September 13, 2015 | Nils T. Kohle
Challenges these days are the same for most companies: Processes are changing and clients wants to be integrated digitally, marketing is not only about advertising, but about content strategies, social media is not always helpful but necessary, competitors are not changing, but disruptors are entering the market with innovations (see my master thesis about disrupting real estate) and finally even the human resources part is changing very fast and the war for talent started (pls. see this book from my friend Jan Brecke).
And all SMEs have the same challenge, markets are going global but you’re too small to cope with the changes and often you do not have the internal know-how and innovative ideas to cope with it. This is where I am starting at: Joining the board, getting to know the company and their digital challenges, find an innovative strategy that uses their strength to be supported by digital tools and processes, implementing the strategy and setting up the internal units and, if everything runs very well, get off board.
The first part is done. That was work for a little bit more than one year. Beat Ambord with whom I worked at Engel & Völkers AG when doing their international digital strategy, asked me more than one year ago if I could do something similar in a slightly different context in Switzerland for the well-known region of Saastal / Saas-Fee.
They have the challenge that business is getting tougher for the +700 – so called – Leistungsträger (i.e. service providers, these are the ones having their businesses there), as competition with other destinations is growing, and it is not easy for smaller companies to cope with the digitalisation.
Finally, last Saturday we had the project closing meeting in Saas-Almagel in a scenic restaurant on top of one of the fantastic mountains. The assembly of the advisory board of the Saastal Marketing AG (SMAG) met to close phase one of this project. The advisory board (at least I should mention Jürg Stettler, Patrick Pfäffli and Beat Ambord) is the steering committee of the destination Saas-Fee / Saastal and is responsible for the overall strategy of the destination. They did a tremendous job in setting the right targets to bring the destination back on track in an ever more digital and competitive space by deciding, that it does not make sense that everybody is doing something on their own. They thought about the big solution, raised all the funds for this project and asked me to do this project and support their CEO, Pascal Schär.
I was delighted by the idea to go skiing at least every month in this fantastic spot (I did it only 5 or 6 times in that one year), and I can say that this was a tough ride, but we have the first amazing results now.
So what did we do? The challenge we had was a little bit different to what I have been doing at Engel & Völkers as this was not in 39 different countries, but in Saastal/Saas-Fee a famous Swiss ski destination where we have about 700 service providers. These are small and medium sized companies which are operating hotels and apartments. Nearly all of them are family businesses and they have been doing their job for long years. In recent years the competition between ski destinations got bigger, target groups were more difficult to reach offline and furthermore there is the same challenge that even the Lufthansa has, and just tries to avoid – higher risk and investments to have everything in place and operating (doesn’t matter if you have to operate planes or a hotel), and a margin which gets lower every time. The margin is not lowering because of the higher competition, but also due to the booking engines like booking.com, Tripadvisor, Expedia etc. that are making great revenues and perfect operating margins, as they take away the margin from the operating companies without having the operational risks attached to that.
Let me say first, that these booking engines are not bad, they do a great job, and also help the hotel to get a better utilisation of their hotels‘ capacity, but it becomes a problem, when you are too heavy relying on them as this might lead into the so-called Doom-Loop where you are only able to lower prices to get a better utilisation. We had the same challenge in the real estate sector where the property portals are doing a great job and helping immensely, but the adverse effect is that they are rising prices nearly every year which you cannot avoid anymore as you are very dependant on their traffic and leads.
The strategy for the Saastal / Saas-Fee was that, although most people say that the destinations’ tourism offices are not relevant in future, we make this one much stronger, i.e. a new kind of destination management as Pascal Schär named it.
But WHY? The reason for that is easy and when I discussed this with the CEO Pascal Schär and the Board, Pascal explained all the issues the service providers have:
Small family companies, heavily involved into daily operations, which is the reason why they are successful
Not enough resources for all digital channels and missing knowledge as the field is too broad
Scarce financial marketing resources and the outsourcing is tough as with a small online advertising budget, you probably won’t get a good agency (you have to be very lucky)
Not too much traffic on the website
They have seen each other in the region Saastal as competitors who cannot work together
Based on that the idea became clear that in order to build up a third pillar, next to their own customer acquisition and the booking engines as a channel, you need a platform where you are the hero and can do all the decisions. And when you have one platform with lots of tools, you can use all the synergies that arise when 700 service providers do something together. We named this platform “SMART MARKETING ENGINE”.
The strategy definition started in September 2014, finished in December 2014, and the kick-off with the external partners was in January 2015 with the goal to have the technical platform ready in April 2015, a very short period to integrate CRM, Social Media Tools, Analytics, Video platform, landingpages, apps for all partners, a new website plus Intranet in four languages and a shop for all bookings (which is not final yet). Basically we did that and launched the platform with 90% done. This was amazing, thanks to the partners that have done a great job (Detco, Facelift and Wilken, just to mention a few).
With the launch of this platform we introduced a scheme for the partners so that they can join, more than 150 are already onboarded, counting more every day.
What do they have out of this? They have a lot of professional tools which are much cheaper for them (due to economies-of-scale), and they can use them properly (due to trainings and a Zendesk based support), and they can start working together in pushing the destination. Furthermore the SMAG provides all support necessary and is doing the big jobs for them:
Content strategy, creation (now inhouse) and postings
App updates (there is a specially designed app that was developed once and adapts to the700 service partners, so nobody needs to pay for updates and we do not have 700 apps competing for the term Saas-Fee – Just to mention here that I am slightly proud that this concept was my work :-))
And the big success is now that we are doing all digital campaigns based on that platform. This means that we do not need every partner to do Adwords for Saastal/Saas-Fee, we do that and they can just take their budget and attach it to ours. So there is less competition about Adwords keywords (and other channels too), they are not competing against each other about the regional keywords, and by that they have much lower costs compared to the service partners doing it by themselves. The aggregated budget also helps to lower the total cost of traffic and lead generation dramatically and by that there is more to share between all partners. Of course, they are still competing against each other at the final stage, but they compete first hand against other destinations, and if this decision can be positively influenced by the SMAG, it helps them to overall get more visitors coming to Saastal/Saas-Fee.
Furthermore there is the knowledge gap, this will be smaller as the SMAG takes over a lot of work for the partners, trains them by videos and meetings, and by that they can concentrate on their business and even save a lot of money as they do not need their own advertising agency for that.
Finally we have just finished the first digital campaign based on that Smart Marketing Engine where the SMAG invested for the ground work, and the partners’ added budget and received lots of traffic with cost per lead more than 40% lower than with comparable campaigns. Pascal Schär the CEO of SMAG mentioned the first success figures yesterday to the advisory board, and this was really great to see.
Summarising this was one year of hard work with a great end, or better, a great start on this platform. The next steps will be to establish the digital campaigns on this platform, train all 700 service providers to use it properly, and there is also a project from the University of Applied Sciences Lucerne called Smart Data with Jürg Stettler where we are developing a forecasting method for campaign success based on all the data the region has access to. This will be interesting in the future too.
Last but not least, thanks to the hotels I had a comfortable stay in during the last year: Schweizerhof, Marmotte, Ferienart, Mistral, Saaserhof, Bristol, Metropol, just to name a few, they have all been great from the food perspective, charming from its surroundings and very personal from the partners that are doing a highly recommendable job there.
Enjoy the sun, keep skiing and booking: www.saas-fee.ch.