of them pass along referrals to others. That means less revenue.

    So this begs an obvious question. Which problems cost the most money? We dug into nine million guest surveys to look for an answer. Here’s what we found:

    Guests are a lot more understanding about product problems than they are service problems. Guest room problems, although they make up the biggest problem category at nearly 42% of reported problems, have the lowest impact on guest loyalty. That’s interesting since ultimately what guests are paying for is a place to sleep.

    Service problems, on the other hand, make up a much smaller portion of reported problems, but have a much more dramatic impact on guest loyalty. Just look at staff-related problems in the table below. They are only 4.7% of reported problems. But staff problems punch way above their weight causing loyalty to plummet by over 26 points when they do occur.

    There is a lot of good news here. Service problems can often be very inexpensive to fix. One of our clients was recently trying to decide where to invest to improve guest loyalty and revenue. Based on our cost-of-problems analysis, they had two big opportunities to reduce problem-related losses. Both were worth over $2,000,000. One was a product-related improvement they estimated would cost $1.8 million. The other was a service-related problem they estimated would cost just $20 thousand to fix. That’s easy math!

     

     

Jon H. Black is a product manager and statistical analyst with Market Metrix.
Mike Waite is executive VP of marketing, client development and product with Market Metrix.

Leave a Comment

Your email address will not be published. All fields required except as indicated.

9 Comments
  • The Most Expensive Problems | Market Metrix | rocmvv | Scoop.it

    [...] Problems cost money. But some problems cost a LOT of money. Not because they occur frequently, but because they have a much bigger impact on guest loyalty.  [...]

    December 10, 2012
  • Denise

    What is % Loyalty? Are you using NPS? thanks, Denise

    December 12, 2012
  • K. V. Simon

    It is bulls eye and nails head hit. Service and staff problems indeed point to the need for quality talent
    development initiatives on an ongoing basis.L&D efforts
    In every service environment and staff encounters must
    Be an integral part of all hospitality enterprises.

    December 13, 2012
  • Simon Chey

    great article and great reminder that we are in the “Service” Industry.

    December 13, 2012
  • Daniel Guerrera

    Exactly why we need to “make it right” for the customer and be sure they have a memorable service experience that leaves a lasting positive impression.

    December 13, 2012
  • The Most Expensive Problems | Market Metrix | Hotel web marketing | Scoop.it

    [...] Problems cost money. But some problems cost a LOT of money. Not because they occur frequently, but because they have a much bigger impact on guest loyalty.  [...]

    December 15, 2012
  • The One Problem that Costs Hotels the Most Customers | Kevin DonahueKevin Donahue

    [...] Studies show that product problems account for nearly sixty percent of all guest complaints. [...]

    December 17, 2012
  • The Many Faces of Mike McBride » Blog Archive » Bad Service Will Cost You

    [...] could negatively impact hotel customer loyalty so greatly? According to data-analysis firm Market Metrix, staff-related problems in hotels can lead to a whopping 26.2% drop in guest [...]

    December 18, 2012
  • The Most Expensive Problems | Market Metrix | Tourism, Hospitality & Leisure | Scoop.it

    [...] Problems cost money. But some problems cost a LOT of money. Not because they occur frequently, but because they have a much bigger impact on guest loyalty.  [...]

    January 1, 2013