Last week I introduced an interesting hotel investment firm, Thayer Lodging. The owners, Lee Pillsbury and Fred Malek, were not new to the hotel game. They were part of a team that had driven jaw-dropping growth for Marriott Hotels. Fred was Marriott’s president, and Lee was his head of strategy. In just six years, from 1982 to 1988, they had driven a four-fold increase in sales and five-fold increase in profit. They grew from about 100 hotels to 750 over the same period. And Wall Street justly rewarded Marriott’s stock, which grew eight-fold.
A dissection of how this team engineered such amazing growth reveals from a very early stage that Lee and Fred are classic “outthinkers.” Specifically, they unleash a stream of rapid-fire innovations that keeps the competition off balance. Competing with Marriott for those six years was like trying to drink from a fire hose.
The key, Lee shared with me, is preparation.
When Lee and Fred first started at Marriott, they conducted a large study of customer preferences (a “conjoint analysis” for you statisticians). They interviewed many business travelers, their target customers, and asked them about their preferences. From this research, Lee and Fred identified and prioritized the 100 most critical factors that determine whether or not a business traveler would prefer Marriott.
This intelligence armed Marriott with enough ideas to outthink its competitors for years. The team knew, for example, that the number one concern for business travelers was that their reservation would be honored when they got in late.
Imagine that you’ve landed after a long and delayed flight, rented a car and made your way to your hotel, calculating how much sleep you may be able to eke out before rising for your 8 a.m. presentation. You press on the gas, and hustle to the check-in counter thinking positive thoughts like, “Six hours of sleep will be enough, five and a half hours will be enough.” Then the desk clerk tells you that your room was given away because they were not sure you were going to make it.
This was the scenario that most weighed on business travelers’ minds. So Lee and Fred decided to offer the “no walk guarantee.” This guarantee promised that if your room was not available when you got to a Marriott hotel, then the hotel would pay for your room at another hotel, for your car to get there, and give you a $100 certificate.
Just after the program was launched, Marriott had to “walk” 300 people from a group that was overbooked because of a scheduling glitch. They thought one group was leaving on Sunday instead of Monday so they had oversold by 300 people on Sunday night.
Lee was not surprised when he got an angry call from a Marriott executive who said, “This program is going to cost too much.” But Lee countered with a compelling argument.
“Think about it,” he said. “We now have 300 people who will prefer Marriott and who will wish this happens to them again.” When those 300 people next book their business travel, they will think fondly of the Marriott experience. The value of those future reservations far outweighs the immediate costs of giving them a “walk.”
Marriott’s “no walk guarantee” program was a hit. And just as the competition was gearing up to copy it, Marriot introduced the first express check-out program and then hit them with the first room service guarantee.
Marriott’s customer preference study armed Lee and Fred with so many ideas that they could fill a pipeline of service innovations every 90 days. This generated press and PR, but more importantly, continually widened their lead over the competition and enhanced customer loyalty.
So take some time out this summer to wind up your innovation gun and load it with a long pipeline of ideas that will keep your competition guessing. This type of research should not take more than a few days or weeks of work, and yet the payoff could be huge.
Ask yourself the questions below to see how you can use consumer research to turn next year into your best year ever.
1. What do my customers and clients really want?
2. How can I find a balance between client desires and outthinking my direct competition?
3. What can I do in the next two months to generate 50 new innovative ideas that will keep my competition off balance?