A survey has indicated that many travel industry businesses anticipate a change in ancillary revenue strategies next year, with more emphasis on up-selling and cross-selling.

According to Collinson Latitude’s survey, which featured loyalty and ancillary revenue managers, particularly across the airline industry, the industry is seeking to maximise the benefits of customer data insight. Nearly half of respondents (49 percent) believe cross-selling and up-selling through the booking process will be the fastest-growing area of ancillary revenues for travel businesses in 2012. Furthermore, 30 percent of respondents predict that non-travel related product sales will play a pivotal role in the future of ancillary revenues.

“With travel companies holding so much knowledge about their customers, cross-selling and up-selling strategies can be tailored to match benefits and promotions to customers’ wider profiles. This targeting can increase the attractiveness, perceived value and ultimate success of ancillary revenue programmes,” said Collinson Latitude director Janet Titterton.

The survey also indicated that conventional travel-related offers will remain important in ancillary revenue programmes. Among respondents, 19 percent predict greater cross-selling and up-selling of travel-related products through the booking process, while 21 percent predict an increase in on-board ancillary revenues for airlines.

Traditional travel-related ancillary revenues will clearly remain important, said Titterton. For example, 22 percent of survey respondents currently implement ancillary revenues by unbundling previously packaged products and services.

“However, this process needs to be handled carefully: although ancillary revenues can bring costs down for customers – as unwanted services are no longer paid for – the perception is often very different. As services previously viewed as ‘free’ become billed separately, the travel industry needs to demonstrate to customers that such services really do provide choice and value for money,” added Titterton.

Targeting

As highlighted in the survey, it is important to note that “targeting” can place a travel company in an advantageous position.

Travel businesses continue to gather customer preferences and have been looking to provide improved personalised features for travellers.

In its regular interactions with specialists in this arena, EyeforTravel has found that travel companies are attempting to better serve their most loyal customers while also working to differentiate themselves from competition on features other than cost. A lot of these efforts are focused online in gaining a deeper understanding of the plans that a user has already made, and then using that information to market travel enhancements, upgrades, or add-ons.

Challenge

The fact that consumers have moved away from traditional digital assets and moved to social space has posed a major challenge to travel companies. For their part, marketers have become a lot more attuned to using data and presenting personalisation and customisations in digital assets.

The critical step to developing true one-to-one marketing communications is in organising analysing and segmenting the database.

Many companies make the mistake of rushing through these strategic steps in order to implement the tactical portion of their marketing plan. This is a critical mistake, according to John Gardner, President and CEO, Integrative Logic (Gardner was a speaker during one of EyeforTravel’s conferences in Miami last year). According to Gardner, a one-to one marketing communications plan goes much deeper than finding out what your customers last clicked on and their name. It is a 360-degree examination of the customer: their intent, motivations, demographics and psychographics, geography, media consumption, as well as transactions. The key to one-to one communications is developing true attitudinal segmentation methodology that ties into a segmented channel strategy that allows you to take advantage of ways consumers utilise content and make sure the content they receive is as relevant as possible.

One has to understand what is uniquely important to each customer to enable messaging to be created that is timely, relevant and useful to them.

Making use of data, garnering relevant information from analysis of that data, and then using that knowledge to take profitable actions is a challenging task. The travel industry has acknowledged the same and travel companies are working with many internal and external resources to refine this approach.

Personalised Experience

Travel companies are also taking initiatives to tailor their customers’ online experience.

For instance, Finnair recently became the first airline to implement Amadeus Dynamic Website Manager. With this move, the airline is expected to improve revenues as a result of optimised up-sell and cross-sell opportunities, and its ability to benefit from market opportunities through faster deployment of promotions. Using the customer’s frequent flyer information, travel history, preferences and cached user’s browsing activities, the offering will propose relevant offers or services that fulfil the unique needs of Finnair customers. For example, offering lounge access at off-peak times to frequent flyers that do not usually have access or a massage at a connecting airport if the duration of the connection time is longer than two hours. This way the airline is working on delivering a personalised online experience that recognises the unique needs of every customer.