Disruptive Forces and New Technologies are Changing the Game: The travel industry is undergoing constant change and innovation. Suppliers seek to take advantage of new technologies that can increase their brand value and pricing power in a changing, largely price-driven market where travel consumers are beginning to focus more on unique travel experiences. The market is also experiencing the strong influence of disruptive forces from new business models enabled by new technologies.

In order for suppliers to gain market share while increasing margins in this quickly evolving market, they must look deeper into their current and prospective customers to understand more about their motivations, behaviors and desires when it comes to their travel buying decisions.

For many suppliers this can be both a technology and business process challenge, as in many cases their current system architectures, restrictions and internal customer data depth can limit their success. Fortunately, advanced analytics and digital technologies are opening the door to a new era of travel personalization that benefits both the industry and its consumers.

Looking to the Past for a Path to the Future

In a time before the Internet and online travel portals, everyone purchased travel through a travel agent. If you used the same person or agency often enough, they came to know you and your preferences very well. Over time, this meant that just a phone call of, “I need to be in NYC on the 15th” led to a set of arrangements based on personal intelligence and just knowing the customer. This was the era of high-touch personal services and travel agent commissions.

With the coming of the Internet and the complete disruption of the travel retailing industry, much of the high-touch service model was lost to a time when the lowest price wins. With disruptions also comes often-unintended consequences, and brand power and loyalty has suffered in many ways due to price-based service offerings. The question really is whether we can get back to a high-touch service model for customers that are highly motivated by what it can provide?

So let us imagine the travel retail experience of the future, one unlike today where you are likely working with several travel suppliers in what becomes a disconnected travel experience. In the future, regardless of which supplier you start with, other suppliers will also be connected into one seamless travel retail package. Suppliers will not only have information about their own customers’ past trips, but also other customer data about their travel and retail purchases.

Suppliers will start integrating their loyalty programs with customer permissions as an incentive to provide these higher levels of service. This higher level of service will use modern digital technology and analytics to replicate the same customer centricity that existed in the past, but will be able to scale far beyond what human capital alone can provide. In this future experience, a customer speaking to their airline partner about a trip from New York to Dallas will receive highly personalized content, such as their preferred hotels and accommodations in Dallas.

This new high-touch experience will move far beyond just ensuring that the supplier shows the customer their preferred flight. The next steps include moving into an understanding of which flights, class of service, seats and ancillary services their customer prefers for business or personal travel and package this information into a unique price for the entire experience.

Suppliers will also understand how to present this unique offer to the customer so that it may be bundled or unbundled to fit their buyer preferences, patterns and behaviors. This will replicate the travel agent experience of old, providing a complete end-to-end travel experience that encompasses all travel suppliers.

Navigating to the Future

As with any broad and transformative vision, the trick is in knowing both how to start and execute meaningful product and service changes for consumers while enhancing revenue and operating models for the travel suppliers. Identifying points of intersection to intelligently drive these types of transformations can optimize investments, generate higher returns and reduce risks.

Using advanced analytics and third-party data services providing information on credit data, life events and social media, it is possible to understand which customers can have their spend behavior altered through a highly personalized experience to attract more of their business. Further incorporating a multi-year customer value score can create an audience highly tuned and responsive to the early stages of this type of transformation. With the audience selected, the travel provider can then identify where to start with altering levers within the experience to drive the largest impacts.

The place to start this customer experience transformation is with the customers that will drive the best response and financial returns. While most travel suppliers have rather deep data sources from their own customer transaction histories, they may be largely blind to other client behaviors and preferences. This can impede getting to not just a “day of travel” customer value, but long-term customer value in a multi-year view. While many travel suppliers have some window into their customer value through their loyalty programs, many such programs are more focused on behavior rather than profitability or buying influence.

The key is to get a broader customer profile by expanding internal data with validated third-party data sources to create a customer experience profile for personalizing all aspects of the customer experience and drive enhanced revenues and margins.

What the Travel Industry Looks Like in an Analytics-driven World

With a customer data set including information from a variety of third-party sources, travel suppliers can identify and segment their customers. They can learn more about individual proclivities and personalities, going well beyond room choice, seat preference and basic travel habits. Using this insight, companies can design a unique experience around the individuals who matter most—one that is not only targeted to their individual preferences, but is also contextually and situationally aware. They can also anticipate life events that can turn into opportunities. Most importantly, they can funnel their marketing dollars and customer engagement resources where they bring the greatest returns.

So, what does the before and after of this concept look like in the real world? On the most basic level, it means offering honeymoon cruises to people nearing engagement; providing gluten-free room service menus to the right customers, and bringing out the red carpet and white gloves when a high-value member of your competitor’s loyalty program books a stay at your hotel.

Looking to the future, the effective use of analytics can transform the entire travel experience. It moves beyond just responding to what customers are actively searching for, but also anticipate customer future needs through analyzing other digital channels such as social media. This enables placing offers in front of your customers that not only recognize these needs, but are also tailored to their specific past trends and proclivities to drive true customer personalization.

In an analytics-driven world, each individual would see totally different flights, available seats, and pricing from an airline, as well as different options and offers from hotel and car rental companies based on their overall value to each travel supplier. Using an overlay of predictive analytics with in-depth customer data, companies can effectively motivate customers to purchase more while improving loyalty in the process. Everything is personalized to each individual’s need and propensity to buy. If the high-value business traveler wants meals, checked bags and preferred seating included in their airfare, airlines can re-bundle this ancillary model in to an all-inclusive option for that customer. When he or she walks to a rental car counter, the vehicle of that customer’s choice, based on historic interactions, is waiting.

By the same token, high-value customers can also carry a multiplier effect beyond the impact of a single negative experience when things go wrong. For elite customers who influence thousands, that could mean some type of white glove, above-and-beyond service. For influential leisure travelers with more flexible schedules, that could mean offering a first-class seat on the next flight and an automatic upgrade for the next trip he or she books, based on what the data shows appeals most to that specific customer.

With a clear profile and continual analysis of the customers who matter most, travel suppliers can offer options that these individuals are most likely to accept. They also have a vision of the type of customers they want to attract from their competition, and a personalized, effective means to win them over. Again, instead of investing funds and resources into influencing the masses, predictive analytics enables travel suppliers to focus spend where it will generate the greatest return.

This is not to say that lower-value customers will receive inferior service. If a person outside of a specific value set makes a reservation, he or she will have the same experience consumers see today. But, if someone is an influencer or high-value customer, he or she will have a different experience that’s powered by the analytics engine, continually collecting data and analyzing responses to refine customer insights.

The reality is that today’s consumer mindsets have fundamentally changed. They are readily willing to share information with companies that make their lives easier. If an airline sends a reminder to someone’s phone to pick up a friend at the airport and calculates the drive time there, tells them when to leave, or offers to have an Uber ride waiting at the precise moment the traveler exits the airport, consumers will respond. If airline systems instantly notified the relevant hotel, rental car company or designated family member every time an arrival time changed, that would make a long-term impact.

No company in the travel industry is currently using analytics to this extreme right now, but the opportunity is there. The leadership position is open, and the travel supplier, or group of travel suppliers, that can offer that kind of experience to high-value customers could have the potential to dominate in a very competitive industry.

Getting from Point A to Point B

The good news is that travel suppliers have the opportunity to move to a transformed, analytics-based, data-driven environment without a total system replacement or massive capital investment. Advancements in database management, analytics and agile delivery platforms solve the major challenges that have held companies back:

- No clear view into customer long-term value

- No clear segmentation based on life events and propensities to buy

- Disparate legacy systems that prevent aggregating and accessing actionable customer insight

The solution to all of these challenges is the creation of a Customer 360 database that continually marries third-party data with existing customer data, which is then analyzed, managed and accessed through a centralized, cloud-based data repository.

The company gets the value of a comprehensive database, analytics-driven segmentation and information access without jeopardizing existing systems or investing in new ones.

Gaining a 360-degree Customer View

Most organizations have some existing customer data residing in their reservation and loyalty systems. By engaging an analytics provider to marry this existing information with a wide range of third-party data such as credit risk, demographics, life events and social media interactions, companies can gain a more comprehensive understanding of those individual consumers.

Once this comprehensive data is in place, the provider can run this data through an analytics engine to segment high-value customers, those with untapped wallet share, or other target characteristics that fit with their strategy. If the client wants to know which customers are most likely to take a cruise, plan a destination wedding, or respond to a specific offer or program, that list can be accurately culled using predictive analytics.

Instead of blanket marketing campaigns or promotions, travel providers can focus resources on specific segments that will bring the greatest opportunity, long-term value or the highest overall return.

 

Creating a Centralized, Cloud-based Data Warehouse

With the availability of cloud infrastructure, all of this combined customer information can be funneled and analyzed within a single, cloud-based data repository. Appropriate information from client systems is automatically uploaded each week, along with dynamic third-party data for ongoing analysis. So, if a customer calls to make a reservation, orders meals, makes a complaint, sends a Tweet or requests a certain type of vehicle, all of these interactions are continually funneled into that one centralized database.

The real beauty of this “digital transformation in a cloud” is the fact that it provides extensive customer insight without a large technology investment or negatively impacting existing reservation system performance. All of the information is housed and analytics run in a secure cloud environment, and served back to the decision makers’ desktops as meaningful insight.

This environment can be set up and operational in a matter of months, at a very economical cost. Travel suppliers can have the insights and engine they need to start building out programs unique to specific groups of customers.

Positioning for a Data-driven, Analytics Empowered Future

With help of new technologies, approaches and agile analytic models, the travel industry is fundamentally changing. It is now moving from a day-of-transaction based approach to one that places the customers who matter at the core.

Companies that can transform their customer data and apply predictive analytics to offer a personalize experience, tools and options to their high-value customers will be the companies that win with higher revenues, lower costs and more effective product allocation strategies.

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