KLOUT & Gamification... Measuring and Enhancing the Effectiveness of Digital Influence in the Hospitality Industry

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March 01, 2013
Digital Influence
Michael L. Kasavana, Ph.D., CHTP, NCE5 - kasavana@msu.edu

Ever wonder if it’s possible to measure the effectiveness of online promotional campaigns on consumer behavior? Have you sought an innovative means to improve and/or expand social media impact or looked for a way to increase consumer engagement and loyalty? Well, now there are two innovative technologies capable of assisting in these areas.


One methodology involves rating the digital influence of individuals and businesses based on metrics derived from social networking platforms. This algorithm, referred to as a Klout score, aggregates social media activities into a comparative measure of marketplace power. Converting a score to a Klout ranking enables a hospitality company to identify and connect with influential consumers, as well as become more powerful and authoritative within social networks. Through implementation of online influence strategies, hospitality businesses can significantly advance the brand by impacting the purchasing behavior and quality experiences of clientele. The beneficial impact of Klout scoring may lead to unparalleled marketing opportunities resulting from the interactivities of influential guests and a hospitality business.

A second helpful methodology is referred to as gamification. Gaining a sustained competitive advantage in the hospitality marketplace almost always revolves around a sound customer relationship management (CRM) program. Recently, several innovative tactics designed to heighten CRM and consumer engagement through game-like activities have been implemented within the hospitality industry. Obtaining customer loyalty has evolved into creating strategies geared toward attracting and interesting customers through participation incentives. Such tactics, referred to as gamification, enable hospitality businesses to incentivize guests to become loyal consumers who spend more dollars.

Regardless of whether hotel or restaurant Web pages experience high or low inbound or outbound traffic or if reward-based applications extend company digital reach, these two measurement schemes, Klout scoring and gamification, are capable of providing a significant competitive advantage across the hospitality landscape.
 
Klout Score
A Klout score is a single number that represents the aggregation of multiple pieces of data about a user’s participation in social media networking. Basically, a Klout score is computed through the evaluation of a strict set of signals built on behavioral influence and consumer engagement. Klout scoring, introduced in 2008, is a complex mathematical formulation that measures the empowerment and engagement of an individual or entity relative to premium social networks. Klout scoring is equivalent to a barometer reading of an entity’s influential power in the marketplace. Recently, Klout.com released a revised algorithm that was recalibrated to include a more expansive set of variables from five highly popular social networks (Facebook, Twitter, LinkedIn, Google+ and Foursquare). The formulation also includes less impactful elements oriented to auxiliary platforms or secondary networks (Instagram, Wikipedia and others). Klout.com, which claims to analyze up to 12 billion data points (termed moments) each day, generates a revised user Klout score every 90 days. The revised scoring formulation is a comprehensive summary of online activities for either an individual user or corporate business weighted by job status and/or marketplace status. At least two other social media metrics, PeerIndex  and Kred, also attempt to quantify social influence in a similar manner, but to date Klout has been the most popular option claiming to have generated more than 100 million Klout scores.

Klout scoring begins with the premise that all online entities are capable of exercising influence, where influence is defined as manipulating the action of others. Klout was the first algorithmic measurement of online presence effectiveness and influence that enabled users to self enroll. Once a person or firm creates a Klout.com profile indicating social network activities, a Klout score can be derived. This numerical outcome is a summation of influence across associated networks based on network size, amount of content created and stature of users interacting with content through shared signals (e.g., likes, mentions and retweets). Klout score calculations may also be upwardly tweaked by such external variables as number of followers, frequency of content updates, Klout scores of linked friends and followers, and the degree of sharing content updates receive. High-scoring Klout users can qualify for Klout Perks. Industry observers claim Klout Perks is a highly effective extension to a base Klout score.

Klout Perks
Klout Perks is a promotional program from Klout.com that provides special pricing, products, packages and privileges to high-scoring Klout profiles. Providing these perks to highly active online users represents a modern-day replacement for word-of-mouth advertising as it provides rapid market exposure for select offerings to influential entities. Hospitality firms are beginning to recognize the potential of Klout Perks and have started to develop strategies to more efficiently attract and partner with guests who are influential across multiple social networks.

Knowing a consumer’s Klout score may motivate a hospitality firm to offer such clientele special amenities, services, packages and/or alternative opportunities that in turn get favorably broadcast to social networks as these persons carry authority and credibility. Supporters welcome this as an impactful campaign, while critics label it a social evil. This may simply be perceived as a new twist on the traditional entertainment of successful travel agents responsible for referring guests to select lodging and/or foodservice properties. The motivation is unchanged: get influential forces in the marketplace to impact consumer behavior. Recently, Cathay Pacific Airlines, for example, began allowing travelers with high Klout scores access to luxury airport lounges which formerly were only available to first-class travelers. Or consider the recent effort by the Las Vegas Palms Hotel that established a Klout Klub for its highly influential guests. Transient guests with high Klout scores were awarded room upgrades and luxury amenities typically reserved for high paying guests. This promotional effort was judged to be effective in advancing the hotel’s brand while enhancing its image.

On a very different note, there has been experimentation to determine if high scoring individuals make better employees. Despite the fact that a high Klout scoring individual may be given special considerations in hiring selection, there is no proof that an active online user is a more productive worker or is capable of attracting other influencers to a business location.

Klout Algorithm
A Klout score is measured on a 100-point scale and is intended to reflect overall social media influence. The score tends to be a weighted average based on network effectiveness, content management and the measure of signals of influence. The score is intended to separate and elevate those who are engaging with posted content from those who are simply sharing it. It is argued that Klout scoring is the only social marketing tool that considers user impact on major social networks simultaneously. 

To avoid ongoing criticism, Klout.com now provides more transparency into how its formula treats user activity. The redesigned Klout score metric enables Klout.com subscribers to gain access to the ranking of online postings and activities. For example, a job title on LinkedIn can achieve higher point totals through the attainment of a managerial level position in combination with the professional stature of the firm. The GM of a boutique hotel, for example, would be awarded more points than a sales director or front office manager at an economy property. Similarly, an affiliation with an established market leader (e.g., Disney, Marriott, Hilton, etc.) will add bonus points to a user profile while lesser known brands would not. Klout.com also provides an instructional document that explains the variables contained in the Klout score algorithm; kept secret is the relative weighting of variables within the formulation of a final score.

Klout.com analyzes data points of activity attributable to individuals, such as the number of friends on Facebook or the number of followers on Twitter, indicators of influence in the marketplace. Capturing this data and applying it in a comprehensive metric (Klout score) produces a comparative ranking of influence for social network participants. With Klout scoring, the assumption is that influence will drive action, such as sharing a great hotel or restaurant experience or a photo of family fun at a resort or catered event that in turn causes a follower or friend to seek a similar experience. Social actions are a signal that friends and peers in a user’s social network have been influenced by user content. Klout.com then attempts to quantify the extent of such activities into an online influence metric (scored from 1 point to 100 points). The goal of Klout.com is to generate a score that measures the online influence of all online users, regardless of how large or small the role of the entity.

Klout Signals
A Klout score measures and incorporates several hundred signals from a set of diverse social networks. The data is processed on a daily basis to generate a perpetual and accurate Klout index. The majority of the signals used to calculate a Klout score are derived from a combination of media channel attributes, a reaction ratio to posted content and an overall consumer profile. For example, generating 10 times more retweets (e.g., 10 retweets) from a single tweet will significantly increase an entity’s Klout score as opposed to generating one retweet from 10 tweets. In addition, a variety of factors such as selective content interaction, number of likes and retweets and uniqueness of individuals engaging in the exchange as friends are also important scoring dimensions. Measurable principles that impact a Klout score include: connectivity to and effective participation in a preferred social network, the duration and recency of network activity and degree of consumer engagement to posted content. Klout.com is careful to point out that being active is different than being influential. The point being that retweets, likes, comments and other relevant signals are indications of influence, not solely levels of activity. It is important to note that the quantity of content generated, as well as the amount of engagement related to the content, are critical variables affecting an entity’s Klout score. The Klout scoring algorithm is continuously being refined and expanded to include additional social networks that are gaining significant recognition (e.g., YouTube, Tumblr, Instagram, Blogger, LastFm and Flickr).

Receiving a value of +K increases an entity’s Klout score as measured during each 90-day cycle. This three-month analysis protects the integrity of the score by keeping it current. Klout.com expresses the online influence score on a scale from 1 to 100 (100 points is the highest attainable score). Klout scores are calculated using variables that include the number of followers, frequency of updates and referrals. High-scoring Klout users qualify for Klout Perks; incentives from companies hoping to garner additional influential praise from the most influential online individuals or entities.

Klout Promotions
For a business entity, a Klout score is reflective of a competitive advantage as it measures influence in the marketplace. For a consumer, a Klout score summarizes influence in online communities. While Klout has been in existence for a relatively short time compared to Facebook and Twitter, it does generate a metric that attempts to capture a user’s influence across social networks. As a high Klout achiever, a consumer often gains knowledge and access to a firm’s promotional campaigns as well as earns rewards and discounts through engagement. A consumer Klout metric can be applied in a variety of business strategies within the hospitality industry. The theory behind treating customers with high Klout scores as privileged guests is that they create social media promotion (buzz) about the sponsoring firm, thereby increasing visibility and credibility. This is not unlike word-of-mouth advertising, in that it positively impacts image and reputation, similar to happenings in the pre-social media marketplace. By providing enhanced status, consumers are deemed more likely to tell others about their favorable experiences. Airlines, hotels and restaurants benefited from this approach.

Salesforce.com introduced a service that allows participating client companies to monitor the Klout scores of their customers who tweet compliments and complaints. The assumption was that consumers possessing the highest Klout scores should receive preferential treatment in speed of response and higher quality customer care. The goal was to keep clientele satisfied so they can broadcast favorable opinions of the host firm. One luxury shopping site, Gilt Groupe, for example, has begun offering product pricing discounts proportional to each customer’s Klout score. Again, the underlying theory was that a person with a large following on Twitter or Facebook can increase a firm’s image quicker than a traditional marketing campaign. In other words, interacting with a client who has a high Klout score can be very beneficial to company success.

Airline companies, hospitality firms and major retailers have sought to develop a methodology to connect with clients possessing greater influence and thereby generate actions and transactions through social networking. However, the incorporation of incentives (e.g., special gifts, restricted area access, pricing discounts, product promotions and premium experiences) to higher Klout score consumers has not been proven a guaranteed strategy.

At the time Virgin America Airlines initiated flights to and through Toronto, Klout.com was hired to identify influential individuals that would fulfill the role of a broadcast marketing campaign. Klout identified more than 100 highly influential social media users and provided them with complimentary Virgin Airline flights. This strategy was deemed highly successful as it generated more than 4,600 tweets about the quality of the airline and its newest route. A competitor airline followed the Virgin America strategy by rewarding its most influential fliers (those with high Klout scores) with VIP status and special inflight services. Other firms have since adopted a similar approach.

Similar to strategies implemented among airline companies, some hotel companies have employed special promotions for influential guests. As mentioned earlier, the Las Vegas Palms Hotel established a Klout Klub for members deserving of room and suite upgrades as well as access to luxury amenities normally reserved for guests paying among the highest room rates, based on measured levels of online influence. ReviewPro, an online reputation and social media management solution provider for the business-to-business hotel sector has recently integrated Klout scores to assist hoteliers improve guest interactions. The company claims to offer analysis, customer intelligence, competitive benchmarking and automated reporting to more than 1,000 lodging clients in more than two dozen countries.
 
Gamification
The term gamification refers to the use of game-like tactics or strategies to enhance customer engagement, allegiance and repeat business in non-intuitive game situations. Simply stated, gamification is the application of competitive challenges to expand and retain a firm’s customer base. Hospitality practitioners tend to favor strategies that directly influence consumer behavior, either prior to or at the point of purchase. Such incentives as awarding purchase points, offering promotional discounts, presenting spending rewards, and the like, capture the robust nature presented by gamification programs. One of the main differences between gamification and traditional loyalty programs is that gamification strategies often are conducted online, at no cost to the provider, and include virtual recognition status awards.

Legacy loyalty programs built on traditional punch-and-play or earn-and-spend formats fail to match the powerful impact of automated gamification strategies. By combining competitive elements, status recognition and built-in rewards, gamification can enact a significant influence over guest purchase patterns. Unfortunately, the attractiveness of yesterday’s loyalty programming (e.g., frequent diner, frequent stayer and flier programs) has faded as the quest for purchase points has evolved to earning superior status as a visit leader of a venue or ranked recipient of special promotions. The opportunity to enjoy competitive success in a virtual environment is unmatched in the physical world of potential upgrades, complimentary goods or access to concierge services. According to Bunchball, the self-proclaimed leader in gamification applications, participant companies experience a 100 percent increase in webpage views, interactivity and repeat visits when incorporating an engaging, game-like format. In fact, Bunchball claims gamification applications can be designed to enhance consumer, employee and business partner relationships.

Additionally, an often overlooked parameter of gamification applications is they tend to include a social dimension (one to many); this differs from traditional loyalty programs (one to one). By posting and sharing a participant’s achievements with others, participating players appear more motivated to complete check-ins, purchases and/or tasks.

Mindshare
While business focus is often placed on market share, gamification providers seek to earn mindshare (i.e., strengthened affinity, engagement and commitment). Recognizing the ever-increasing number of websites, social media networks, digital platforms and mobile applications reflects the challenges of an overly competitive environment. Behavioral specialists conclude that consumers are more likely to do business with firms that effectively connect with them. As a result, hospitality businesses that clearly communicate goals, monitor consumer spending and status, and provide high-quality rewards are better able to engage active, loyal and branded consumers. Personalizing business interactions, for example, greatly simplifies guest acceptance of a tactic while enhancing implementation of a new strategy. As Bunchball research indicates, a disengaged consumer quickly grows disinterested, delays purchases and tends to drift to competitors.

While some hospitality firms consider gamifying an existing loyalty program through the implementation of tiered statuses (e.g., badges for prescribed accomplishment, cataloged prizes for redemption, etc.), others strive to develop bold incentives to enhance and increase customer engagement (e.g., website challenges, seamless links from social media and  posting leaderboard rankings).

Hospitality Industry
It is an accepted fact that the hospitality industry considers customer relationship management (CRM) a critical element in creating a successful guest experience. The application of gamification, often referred to as funware, within the hospitality industry can enhance CRM while strengthening brand affiliation (e.g., loyalty programs, reward programs, etc.). From a mobile technology perspective, gamification is often present in location-based marketing (e.g., opt-in formats and self-check-in scenarios), as well as geo-fencing promotions (e.g. push-and-pull technologies). Basic gamification strategies include presenting rewards and incentives designed to influence guest behavior, while highly effective hotel and restaurant loyalty programs (points, discounts, miles, rewards) can generate more impactful results.
Consider a hotel or restaurant chain that encourages its frequent customers to earn bonus points by posting comments about lodging and/or dining experiences to the company’s Facebook, Twitter or Foursquare account. This approach can help bolster brand affinity while reflecting an otherwise unknown measure of consumer satisfaction. The term SoLoMo, that depicts social, local and mobile technologies, may be emerging as the predominant focus of gamification campaigns across the hospitality landscape.

Summary
Klout measures online influence as the ability to drive others to action. When a user produces digital content, network response to that content is evaluated. Klout integrates evaluative data from select social networks and tabulates a Klout score based on measurable signals. Although in its infancy, social influence scoring involves understanding consumer behavior. It simply provides hospitality management an additional reference point to evaluate interactions. A hotel desiring to increase online relevance should monitor the most pertinent metrics in planning webpage and hyperlink schemes. Influence scoring can provide hoteliers with an additional variable, leading to better decision making. According to ReviewPro, there is a data saturation that occurs on a social media network that if not quickly acknowledged may negatively impact a firm’s social media strategies. It is for this reason that the integration of Klout scoring and gamification may play a role in business success.
There are several software design firms focused on adding game methodology to hospitality industry products and services that are not logically considered game related. Gamification can motivate consumers to strive for achievements, rewards, statuses and enhanced engagement. Currently, gamification is listed as a top strategic technology for most retail sectors, and hospitality companies are wise to become active participants. By providing guests with access to information through game design, firms are more likely to influence purchase behavior both prior to and at the point of purchase.

Recently, software designers improved the attractiveness of gamification by extending its offerings to include virtual awards that have little or no monetary value. This approach of providing intangible winnings can provide hospitality firms with an effective means for intensifying consumer engagement at a marginal incremental cost. Gamification can be used to measure the success of incentivized promotions, loyalty branding, crowd-sourcing of new products and overall guest experience. As the new wave adage states, “an engaged consumer is more likely to be a loyal and committed consumer,” and what hospitality firm would not want that mindshare advantage.
 
Michael Kasavana, PH.D., NCE5, CHTP, is a NAMA professor in Hospitality Business for the School of Hospitality Business at the Michigan State University. He can be reached at kasavana@msu.edu.

 

A study by The Boosting Company reveals that gift cards are the most popular gift to send and receive. On average, a person has four or five gift cards, and a common problem is that gift cards never seem to be available when needed or the cardholder is unaware of the current balance. As a result, upstart Gyft developed a way to store and manage gift cards through a mobile phone. This application allows consumers to store and redeem cards through standard gift card entry procedures by accessing stored data via the phone display. Unlike similar data storage apps, Gyft connects to Facebook, Twitter and Google+, and allows users to send, re-gift and receive gift cards seamlessly through the social network channel. While not as obvious, this approach also provides an opportunity for an additional sales channel for hotels and restaurants to directly advertise and sell gift cards through social media sites. This channel helps drive customer acquisition and customer redemption by identifying gift card owners and enabling merchants to gain information about them. For example, someone holding a $150 Marriott gift card is unknown to Marriott and therefore Marriott is unable to incentivize the cardholder. Once the card is entered into Gyft, the merchant is able to gain some visibility about the cardholder and offer promotions aimed at driving the redemption of bundled purchasing.

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The Klout score posting each 90 days is based on channel signals from these popular networks:

Facebook
Signal metrics include and indicate: mentions (engagement with business); likes (engagement with content); comments (reaction to shared content); subscribers (persistency of influence);  wall posts (both influence and engagement); and friends (strength of influence).

Twitter
Signal metrics include: retweets (indicating influence and network extension); mentions (indicating strength of influence);  list memberships (indicating areas of influence); followers (indicating breadth of influence); and replies (indicating consistency of engagement).

Google+
Signal metrics include: comments (indicating reaction to content and direct engagement); +1 (indicating level of engagement); and re-shares (indicating influence across an extended network).

LinkedIn
Signal metrics include: title (indicating persistent influence); connections (indicating validity of influence); and recommenders (indicating additional strength of influence and indicating direct engagement).

Foursquare
Signal metrics include: tips (indicating influence); to-dos (indicating strength of influence); and done (indicating influence).

 

Here are just a few examples of prominent campaigns:

InterContinental Hotels Group
As reported in the media, IHG added a daily online trivia game to the group’s loyalty program. The trivia game awards participants with free miles based on quick and correct responses. Known as the “Win It In a Minute” program, industry observers cite the firm’s improved loyalty program among younger consumers, a group not normally credited with brand loyalty.

Starwood Hotels and Resorts
By partnering with Foursquare, members of the Starwood Preferred Guest (SPG) loyalty program are now able to receive additional points, badges and rewards for hotel check-ins. As MarketMetrix reported, SPG members who check in frequently at Starwood locations may be anointed as the SPG Mayor. Each month, Starwood will declare the member with the most check-ins across all properties as the SPG Mayor. Mayoral duties will include sharing favorite insider travel tips and destination hotspots with fellow frequent travelers around the globe.

Marriott Hotels
Gamification has also been used to appeal to employee recruitment. Marriott has a Facebook game that introduces prospective employees to the hospitality industry. MyMarriottHotel allows players to take on the role of a kitchen manager. In the game, players must cook, buy supplies and get dishes to the service counter. At the game site is also a “Do It For Real” button that is linked to the Marriott career site. MarketMetrix concludes the business goal of the game is to fill the tens of thousands of staffing positions the company has worldwide.

Caesars Entertainment
Long considered a front runner in CRM programming, Caesars Entertainment’s Total Rewards guest loyalty program is a tiered program that boasts more than 40 million participants. Caesars developed unique guest analytics to identify spending patterns for use in establishing a potential, future value for each customer. As a result, the company has taken a reverse approach to obtaining standard rewards based on past business achievements. Instead, Caesars rewards guests based on projection of forthcoming spending activities (e.g., casino comps in advance of play, lodging offers based on potential play, special food and beverage opportunities). The presentation of relevant branded offers, in real time, to in-house guests appears to be unparalleled in the hospitality business.

TripAdvisor
This travel review site has added various reviewer levels based on the number of reviews entered at the site by registered participants. The status of Senior Reviewer is awarded to someone submitting more than six reviews while a star badge,  with various color coding to distinguish to productivity, is allocated to user profiles. MarketMetrix indicates that this approach has resulted in more postings while also strengthening review credibility.

 



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