Cruise Lines Should Target Their Most Profitable Customers

[Huddler]

Watching the Peter Greenberg special on cruising tonight on CNBC got me to thinking about the cruise line business. I know that each line has "loyalty" programs that encourage repeat business by offering various incentives. And that makes alot of sense to me. But do they really want to target all repeat customers equally? Why dont they target their most profitable customers more than others? For example, my wife and I dont just get a cabin and then tighten up the purse strings. We burn through cash onboard like a drunken sailor on shore leave. We drink several drinks every day of the cruise, and then get a bottle of wine with dinner. I would wager that our drinking bill is in the top 5% of all passengers. Speaking of wagering, we gamble alot of money every day of the cruise in the casino. We book at least half our excursions through the cruise line. We eat at all of the specialty restaraunts. We pay for spa services. We buy pictures and souveneers. And although we dont get the biggest suite, we always get a veranda cabin.

 

In other words, we are the type customers who spend money once we get on board. The kind of customer who the cruise line really covets: the one's who can make the difference between a cruise just breaking even or making a substantial profit. So, as a "profitable" repeat customer, why should I be treated just like the tightwad who brings their own booze, doesnt gamble, doesnt go on the ships excursions, and is basically tighter than a crabs ass in cold water once on board? Sure, the cruise line needs to fill every cabin and they need every warm body they can get to achieve 100% capacity. But they need my warm body more than the miserly old curmudgeon. So, since I am more lucrative than the average cruiser, why not target me like a lazer beam and offer me greater incentives?

 

The closest thing I can compare it to is comps that Vegas casino's give to "high rollers". Those gamblers who are most profitable to the casino are targeted with all sorts of incentives to come back and gamble more. The more you gamble i.e the more profitable you are to the casino, the more comps you get. And real frankly, the more times that the casino will reach out to you to get you to come back. Either through your host calling you monthly like mine do, direct mailings, etc. I wonder if cruise lines analyze the value a particular customer has to them. And why they dont reach out to their most "valuable" customers with "comps" or deeper discounts on the cabins? Just a thought and I would like to hear others opinions.

[choochoocruiser]

This should be fun. I've got the corn popping.

[Can'tstopcruising]

Couldn't you present your argument omitting references to "tightwads, tighter than a crab's ass" (By the way, something new for me. The things I learn on CC!!), or "miserly old curmudgeons"?

 

You probably will get more responses to these slurs than you will to your idea!

[Schplinky]

You present an interesting point.

 

I wonder if this is not already being done, with targeted couponing or something like it. I know that some lines have casino programs that make it easier for high-rollers to return.

[sandravb79]

Not everyone has money to blow like you have, but we are not any less customers because of that. And we certainly don't deserve to be called the names you are calling us.

You might have the money, but you don't have the class.

[RodPat]

Huddler, Had a lot of laughs reading your post. I don't know if you meant it as fun but I enjoyed reading it. Other than that "no comment"

 

Pat

[quiescentlyfrozen]

Allright, I'll step up to the plate. Perhaps they don't want to target you because you make other people not want to be on the same cruise you are due to your outspoken and offensive commentary about those with less money to blow on a cruise. And so the end result is simply break even rather than profit. :eek:

 

But in all seriousness, my guess would be that a) their systems don't track this type of information (which IMO is bad, they should since it's good for them and for the customer), or b) they are confident they'll get you back or get someone like you back anyways, and don't feel the need to "fight" for your dollars since they're coming anyways. Or so they assume...

[BostonBud]

I saw that special and I think the cruise has to also "gamble" that new cruisers will also become like you and spend lots on the ship. It was interesting to see how the cruise industry relies so much on the onboard purchases which definitely makes sense of why they don't allow people to bring alcohol on the ship.

 

Unfortunately, the cruise line probably also factors in that people like you WILL spends lots on board and other, who don't, just might and increase their revenue or brings other on board who will also spend more money.

 

BTW, I think crabs LIKE cold water, it's when you increase the heat that they get "tighter"

[wvufan]

There have been 3 posts, and 155 views. That's a lot of tongue biting. :DIt's a rainy day around here so this thread ought to provide some entertainment. The OP has 30 posts, so hard to tell if he is being serious or just baiting us.

 

Anyway, sounds to me like the OP's sense of pride is a bit unjustified. Dont' know if I would brag about having one of the biggest bar bills on board. Or getting gouged on excursions (more on this below). Or gambling big bucks every day. Or unrestrained buying of other overpriced goods and services. Maybe if the bar bill was lower, the OP would use more discretion in his spending;).

 

While the OP may refer to himself as a "valuable customer" I suspect the cruise line unofficial term would be "mark." He is a captive audience and they have him on the hook. They are already "targeting" him by providing all those outlets for his money, er, uh, entertainment.

 

The fact that the vast majority of us a more judicious with our spending does not make us tight curmudgeons-it makes us informed and wise consumers. It means we have learned how to evaluate services and products. We learned how to take advantage of good values and to reject being taken advantage of.

 

There are some very real ways the cuise line can increase profits (and I am a stockholder in RCl), but, unfortunately, there are enough passengers like the OP who rampantly spend huge amounts that reforms are not likely.

It seems the ships would rather make a whole bunch on relatively small percentage of passengers than a reasonable profit on most of them.

 

Here's what I mean.

 

Mosts of us consider the services and products on board to be ridiculously overpriced. For example, internet service. I would gladly pay a fair amount for access, but am not about to get gouged. So, they make their bucks on a few people, when they could make much more on a lot of people-the ones, like me, who flock to the internet places in ports of call.

 

Excursions are notoriously overpriced and do not need to be so. For example, I talked to an independent tour operator in Alaska. He said he had been approached to do his bear watches for the ship, but that they wanted 55% of the cost. So, they not only charge more than independent operators, but take too big of a cut from the operators they use. If they reduced their price and took a fair cut, they would be able to arrange and fill more excursions, and thus make more money. (I'm not even going to get into other aspects of the ship v independent controversy in terms of quality, crowds, etc.).

 

Some of the spa services are OK, particularly their daily specials, but I have read many comments from posters (with plenty of money) who report the spa is overpriced or that they can get a better massage etc in one of the ports for much less.

 

It seems everyone we have ever had as a table mate has a camera, and we find our "natural" pix are much more enjoyable than the posed ones from the ship photog.

 

Booze. I don't drink myself, and my wife only wants a glass of wine a day. We don't spend more on hootch because we don't want more hootch, not because we are tight. Money is not the issue. The vast majority of people on board are light or moderate drinkers who probably wouldn't drink any more even if it were FREE. The OP's admission about his bar bill may be cause for concern.

 

We eat in the specialy restaurants once or twice a cruise because we like them and think the value is good-again, money is not the issue.

 

Well, been rambling too long. The cruise lines must somehow learn how to make a reasonable profit from a bigger percentage of passengers. The way to do that is not to offer incentives to the whales, but to price their products and services in such a way as to appeal to more passengers.

 

Happy Sails to You

 

OOOEEE :D:D Bob and Phyl

[hcat]

Let the fun begin! but it could be a serious discussion too!

 

OP did make a valid point, perhaps more crassly than the way others might have expressed a similar thought ( the new demo?)

 

It was a bit off-putting when we were trying to get to Elite, to learn that some would take 3 day inside cabin trips to get to Elite, while we were taking our regular 7, 10 & 14 day trips in premium cabins for the same cruise credits (2 for the 14 day ones or CC class) Also buying jewelry, flowers & liquor, excursions, multiple spa vists etc..

 

I always thought that levels should be based on dollars spent not # of cruises or days at sea....(guess this will spark a few replies) I think it is Royal C or was it X??? that has discounts for gambling hi rollers, so maybe the Vegas model will be coming to cruising but I hope it is based on dollars spent--not just gambling!

 

I do not think the perks should be reserved chairs or anything that further divides cruising classes, but maybe greater discounts & better perk booklets..

 

once you reach Elite you learn it is an empty perk--not even a free specialty coffee anymore!

[Cindy G]

There is a high roller casino "club" with cruises and other ammenities being comped. Guess the OP isn't "high" enough for Celebrity to notice.

[lisiamc]

basically tighter than a crabs ass in cold water

 

LOL, I just wanted to see that in print again.:D

 

I do agree that Celebrity, Royal, etc should target the "high rollers". They must feel they're doing ok without that strategy, but maybe that will change.

 

Lisa

[ab0si]

taking the question seriously....

 

There are reasons most companies' reward programs use segments or days rather than gross revenue as the unit for their reward programs. These include:

 

1) Gross revenue and net revenue are different. A perfect system (from the bean counter's viewpoint) would reward customers who most improve the bottom line not the top line. For a cruise line, this is both particularly important and would really get customers upset as a fair portion of the revenue is taken in by the cruise line as an agent, not supplier.

 

2) The purpose of reward programs is to encourage repeat business. I know of no research showing that rewarding by dollars spent increases repeat business from the higher spending customers. I do know of research that shows such a program DECREASES repeat business from those customers who spend less. It appears that such a program would actually reduce repeat business dollars, rather than increase them.

 

That said, things change. JetBlue, for example, has just changed their program to reward by dollars rather than segments. However, they are a rather special case (due to their business model). I doubt it would work in the mass market cruise space that Celebrity occupies.

[signman]

I'm not going to get into anything other than I think OP makes an excellent point, and the cruise lines would be smart to give this topic some thought.

 

Targeted coupon offers, comped specialty dinners, would be smart marketing IMO.

[Schplinky]

Thisis a thread the OP pulled over here from the Oceania board.

 

I do think that there are some interesting point. Some book grand cabins and spend nothing while others book basic surroundings and spend a lot (although I disagree with the OP who seems to think a few drinks and a bottle of wine a day put you in the top 5% of bar bills).

 

I'm sure the cruise lines have the capacity to analyse the money spent and what would induce folks to spend more. I would think that those buying those cheap cabins and spending a great deal would be the ones you want to target.

[Rick-cruiser]

While the OP may refer to himself as a "valuable customer" I suspect the cruise line unofficial term would be "mark." He is a captive audience and they have him on the hook. They are already "targeting" him by providing all those outlets for his money, er, uh, entertainment.

 

The fact that the vast majority of us a more judicious with our spending does not make us tight curmudgeons-it makes us informed and wise consumers. It means we have learned how to evaluate services and products. We learned how to take advantage of good values and to reject being taken advantage of.

 

I recently came off the Solstice and observed exactly the same thing in regard to drink prices. One bottle of beer was $7.38, and one Martini was $11.50.

 

I try to live my life according to principles and, based on that, I cannot - and never will - allow myself to buy ONE beer for $7.38. I don't care that "I'm out to sea, so I have no choice..." or "I'm on vacation..." or "this is how it is.... so waddaya gonna do?...". I do have a choice, and I'm very aware where my money goes, at all times.

 

I don't mind paying certain mark-ups for things, but $7.38 for something that costs the cruiseline probably .30 wholesale is absolutely ridiculous. I just could never support and encourage that.

 

I actually just give myself a threshold for things (price-wise) and don't go above that threshold. For example, I think $3.00 is reasonable for a beer when I go out somewhere - considering their overhead and operating costs, etc. I don't buy drinks onboard, simply because they have raised and raised and raised their prices... to the point where, now, $7.38 for a beer and $11.50 for a martini is just beyond reasonable. Believe me, they will keep raising their prices as long as people keep paying them... soon it will be $10 for a beer.. then $12.. then $15... where will it end? For me it ended after it crossed the $3 mark (about 5 years ago).

 

Believe me, I'm a very laid-back person and people say i'm always having a good time. I just don't readily "accept" things that some people seem to. I believe in taking a stand sometimes. If more people did that, you'd see how fast they lower their prices. Principles don't mean anything if you don't stand by them when they're inconvenient.

 

- Rick

[obnancy]

Hi Huddler,

 

I think you make a very valid point. People love to read more into things and I ready your post "very tongue in cheek."

 

I worked in large group sales in the Hotel Industry for 10 years and you are right on target. Before I booked any group I would get a detailed history of what they spent at the last hotel they were at, or mine, if they were a repeat customer. If all they did was buy rooms, get a couple of meeting rooms and buy some coffee service, I wouldn't book them. I would hold out for the group that would increase revenue across the board, room revenue, food and beverage, spa, etc... These groups were the ones I coveted and the meeting planner got treated right. Upgrades, a couple of free things thrown in, etc... to make sure they knew I valued their business. (On a fun note for today's time, the big spenders were always banks and insurance companies. Ummm...)

 

The current economic climate will make my next cruise were I will be one of the crab in cold water tight asses :}... and I think the cruise line would be better off courting people like you, than me right now. My industry has been decimated by the economy and I work twice as hard for half as much money as I use to make. So no balcony for me this time, it's a category Z. I'll book my own shore excursions and keep a closer eye on my bar bill than before.

 

The cruise line can tell how much people spend per room through the sign and sail card. I think they would be well served to review the revenue per occupied room for the guests and do some target marketing to people like you, who will spend the revenue they need to make a profit in these tough times. After all, if you got a personal call from a Celebrity vacation planner and they thanked you for your business and offered you a little something for your business you would probably book before you got off the phone.

 

Happy Cruising,

 

Nancy

[snowglobe]

The cruise lines must somehow learn how to make a reasonable profit from a bigger percentage of passengers. The way to do that is not to offer incentives to the whales, but to price their products and services in such a way as to appeal to more passengers.

 

Well argued and well put! In these days of educated consumers, where access to information about the true costs of goods and services is readily available, and where "plus-value" is sought after, tapping into the wide pool of guests willing to pay a bit more to the cruise line for a perceived value, rather than letting them slip their $$ outside of the ship would make tremendous sense. Guests tend to *know* when they are being gouged, especially when the higher prices offer little added value in return.

 

Guests want value and are willing to pay more to get it, but not to the point of being gouged. It's a mistake to assume that "value sought" is equal to "cheap" - money *itself* is not at all the issue - actually, the perception of the "value" is.

[Veronica13]

Couldn't you present your argument omitting references to "tightwads, tighter than a crab's ass" (By the way, something new for me. The things I learn on CC!!), or "miserly old curmudgeons"?

 

You probably will get more responses to these slurs than you will to your idea!

 

Does CHEAP work better?:D Sometimes it's tough to be politically correct and still get your point across.

[snowglobe]

Does CHEAP work better?

 

"CHEAP" can also mean "NOT STUPID" :D;)

[cvaty]

Watching the Peter Greenberg special on cruising tonight on CNBC got me to thinking about the cruise line business. I know that each line has "loyalty" programs that encourage repeat business by offering various incentives. And that makes alot of sense to me. But do they really want to target all repeat customers equally? Why dont they target their most profitable customers more than others?

 

Just a thought and I would like to hear others opinions.

You could be identically to a cruiser with 80 guests.

[Karynanne]

There is a high roller casino "club" with cruises and other ammenities being comped. Guess the OP isn't "high" enough for Celebrity to notice.

 

This club is "The Blue Chip Club", and you do get gambling perks. BUT you do have to spend time and money in the casino in order to be rated, and for the perks to be alloted on subsequent cruises.

[Longboysfan]

I think the point he is trying to reach for is the passangers who bring more profit to the line could be targerted better.

 

That would be a combination of cabin and ship board dollars.

The total cabin price plus the ship board charges.

 

They may target say someone who hits the casino a lot if they have a poker event on the ship that lasts the whole week.

 

I am of the passanger type that does not spend a lot beyond the ship board credit I get from the line. I think in the last 4 cruises I have spent about $300 above the ship board credit. That does not include tips. or the things I bring on and or buy on the trip and give away to passangers and crew. Not tight but just smart how I decide to spend the ship dollars. One thing I did not pass on was the afternoon 20oz mug of Amstel at the pool bar.

That was $5 including the tip.

 

There are always values to be had on the ship. If your a wine person they have a few wine tasting things going on and wine blending. If you drink there is the mixing classes they have. If it is straight out drinking you can BYOB to some extent and make sure you hit the free drink meets the line has.

 

Activities are a wash as this is entertainment for me. The shows kind of blend together after 20 plus cruises so unless it is a Comedy show then....

 

There are ship values to be had out there. You just have to know where and what.

[leoandhugh]

I can't figure why a cruise line should target someone who is already a "big spender" and is doing that without further incentive. It is not as if they are going to stop cruising or move to another line. I doubt that any cruise line would be the first to step up to the plate and find some other way of rewarding the big buck guys; many of them already do that by rewarding either days spent onboard or number of cruises taken.

And the coupon books they provide already offer some incentive for spending more money on things like pictures, bingo, spa treatments etc which are all money makers for the lines. I would be pleased if they did reward us big spenders, but I am realistic enough to believe that ain't gonna happen:)

[jackdiamond]

I saw that special and I think the cruise has to also "gamble" that new cruisers will also become like you and spend lots on the ship. It was interesting to see how the cruise industry relies so much on the onboard purchases which definitely makes sense of why they don't allow people to bring alcohol on the ship.

 

Unfortunately, the cruise line probably also factors in that people like you WILL spends lots on board and other, who don't, just might and increase their revenue or brings other on board who will also spend more money.

 

BTW, I think crabs LIKE cold water, it's when you increase the heat that they get "tighter"

Most crabs (blue, and stone) prefer water temperatures in excess of 70 degrees.