Technology that statistically calculates tailored ancillary products for hotels can improve the experience while driving revenues, but could this apply to airlines too? Tom Bacon thinks it might
Using big data analytics to sell more customer specific ancillary products, is what hotels should be focused on, Jerry Joyce, senior vice president at marketing intelligence agency Wiland and sponsor of EyeforTravel events told an audience in Atlanta earlier this year.
By doing so, hotels can help check-in agents address the most likely needs of their customers while driving incremental revenue; the idea being that they offer a larger room or a voucher for a drink based on calculated individual probabilities. For example:
One of the most important results of this is that it gives the front-line new focus. With the proliferation in ancillary options and associated fees, it can be overwhelming for both customers and employees. By offering customers a more personalised set of options – that add value to that individual customer – the customer experience can dramatically improve, even while the hotel gains more revenue.
Wiland’s argument is that the one-on-one interaction between the check-in agent and the customer is already too long and making it longer can just annoy customers - especially if there is discussion around unwanted services. So its technology specifically limits the number of recommended amenities for each customer; the agent is provided the most value-added options for possible discussion and sale.
Note that this is not actual personalisation. Instead of relying on actual individual purchase behaviour – which is often limited – Wiland compares individual characteristics with other travellers and correlates purchase behaviour across the newly defined segment. The statistically based Wiland approach is based on market segmentation: what characteristics define the highest probability ancillary purchasers?
This concept has possible implications for airlines too.
How would you use the above information as an airline? Would you modify the booking path, focusing more on the first few, higher probability options rather than muddy Mr. Bacon’s booking experience with low probability sell-ups? For me, for example, the travel insurance option is always just an annoyance – I never purchase travel insurance and having to explicitly reject it, every darn time, just complicates my booking. On the other hand, I appreciate some of the other ancillary options common in air travel booking.
Branded fares, of course, are an example of airlines trying to make the booking process easier for certain segments that value a bundle of amenities. These, however, are currently generic and not packages truly designed for individual passengers based on their ascribed market segment.
Besides making the booking process more relevant to individual travellers, airlines can leverage this information at other touch points.
Lufthansa, in fact, has identified a special target customer for lounge use. The algorithm the airline has developed includes customer specific information along with, for example, details like when the traveller checks in for his flight; if a flier has more than an hour, he is a more likely customer for the lounge. It also considers things like the busy-ness of the lounge itself and won’t seek more customers if the lounge is full.
Lufthansa notifies passengers via a mobile message as they arrive at the airport for their flight. Similarly, electronic messaging could advise other passengers with messaging relevant to their particular segment: segments with other helpful information including, where deemed appropriate, onboard amenities or services available at the destination?
Of course, the actual check-in process for a flight has become totally transactional, often with the passenger using a kiosk and having no contact with any airline employees. For airlines to exploit the personalised probabilities at the airport, the kiosk could be set up to highlight individualised, value-added amenities or, alternatively, it could direct the passenger to an employee for additional information.
Could there be an airport employee designated for personalised travel experiences, responsible both for increased customer satisfaction and sell-up revenue? This seems totally counter-cultural (airlines adding customer-service employees) as for decades we’ve seen airlines seek technology to replace labor. Still, arguably, as airlines seek to be better travel merchandisers, there is a need for such one-on-one human interactions.
Tom Bacon has been in the business for 25 years, as an airline veteran and industry consultant in revenue optimisation. He leads audit teams for airline commercial activities including revenue management, scheduling and fleet planning. Questions? Email Tom or visit his website