Marketing is becoming more quantitative and more consumer-centric but there is a long, long way to go in the travel indu
Published: 31 Oct 2005
Marketing is becoming more quantitative and more consumer-centric but there is a long, long way to go in the travel industry, feels Brad Corrodi, SVP, Rosetta Marketing Strategy.
"There was a time when the airline-subsidised agency so dominated the
information flow to the consumer at the point of sale that it did not
make sense to try and measure much about your marketing - after all, the
agency was unlikely to be able/willing to tell you what really made the
consumer walk in their door. That time is gone. With the proportion of
trips that are researched on-line, and the sophistication of phone/CRM
systems - there is no reason why travel companies should not become as
sophisticated as credit-card companies in understanding what is working,
with whom, and why. Few travel companies even know the distinct
attitudinal segments that exist in their market, let alone aligning
brands and messaging against those segments and measuring awareness
through response and close rate within the segments that actually
matter," says Corrodi.
Corrodi shared his viewpoint on new trends and operations of the company
with EyeforTravel.com's Ritesh Gupta ahead of Travel Distribution
Technology 2005 scheduled to take place in London this month. Excerpts:
How do you assess opportunities for a company like yours in today's
travel market?
We look at where the marketing spending is going, and who is making the
investment in understanding how different consumers buy travel.
What have been the major developments for your company this year?
We have completed Personality-based segmentation of the cruise, leisure
and business hotel markets as well as typing tools that predict
consumers Personality in each category. There are 4-7x differences in
customer value, as well as "night and day" differences in what drives
their decisions.
What major trends have you witnessed as far as customer retention and
satisfaction (in travel market) is concerned?
Several of the major players have gotten more serious about
understanding the drivers of satisfaction and retention - rather than
just giving retrospective compensation on volume of purchase. A few
have gone so far as to re-organize to improve share of wallet -
Intrawest's Leisure Travel Group comes to mind, as well as IAC's efforts
to broaden the product offering. But few, if any, have really grasped
the nettle of understanding the core consumer beliefs that drive the
portfolio of travel occasions that a given consumer is likely to
purchase against.
With consumers having variety of options to choose from suppliers,
intermediaries, search engines etc, what should be the focus as far as
investment in consumer-centric technology is concerned?
As indicated above, the first investment really should be in consumer
insight. Unless you know who you are targeting, and what your target
segments tell you about what they buy and why they buy, all of your
investments in content, site features, etc. is really just "spray and
pray".
With the basic targeting insight in hand, the 'gap' in technology tends
to be in content management. Many content management vendors are just
re-branded document management companies, so there is a lot of confusion
about what the most important content management capabilities are. From
my perspective it is quite simple - if you watch a salesperson selling a
suit, they do three things - they create a consideration set the three
different suits hanging on neighbouring hooks that "brackets" what the
consumer asked for in terms of price and features, they get you to try
them on visualising the sale, and they talk about the alternatives IN
THE WORDS YOU USED to describe what you were looking for. So the same
suit gets sold to different people, bundled with different combinations
of tie/socks/belt, based on a discussion of quite different features and
benefits in each case.
Travel companies still approach content like they were loading a GDS -
does the room have a view, check yes or no. It is a fundamental change
to realise that you need your systems and people to be able to talk
about the same room in different ways to different people. Our research
suggests that for a significant subset of the market you actually don't
want to talk about the room at all - you want to talk about the location
and how convenient it is to where you are coming from and where you are
going.
These investments in "consumer-centric merchandising" are actually
valuable across all channels - you get a better return on your
search-word purchase when you know what attitudinal-type of consumer is
likely to come in from that sort of search, and closing 50% more of that
'flow' by merchandising to them appropriately. Similarly, an
intermediary can thrive by using their contact with each consumer across
a wide range of travel occasions to build up their reputation with the
consumer as being "relevant" - rapidly and effectively recommending
product that is "fit for purpose" in each case.
With studies showing that requests for personal information deter
customers, how can you obtain the greatest amount of CRM data from your
online customers?
It is about quality of information, not quantity. And being sure that
you know what to ask for in advance, keeping it to the bits that are
most concentrated/predictive of how the consumer wants to be served, and
acting on them in a way that transparently delivers relevance, ease of
use, recommendations that are fit for purpose. The objective in each
case should be to build an ongoing, productive dialogue, and that means
doing your homework before you ask the consumer anything.
Are there new technologies that can make personalised selling more
effective and easier to implement? What are the major pitfalls?
There are good new technologies, but as above, the biggest pitfall is to
rely on technology to somehow automatically "learn" the consumer
insight. It doesn't work. And the results can be worse than doing
nothing. Most automated systems rely solely on consumers past
demonstrated behaviour - what did they buy before, what did they click
on, who else bought something similar.
But past behaviour doesn't tell you why someone did what they did before
- and "more of what you did before" tends to be pretty transparent to
the consumer, and not perceived as adding much value. To be able to
deliver relevance, you have to be able to understand and type the
consumer's "Cruise/Business Hotel/Leisure Hotel Personality" - which
captures the essence of how they think about the category, why they are
even considering the trip - only then can you infer what
product/message/offer is likely to feel like you are helping the
consumer do what they want to do.
A very simple example is buying gifts on Amazon - they had to add a
kluged check box "exclude purchase from my profile" because anyone who
bought a friends child a book found the Amazon product recommender
stubbornly insisting that people like them liked Miffy and Maisy. TiVo
suffers from the same problem.
What do you think are going to be major trends as far as marketing is
concerned?
The trends are already here - the biggest on-line players are already
far ahead in tracking their marketing effectiveness quantitatively, and
in tuning merchandising of different products to different types of
people to drive close rates and sales.
The big suppliers have gained some ground back by re-asserting control
of their brands and through price guarantees, but have a ways to go in
targeting and tuning their marketing and distribution spend - it is only
as consumer reach has gotten much more expensive - bid up by the players
who are most effective at closing sales from particular sources - that
they have realised that they have to be much smarter about paying only
to put the products most likely to sell in front of a given consumer,
which applies to their advertising and promotion as well as to what they
pay for search words or placement on a retailer's "front shelf.
Over the longer term, the market will essentially split - with the
bigger, sophisticated supplier groups learning how to reach and sell
their target consumers cost-effectively - and the less sophisticated
will be squeezed back into an "just operate the
property/ship/airplane/service" role, and forced to pay 20%-30% of
retail price to one of the skilled intermediaries that have the insight
and tools to know who to sell their product to, and how to reach them
cost effectively. This trend is already evident across other categories
from private-label food suppliers to power tools.
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