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Winning the hearts and minds of travel agents is one of the keys to running a successful hotel chain. Agents are barraged by faxes, brochures, and advertisements from hotels, airlines, rental car companies, cruise lines, and destinations. The information changes daily as rates are revised and promotions generated. If a hotel wants to get the attention of travel agents, it must break through this information overload and promise something more. To increase booking activity for Radisson Hotels during slow travel periods, Gail Recker of the Carlson Marketing Group created a hurdle promotion to motivate travel agents. Using the Radisson travel agent database, Gail created a speci c con dential and achievable goal for each agent s booking of Radisson hotels between March and May. The goal varied based on an analysis of the agents past activity with Radisson. Upon reaching the goal, the travel agents would be rewarded with double points for bookings made through August. The points earned by the travel agents would put them into a sweepstakes drawing. Eight agents would be selected in the drawing for an all-expenses-paid, 2-week trip to one of several exotic spots as a training exercise. Because the reward for agents offered double points, the program was called Secret Double Agent, with spylike teasers and a mission for each travel consultant.
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Phase 2 of the promotion focused on the slow travel period just before the holiday season, with successful agents being rewarded with double points for future bookings made in October and November. Radisson and Country Inns & Suites general managers received a mailing to alert them to the programs.
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The program was launched by sending a self-mailer with customized hurdles to 80,000 U.S. and Canadian travel agents. The hurdle levels were determined by segmenting agents into 10 tiers based on past booking patterns, probability, and liability. A control group of 20,000 agents was identi ed that was not included in the promotion. This gave Carlson the ability to measure the incremental value of the program. The Radisson database, which had been built up over 9 years, included 250,000 travel agents worldwide. The database was used to communicate monthly with the agents. The goal of the program was to increase incremental revenue from the 80,000 targeted agents by between $1.5 and $3 million over a 6-month period. The results were far greater than anticipated. The incremental revenue increased by $4.5 million, with 15 percent of the targeted agents reaching their hurdle and receiving the double points as an incentive.
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Probably the most important new use of database marketing and the Web is in supply chain management. There are many different inputs that manufacturers need in order to make their nished products. Keeping the warehouse full of parts entails high interest payments and requires lots of space and employee management. Now that everything in the world is bar-coded, it has been possible to introduce vendor-managed inventory. The system works as follows: A manufacturer keeps its inventory records on a computer that can be accessed by its suppliers through the Web. It works out arrangements with its suppliers so that they can use the Web to learn electronically
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every hour what parts have been used and which remain on the manufacturer s shelves. The manufacturer discloses its sales plan so that the suppliers can estimate how many of which items will be needed each day. Then they can arrange just-in-time shipments to keep the inventory to an absolute minimum, but always suf cient so that the production line is never halted for lack of a part. Before the Web, some manufacturers used a system called EDI (Electronic Data Interchange), which served some of the same functions as vendor-managed inventory. EDI, however, was much more dif cult to install and operate than the Web. Using the vendor-managed system allowed Dell to hold less than 8 days worth of inventory at any given time. Without the system, Compaq had to maintain 3 weeks worth during the same period. This gave Dell a tremendous cost advantage. Intel shipped products to Dell three times a week without Dell s having to process a single request Intel could forecast Dell s needs based on Dell s sales forecasts and current stock usage. Let s see how a supplier might pro t from using vendor-managed inventory and forward-deployed products for 400 of its 1000 best customers. These customers spend much more than other customers that is why they are the best. Figure 9-6 shows what the new system might look like if you were the supplier. Your products will be stored in the customer s warehouses and in your nearby warehouses, with title still remaining with you. Every time your customer takes your products from its shelves or from your warehouse, your vendor-managed inventory system will know this. Shipping Figure 9-6
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