How big data in action is helping winter sports to lift off
With the Winter Olympics soon to be underway, Pamela Whitby hears how the shift to dynamic online pricing in the ski niche is paying off
Not so long ago ski passes were sold from the ticket window but the shift to online distribution has changed all that. Now consumers can buy tickets online and ski resorts are rapidly shifting to an Internet distribution model to drive fresh revenues and simultaneously understand their business better. Liftopia is one company that says it is helping resorts to grow their business by shifting to a dynamic pricing model, while at the same time helping consumers to ski more frequently by getting the best deal. “We’re trying to build value on both sides of the business,” says Liftopia chief executive officer Evan Reece, who describes the e-commerce pricing and distribution platform as a cross between Expedia, Sabre, Hilton and travel research for the ski industry.
For a number of years, people only really knew about the consumer brand liftopia.com, but Reece says that its SAS distribution platform, which is powering e-commerce for resorts, has recently gained traction. “Most of the growth has happened in the last 18 months and we have had a huge swing in resorts using our platform 100%,” he says. “In fact, the revenue we sent to resorts last year was more than the previous six seasons combined.”
As a result, the firm has grown from 20 to 55 employees and is now, according to Reece who was formerly with Hotwire, the largest e-commerce provider for ski ticketing in North America. While in the past most resorts had no such ability to price dynamically online, today resorts using Liftopia technology are selling 55% of their product via the Liftopia platform.
Setting the right expectations and the right price
So how exactly is Liftopia achieving this? For the past nine years, Liftopia has been studying consumer intent and the consumption habits of skiers. By closely tracking and analysing historical data, the firm has been able to build a pricing strategy that is highly accurate and allows resorts to give real value to the customer, says Reece. This is big data with plenty of detail action. On December 23rd last year, for example, Liftopia knows there were over 10,300 searches for tickets and 7,3% of those converted into bookings based on the pricing that was available.
“We take that historical demand data and translate it to the next season and then we build a suggested pricing strategy for each day of the season based on the unique attributes of the resort, the region and so on,” explains Reece. So while the Christmas week is a peak period, for example, Christmas day is off-peak day and the pricing strategy should reflect that. What the firm also does is have various pricing structures for each day of the year that scale up as more tickets are sold.
“Today resorts are using our pricing methodology to help influence purchasing behaviour and to encourage people to purchase in advance,” says Reece. This helps them to forecast their business more effectively, such as how many staff they should employ on any given day.
For Reece it is really important to set good expectations. “Customers must know that this is the price right now and that they will not get a better deal, and if they wait it will likely go up,” he says. There should also be clear information about cancellation policies and so on. By doing so, the whole ski system becomes more educated about what a price point is and that is likely to give them more confidence to book in advance in the future.
Mobile but not at the expense of the desktop
Like many other travel companies, Liftopia is seeing huge jump in mobile traffic and also in mobile bookings. However, the desktop still leads the way, which is probably more down to the fact that ski vacations tend to be higher value transactions that are planned in advance. However, while mobile conversions trail desktop conversions that is not to say that mobile isn’t a priority for Liftopia. “We are doing a lot of user experience testing in the lab on mobile and a huge focus is to continuously iterate on the mobile booking experience relative to the desktop experience,” says Reece. This means looking at product design and development and also finding pricing strategies that make sense for the mobile booker. In other words the inventory on mobile – which tends to be booked two to three days out – must be relevant.
Reece is quick to point out though that being mobile first should not be at the expense of the desktop. “A lot of folks are developing mobile first right now but we need to remind ourselves that a mobile first mentality doesn’t mean desktop is bad. Any mobile strategy must ensure it serves the desktop customer as well because this is a big part of the business,” says Reece.
On personalisation, Reece also takes a contrary view. “In the short term we are trying to do more personalising on resort side to ensure any strategies are unique to their own particular attributes,” he says. Why? Because only once you have the inventory quality right, so that you are able to sell the right product at the right price and time, are you then able to target the individual with a highly personal offer. For Reece it’s about taking “a broad sweep approach before getting too granular,” he stresses.