Focus on your retailing strategy before selling ancillary items
Published: 28 Jul 2008
EFT Ancillary Revenue in Travel 2008 Special
Ancillary revenue is surely a proposition which airlines seemingly can't do without especially when companies are constantly working on covering all of customers' travel needs and keep them loyal by packaging additional content.
But what approach do suppliers specifically airlines need to take before joining the bandwagon or expanding their bouquet of offerings?
From an airline's perspective, Charlie Sultan, Managing Director- Sales Planning & Analysis, American Airlines, says, "Any discussion of ancillary revenue, should also include a realisation of the how the core revenue is being sold. Any supplier can sell ancillary items, but it shouldn't without an overall retailing strategy."
"If you don't understand your core offering and have that business working soundly, then trying to offer ancillaries will not only make it difficult for you to execute internally but it will confuse your customers," according to SeaMountain Director Michael Smith. "It is very, very, hard to sell ancillary products if you can't make the planes run on time or deliver bags safely to their final destination."
"What fits with your own core brand? If you brand proposition is cheap and cheerful then offering hostel accommodation will likely be relevant to your target market. If, however, you are offering a premium service then clearly this is less likely to be a good offering for your potential customer," shared Smith.
Smith recommended following check points as far as the do's and don'ts in Ancillary Services Selling are concerned:
· Customers want the product they are buying to work before they will trust you to buy other services. A big part of making this work (especially if you are a legacy carrier) is to involve your own staff in designing, developing and delivering the offerings. There is nothing that will sink efforts faster in this area if your own staff don't know what additional services the business are offering.
· Ancillary services can be divided into three main area – what is traditionally called non ticket revenue as a la carte services (like charging for extra leg room seats), frequent flyer mileage sales and commission from third party services. Which of these to concentrate on again depend on (a) your fundamental brand and customer profile (b) your customers expectations – a BA will have difficulty (and they tried) to sell food onboard for example – of the product (c) mix of direct and non direct distribution and (d) systems and practical implications of being able to offer them. For some items, remember that other suppliers have the skills and expertise that an airline doesn't have and they should not try to do everything themselves. Therefore, careful evaluation of suppliers with whom to build partnerships with is also vitally important
· Do consider where the risk of implementation lies and where/how a customer will interact if (and when) things go wrong. For example, where a passenger has bought a hotel from an airline who do they contact for items like refunds/complaints?
· Do understand the relationship(s) with the customer. Not so much who "owns" the customer relationship (although that is also important), but who and how to deal with them. An airline with an upmarket brand image might find it difficult to have their customers dealing with, say, a 1 star hotel property.
· Do prioritise – you can't do everything well overnight.
"As far as partnership decisions go, that again depends on the overall strategy of the airlines. For some companies doing individual deals with a number of partners (for hotels, car hire, travel insurance etc) gives them some advantages. For others, arranging a deal with the likes of the white label side of Expedia gives them advantages. Many of the implications of which route to take are addressed in some of the do's and don'ts listed above," said Smith.
Ancillary Revenue in Travel USA 2008 Conference
EyeforTravel is scheduled to conduct Ancillary Revenue in Travel USA 2008 Conference in Las Vegas on 1-2 October 2008.
click here:
http://events.eyefortravel.com/tdsusa/ancillary/agenda.asp
or contact:
Helen Raff, VP North America
Email: helen@eyefortravel.com
Tel: +1 773 929 4032
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