By Vin Kumar, Director, Megatix Thailand
Third parties are a love hate relationship that has become all too familiar in almost all market segments. The question that needs to be asked, has your brand and customer relationship been hijacked?
As business owners and operators, we are driven down the road to a third-party vendors for various reasons including improving customer service, reducing costs, attracting new customers, and a myriad of other operational reasons. For the purposes of this article I will focus on, what are we giving away in return? And what are some of the long terms impacts of these decisions.
At this stage I think its worth giving an example of a third party hijack scenario, just in case someone doesn’t quite understand what you mean. Eg. hotels.com taking away the customer experience and interaction with the hotel from their guests.
In the case of using third party websites to bring you new customers, often the main driver is discount strategy as this is how the third party attracts the customers in the first place, In this case, you are effectively giving away a percentage of your revenue, This loss is then compounded because you are likely paying an additional commission to the company for bringing you the customers. By doing this you hope for more bookings, more revenue, and new customers. However in reality you have reduced your profit margins, and driven a portion of your existing loyal customers to a third party and then signed a contract to keep buying their business back.
There are more points to consider, Third party companies are not working for you, they are working for their goal of having more customers themselves, and to do this they will promote the business which provides the best value for money – or the highest discounts, Their communication material is often considered to be spam, and their customers are not loyal to their platform but rather driven loyalty to discounts, They will also promote your direct competition – sometimes in the same communication as when they promote you.
For most of these third parties, their SEO and digital foot print is likely stronger than yours, and by feeding them your clients they will only get stronger. If you still rank higher than them, they have the budget to run ad campaigns to direct your customers to click on their ads when searching for your business.
Let’s drill down a little bit and talk about the customer relationship. As any successful business operator will tell you getting business in the “door” is not the main objective, Sure, you need strong marketing to bring people in, but the success of a business lies in its ability to keep them there, Note that we are not talking here about long term iron clad contracts, but more of symbiotic relationship – one of mutual rewards and loyalty. Keeping this in mind and picturing a middle-aged man and woman who own and run their restaurant and take bookings by personal phone calls by guests they almost consider friends Every day they make the effort to meet their guests, check the food, double check the bill and most importantly ensure they receive feedback prior to the guest leaving their establishment, How has this transformed into the digital space or the state of things today? A lot of the marketing is being done by third parties, the bookings are indirect and from multiple channels, Feedback will also go to the source of the booking or a social media platform. So more than 50% of the experience with your brand is in the hands of someone else, particularly at some of the very crucial touch points like when the purchase decision is made, and post experience feedback. Can you really trust someone else to manage this relationship as well as you could on your own?
The age of information, is a term that is loosely thrown around to describe our current days, also known as the age of data. This really hits the nail on the head. The brands that will survive the next decade will all have “mountains” and it starts with each of your guests, their consumer behaviors, purchasing power and habits, social media platforms, likes, follows, shares and all the other buzz words that surround social media. This is what you are giving away and in some instances buying back.
So what is it that is shifting the power of the “Mum & Pop” restaurants, travel agents, event organizers indie media companies, artists, musicians to having indirect relationships with their own customers. Its simple, software and technology,
Third party companies have the resources to build great software which keeps evolving and revolutionizing industries. But how can you compete? The answer is – work with those businesses which facilitate and support the relationship with your customers and have your best interest at heart, and avoid those which hijack your relationship and make you reliant on them.
Over 15 years’ experience in hospitality, events and marketing. Including roles of Strategic Marketing for Imperial Tobacco Western Australia, Head of Marketing for Sofitel and collectively 10 years with AccorHotels in Australia and Thailand.