Interhome: a good example of best practices

At the 2007 ITB Berlin Trade Fair, Simon Lehmann, CEO of Interhome, spoke on the topic of Customer Relationship Management (CRM), an approach adopted by Europe’s largest holiday rental accommodation agency. The impressive results testify to CRM’s undeniable impact when used in conjunction with a personalized marketing strategy.

What is CRM?

The goal of CRM is to collect as much information about one’s clients as possible, and to combine these individual pieces of information into targeted, personalized marketing initiatives in order to recruit and retain clients and encourage them to spend more.

Interhome and the reassessment of previous practices

Interhome has offices in 20 countries. Each year, it rents over 20,000 vacation homes and apartments to over 500,000 guests, for over 7 million overnight stays and sales of 120 million euros. In order to promote an inventory of this size to such a large number of potential clients, Interhome uses a variety of communication, promotion and sales methods including distribution networks, advertising, a sales force, catalogue, and the internet. Although the company’s management team believes this number of methods is unavoidable, it is also convinced that using them prevents it from developing an accurate assessment of the profile and habits of its clients.Reflecting on this fact, Interhome’s managers began to ask themselves whether the impressive catalogues listing all the available homes were, in fact, relevant or effective. Producing them involved costs which were not necessarily offset by the relatively low reservation (or conversion) rate. The company also realized that client‑related information was distributed throughout a number of databases.

Know your client

It was then that Interhome decided to invest in CRM in order to consolidate and improve its client‑related information. This new database stores three different kinds of information:

1. history of the consumer’s contact with the company (catalogue orders, reservations, comments and complaints, etc.);
2. data collected during each consumer contact (visiting the site, requesting information, reserving a home, etc.) regarding his/her vacation preferences;
3. complementary information obtained via surveys (lifestyle, purchasing habits, household composition, habits and leisure activities, etc.).

Thanks to this information, Interhome was able to develop a system that creates a profile for each customer. These profiles list the customer’s profile, his/her loyalty index and the complete history of his/her interactions with the company.

• prior expenditures
• preferred destinations
• preferred travel periods
• favourite type of accommodation
• family situation: number of children and their ages
• leisure activities, interests and motivating factors
• preferred method of communication

CRM enables companies to gather the information they need to create detailed consumer profiles which they can then use to implement marketing strategies based on personalized offers.

1‑to‑1 marketing

In order to bring consumer preferences in line with their offer, Interhome developed a new method of classifying residences based on the client’s stated preferences: spa, family, sports, comfort, pleasure, rest, snow and dream destination. Interhome analyzed the client profile in order to identify the product categories likely to interest him/her. It then analyzed the characteristics of each vacation home (location, accommodation capacity, price, availability, etc.) so it can propose to each of its clients places that are perfectly suited to their preferences. Henceforth, instead of receiving an exhaustive catalogue, the client receives a brochure listing no more than 8 prospective residences that both fulfill his/her requirements and are available during his/her preferred travel periods. This also enables Interhome to prioritize homes that will generate the highest profit margins.

This personalized brochure is either mailed or e‑mailed depending on the customer’s stated preferences. Automatic follow‑ups are generated by the system and all reservations can be made through Interhome’s website. It goes without saying that all action (requests for information, reservations, etc.) generated by this mailing will be added to the client’s profile, thus further increasing Interhome’s effectiveness.

Telling results!

Lehmann emphasized that the cost per reservation is 10 times lower with the personalized, or “1 to 1” marketing approach than it is with the undifferentiated, catalogue approach. Some of the results he mentioned are as follows:

1. a 30% reservation rate following a request for information (as opposed to a 7% rate with the catalogue);
2. the average rate is one reservation for every 12 direct mail messages, a higher‑than‑average conversion rate for direct marketing;
3. significant savings on postage, since two‑thirds of mailings are done electronically;
4. a savings of 500,000 euros on the cost of printing catalogues;
5. because the company was able to prioritize homes that would generate the highest profit margins as well as profitable complementary sales (transportation, car rentals, ski tickets, trips, packages, etc.), revenue per reservation increased by up to 30%;
6. every year, over 200,000 new client‑related information items are added to the database.

During his presentation, Lehmann did not reveal how much his company spent to develop such an effective CRM system but the results he presented lead one to believe that the move was a profitable one.

Will other tourism companies follow suit?

Many tourism companies have already gathered a significant amount of information about their clients and a number of these companies would probably benefit from adopting the same type of CRM that Interhome did. After all, client data is a gold mine; once data is collected, all the company has to do is put the data to work to make its marketing efforts more targeted and effective. Source: * Lehmann, Simon, “Best Practices in CRM & Personalisation, 1 to 1 Marketing @ Interhome,” PhoCusWright conference – ITB Travel Technology, Berlin, March 8, 2007.