Learnings from the Datalex User Forum “Journey to travel retail” in Dublin, 15-16th June 2010

Red herring marketing, hybrid mobile phone solutions and airlines in the mud

Present at the conference were more than 250 years of aviation experience: airlines that have proven courageous approaches to airline retail such as Continental, Philippine Airlines and Norwegian, some travel agent representatives and various transport industry experts on strategic, commercial, customer, and technological issues were discussing for 1,5 days the road to success of travel retail. Datalex managed to initiate lively discussions through a simply format of non-formal panelists and an involved audience covering “hot” subjects.

Datalex also proved with their latest solutions how new technology “made in Ireland” can enable higher revenues and lead to higher customer satisfaction.
Watch the hot dog example on youtube:
http://www.youtube.com/watch ?v=GAm6MTtu3KA

The question remains why airlines show such difficulties in developing strategies around merchandising when hotels have offered everything but the hotel bed as additional sales for years. Airlines were deeply in the mud and only woken up in panic by such a deep crisis as the last year brought about. Could they have been much better prepared and already achieved much higher revenues years before?

Do’s and Don’ts Ancillaries in a nutshell:

Strategy and brand consistency
Timing - customer touch points - opportunities
Don’t forget other direct channels. Multi channel strategy should not be underestimated
Focus - 80/20 rule
Measure - data. Test, test, test
Communication, information
Don’t underestimate the price. Customer loyalty is about experience but price is a key part of it!
Do not forget the right payment methods for the market
Start with the customer
Think out of the box
Create wows for the client -even with ancillaries
Keep it simple!

Learn more:

• Ancillary revenues are not a one way street. They need to be thought through in line with corporate strategy and positioning, starting with the customer and enforcing the brand values. As many airlines started almost in a panic to sell ancillary products to gain additional revenues in the crisis last year, they did not well think through what fits their customers, and how they can ensure that their staff can adopt a sales attitude and support the merchandising approach. The result: unhappy and confused customers, changing their travel behaviour and becoming disloyal.
• Start with the customer, manage the expectations and try to create a “wow” factor even with products for sales. Today, consumers rather experience ancillary sales as a punishment and a bad thing. Yet 5 star hotels have charged for their breakfast for many years, and even do so for Wifi in many cases, restaurants charge any extra order of vegetables or salad to go with the meal, train companies charge for meals and extra services, insurance companies charge extra services with extra fees. Why do high quality airlines not offer “time is money” bundles allowing a faster track through the airport, allowing to avoid the queue by pre-booking the museum, or a “piece of mind” service booking the nanny to allow a kids’ free weekend, a cleaning service for their clothes or a pick up service for elderly people from home with their luggage, as many train companies have offered for a long time. They might even get a “wow” from their customers on top of additional revenues... Have a look at this video on youtube: http://www.youtube.com/watch?v=GAm6MTtu3KA
  
• Take another road to work next week. Choose a new restaurant in town next time you go for dinner. Seriously, suddenly you will realise that the restaurant in the other street has improved the service so significantly that they became better than your favourite one. That the new road offers some better shopping choices on the way or less traffic. - At the conference, Amazon was probably one of the most repeated words. Ensure to think out of the box, thinking what experienced retailers have been doing for many years on the merchandising side. Check Amazon, Tesco’s, Landsend, Walmart...
• Standardisation e.g. by using xml interfaces proved to be successful and helpful, creating transparency, simplicity, speed. But never forget - entrepreneurship and positive margins were created by low cost carriers getting out of standards...
• Have the right offer at the right time in the customer experience curve. Lounges, upgrade and fast track sell best during online check in or at the airport. Hotels can be a decisive factor even at time of booking. Creating lots of opportunities and reminders will increase conversion.
• Don’t forget other direct channels for ancillary sales. Multi channel strategy is the key for success in today’s environment in order not to lose a single cent.
• Use the 80/20 rule to ensure the focus - you will not be able to do it all, even less so with staff reductions having been done at the same time. So focus on the highest revenue potentials and the one where you can save money, gain revenue and attention whilst enhancing customer service and customer satisfaction.
• Communication is crucial. Even a little word can make a big difference. On Barrack Obama’s site the change from “sign up” to “learn more” led to 10% higher conversion! Ultimately, consumers do not always behave rationally, which requires red herring marketing. See also enclosed video: http://www.youtube.com/watch ?v=YsCR9Y4Ymvo
• Simplicity is king! Amazon achieved 17% conversion with their one click product!
• Test, test, test - there is no one way of selling ancillaries, but instead of doing nothing you should test, measure and adjust.
• Customer loyalty is about experience and customer satisfaction but price is a key part of it and should not be underestimated. The price has to be competitive and to be perceived as fair. Lower prices also mean lower expectations, and higher prices mean that the customers expect higher service. Bundling with a discount creates a sense of urgency. And communicating this in a simple and clear way even more so.
• Problems with the payment process or not having the right payment options available can make the difference between buy or no buy.
• New technologies enable new ways of reaching the customer and sell. Can Irish technology help airlines to get out of the complexity that they had created themselves over the years? A good example are some interesting product innovations from Datalex:
• The power of the datalex travel distribution platform: the volcanic dust put a lot of pressure on airlines’ call centres and left travellers stranded with seemingly no options. Aer Lingus however invoked a rule to waive any penalties for online changes to impacted travellers, thus enabling travellers to rebook themselves online without any additional cost, lifting the load on call centres and freeing valuable manpower to focus on dealing with the most impacted travellers. The flexibility of the datalex distribution platform made this possible.
• Datalex ad server: online advertising solution which improves the effectiveness of marketing campaigns - dynamic selection of lowest available fares at appropriate touch points to reach customers in a targeted way. No more need for manual intervention
• The latest offers can be shown in a dynamic way, taking into account departure airport of the customers and changing according to flights being booked in total at the moment. Or the interactive and graphical choice according to budget of the traveller and advance booking period. Well done, Datalex, but why not make this and your other products known more aggressively?

Finally some other observations:

A twitter competition and the ipads to be won being handed around during the conference to twitter and see the latest products of Datalex - a best mark 1 for a key technology provider! However, the 5 star Marriott Hotel provided poor internet accessibility but for high ancillary cost!

The question remains why airlines show such difficulties in developing strategies around merchandising when hotels have offered everything but the hotel bed as additional sales for years. Airlines were deeply in the mud and only woken up in panic by such a deep crisis as the last year brought about. Could they have been much better prepared and already achieved much higher revenues years before? Maybe the top management needs an overhaul...