April 6, 2020

Four ways for airlines and hotels to optimise the customer experience AND revenue.

James Edwards
Partner Manager - Airlines

The term ‘customer experience’ is by no means new in travel, but what it entails is continuously evolving to reflect, and unite, multiple aspects of the travel journey.  

From the underlying ‘product’ of a holiday, flight or hotel stay, to the rise of ancillaries, and of course, digitalisation across the whole travel ecosystem, technology is now front and centre of everything – including the customer experience.

Taking customer experience from the perspective of airlines and hotels, what’s key to delivering a superior customer experience in the digital age? How can they differentiate, and what aspects of the passenger or guest experience should they prioritise for the biggest gains?

Some thoughts from me;

1. Think about customer experience beyond the CX team

In researching this blog I came across a number of articles talking about the trends, considerations and challenges ahead for ‘CX teams’. But where those teams that own customer experience as a key brand differentiator ‘sit’ within the company varies across industries, even within the same industry. CX is commonly siloed to marketing, but if those teams are largely acquisition-focused, for example, there’s potential for conflicting priorities with more feelings-led CX. On the other hand, it may be that CX does not have much exposure to pricing teams - whose primary focus is (understandably) on revenue and, within travel especially, yield management.

While commercials are clearly important, a lack of integration between those responsible for overseeing the customer experience across different touchpoints and those focused on revenue-based metrics can ultimately dilute CX. In a dynamic industry like travel (certainly in terms of price) there’s a real opportunity for CX and revenue teams to align and frequently benefit from shared insights and data sets that can then be leveraged in their respective strategies. For instance, if a given yield management assumption doesn’t transpire, or there is a consistent surplus in the premium cabin on a non-key route, it can be easy to write these costs off, but what if there was a way to mitigate that with specialist pricing and distribution (see point 4) to not only optimise revenue but also enhance the customer experience – with specialist pricing on this inventory.

2. Invest in direct customer relationships

While airlines and hotels already invest in direct customer relationships –  this is largely through the mechanic of a frequent flyer or hotel loyalty program. Many are being more proactive in driving direct bookings to ‘take back’ aspects of the customer relationship while reducing their reliance on commission-heavy OTAs and other paid for intermediaries. It’s arguable though that the opportunity to develop the relationship with other existing, equally high value, (and potentially still ‘loyal’) customers isn’t being optimised as reaching them outside of opted-into channels is a challenge. Currently those intermediaries that help airlines and hotels increase reach still own the relationship creating a more arms-length experience for both the customer and their host hotel or airline – another relationship barrier that airlines and hotels are actually paying for. It’s a key reason why we created Upgrade Pack – to give airlines and hotels the ability to reach and engage a highly desirable new customer set (and access a unique ancillary revenue opportunity) as part of a high relevancy third party distribution offering – all without fees or commission.  

3. Connect with customers emotionally

The role of emotion in creating meaningful, and ultimately lasting and loyal relationships with customers, is a critical aspect of brand differentiation. Research from Forrester shows that that emotion has a bigger impact on brand loyalty and customer retention than ease-of-engagement. While simplicity over complexity should always be the aim, balancing practical and emotional drivers to create moments that matter – whether that’s time saved with priority check-in, or the chance to access the full ‘front of the plane experience’ for just a little bit less – is key . Ultimately, although quick wins are great, it is substance how you make people feel that holds the key to differentiation in CX.

A great example that felt particularly relevant to travel is an established rule of psychology called the peak-end rule. It suggests that people judge an experience largely based on how they felt at its peak (i.e. its most intense point) and at its end, rather than based on the total sum or average of every moment of the experience – a pleasant and lasting memory.

Traditional ancillaries, for instance, certainly ‘work’ when it comes to the practical aspects of a customer’s journey, to transform these experiences (and lasting memory) of your brand, you need to get the peak and the end moments right — in our case an upgrade on their existing booking with you that they are happy to pay for!

4. Complement volume with specialist distribution

Platforms offer airlines and hotels scalable access to audiences, international markets and behavioural insights, without the need to invest in expensive targeted campaigns or proprietary tools in a rushed or haphazard way.

However, airlines and hotels pay heavily in fees, commission or margin for the volume or immediacy of such capability.

There is a wave of new tech companies arriving on the scene to ‘disrupt travel’. Whether it’s through optimising existing legacy systems or helping airlines and hotels to diversify their products and services, it’s fair to say that the majority of these offerings are weighted towards the mass category. High volume, and likely high engagement, but lower margins.

Amid this focus on innovation that elevates the customer experience in the budget category, it strikes us that the premium products are curiously underserved. By creating a platform dedicated to the distribution of premium inventory, we are connecting airlines and hotels with hard to reach customers – with a closed market upsell of cabins and suites that might otherwise go unsold.

As such we are creating a unique opportunity for travel partners to enhance the customer experience while optimising their own inventory as an ancillary revenue source. All in a secure environment that doesn’t interfere with other distribution channels. Broader, specialist distribution focused solely on paid upgrades for those that truly value them creates a new way to engage directly with your customer, enhance that customer’s experience of your brand and optimise revenue. Surely a win-win all round.

To talk to us more about our market-first platform for flight and hotel upgrades contact our Partners team:

James Edwards – Partner Manager, Airlines

Charlotte Fincham – Partner Manager, Hotels

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