ATLANTA -- Hilton Hotels Corp. is a prime example of how improving customer relationships doesn't always necessitate...
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Hilton had a challenge. In December 1999, it paid $4 billion for Promus Hotel Corp. Promus, while its name was not recognizable to most travelers, owned such well-known brands as Embassy Suites, Hampton Inn, Homewood Suites and Doubletree Hotels & Guest Suites. Hilton, on the other hand, is one of the 100 most recognized brand names in the world. Its guest rewards program, called Hilton Honors Club/Hilton Honors Worldwide, has more than 6 million members.
Hilton's mission: integrate Promus with the existing Hilton hotels, in terms of IT systems, CRM initiatives and brand perception.
"When this acquisition was made, an effort was made to do it right," said Rebecca Wyatt, vice president of brand integration for Hilton Hotels Corp. Wyatt highlighted her success story at the recent CRM Technology Decisions conference.
In Hilton's case, the right way was to form a brand integration council (BIC) made up of brand managers, the president of Hilton Honors and two brand integration officers.
The BIC's mission was to "make sure that the brands played nice with one another," Wyatt said. That meant integrating Hilton Honors into the Promus brands, implementing cross-selling across all brands, finding synergies across brands and business units and, most important, making sure not to "screw up anything that isn't broken," Wyatt said.
For example, an early suggestion was to save money by doing one big ad for all Hilton and Promus brands, but it was decided that such an approach would have been visually confusing and would have made it difficult to maintain the strengths of each brand.
Still, Hilton's brand integration got off to a fast start.
As soon as the acquisition was complete, the combined company began cross-selling across brands. For instance, if a Hilton hotel wasn't available, the reservation agent would manually transfer the customer to a Promus agent. Within six months, however, all agents were trained on a new interface that sat atop both reservations systems and made cross-selling a seamless process.
In short, by adding some database connectivity and building a new interface, Hilton quickly got rid of the notion that specific reservation agents were working for individual brands.
In a few months, Hilton Honors was implemented across all brands. This required some enhancements to the company's proprietary operating system and further database synergies.
The savings were impressive. Cost reductions from centralizing internal services, consolidating media purchases and new technical efficiencies totaled $60 million in the first year.
Next, Hilton assessed its strategy. Research showed that most people still weren't aware of the new relationship, and the brands' excellent performance in 2000 wasn't out of line with the industry as a whole that year. Executives discovered that the Hilton Honors program was the greatest link between the brands.
Hilton also discovered that the brands didn't necessarily appeal to different demographics, but rather to the same demographic of customers on different travel occasions. A customer might, for example, stay at one branch of the chain when traveling for business and another when traveling with children.
To cement the brands in people's minds and leverage the new relationship, Wyatt and her team decided to align the Promus brands with the Hilton name by re-branding some of the Promus chains to reflect the merger, creating, for example, Homewood Suites by Hilton and Hilton Garden Inn. They also created a Hilton family logo and supported it with brand campaigns and advertising.
The ultimate effect of this new branding strategy was a transfer of good qualities from each brand to the other. Research showed that Hilton's "esteem and quality" were transferred to Promus brands; Promus' "emotion, warmth and youth" were transferred to Hilton.
Hilton's overall CRM strategy focused on "best guests" first -- Hilton Honors members and airline frequent flier customers. Its goal was to grow wallet share and drive lifetime value by doing little things that can make a big difference with guests. For example, Hilton took strides to recognize guests' stay history upon check-in. As a result, it improved its Hilton Honors customer satisfaction scores for service and recognition.
Overall, very little technology enhancement was needed, since more than 95% of the hotels across all the brands were on the same operating management system. In addition to homegrown systems, Hilton is using software from E.piphany Inc. for data access and analysis and PeopleSoft Inc. tools for financials.
Moving forward, Hilton will add services like enhanced messaging and profiling capabilities, which will allow its best customers to define how they'd like the hotel chain to communicate with them.
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