By Bojan Jokic
Airlines can unlock a new source of revenue with personalized ancillary sales that will please travelers instead of leaving them indifferent. Perfect offerings that will increase profits are waiting for passengers, and they are very different from the dreaded fees for checked baggage, preferred seating, Wi-Fi, in-flight meals, or the redemption of frequent flier points. Tap into unrealized revenue streams with a dynamic range of products and services that passengers actually welcome and that enhance each step of their travel journey. These include pre-travel accessories and care (such as GPS trackers, city guides, waterproof beach bags) to in-destination services (restaurant bookings, beach accessory packs) to post-travel necessities (grocery deliveries, digital photo printing).
In today’s buyer-driven market, the travel industry is embarking on a transformative journey to adopt more customer-centric business models to improve performance and service quantifiably. The first step of this journey is to grasp the need for change—an imperative driven by the inevitability of the rapid evolution of technologies, more demanding traveler expectations, online reviews, OTAs and fierce competition. Passenger experience is one of the most powerful competitive differentiators and optimizing the entire voyage means putting their needs at the center, and the current focus on alienating them with add-on fees at every touch point isn’t going to stand the test of time.
So what does this newly expanded and passenger-friendly ancillary opportunity look like? Personalized, relevant long tail ancillary offerings that are needed, when they are needed, and where they are needed. This new ancillary revenue stream creates happy customers, loyalty and a positive image of your brand.
Long tail ancillaries represent a $280 Billion USD opportunity in travel. Third party ancillary sales will grow ten times faster than general sales in travel. By leveraging the gold mine of data, passenger profiles, choices and preferences can be leveraged by airlines to deliver product offerings, predict customer needs and preferences and effectively cross- sell and up-sell additional products or services.
Eight out of ten travelers would buy ancillaries from their travel supplier, but great products and services just aren’t enough anymore. Airlines need to present new offerings, or inviting ancillaries, into the context for the customer. The difficulty for airlines is to decipher the context of each traveler and to identify what to offer them and when from the fragmented network of 3rd party products and services. Also, most airlines don’t have the platforms, processes, knowledge or focus to help their passengers with this as 3rd party ancillaries just aren’t their core business.
To take advantage of the profitable opportunity, it’s imperative to have a comprehensive merchandising strategy that considers the impacts of timing, technique, channel, service and price.
Once a customer has booked a holiday, their journey has just begun. This is the stage at which you need to not only impress the customer with the quality of your service, but also follow-up with them to build a connection, make them feel important, and ensure that you engage them with only the information, products and services that they value and need. This includes travel related merchandise and services that customers need, want and wish for about their trip. That type of ancillary sales strategy adds value to every step of the traveler’s journey and helps airlines reach new revenue streams.
Great products and services are not enough anymore. Nor is it enough to just organize all your content and make it universally accessible and useful. Nor is it enough to just have the knowledge at your fingertips (big data anyone?).You need to put your offering, and especially any additional offerings or “ancillaries” into the perspective of your customers.
This means identifying and offering the right product or service and always at the right place and at the right time and through the right devices (mobile phone, tablet, personal computer). It’s also about understanding the customers core attributes and learning to sell in a way that resonates deeply and gets them wanting more. This can play a far more direct role in engaging customers, improving customer experiences, and increasing sales, by enabling companies to deeply personalize their communications and interactions.
But this is just common sense, right? Yes, but to actually do it is something completely different.