Choosing the right ancillary revenue strategy

Apr 21, 2009

Exclusive: Eurostar and Expedia on ancillary revenue strategy

Published: 21 Apr 2009

Exclusive: Eurostar and Expedia on ancillary revenue strategy

For a supplier, any discussion of ancillary revenue should also include a realisation of how the core revenue is being sold.

It is also imperative to assess how the staff should be involved in order to add such offerings to the core product. Any supplier can sell ancillary items, but it shouldn’t be without an overall retailing strategy.

Travel suppliers need to consider the relevance of such offerings.

“Travel suppliers are looking for ancillary products that are relevant to their customer base, and not to alienate customers or create conflict with the sale of their core products,” says Georgia-Lee Cleland, E-Commerce Ancillary Revenues Manager, Eurostar.

The benefits of ancillary income vary across travel suppliers, for some it is an additional income rather than a substitute for loss of a core revenue stream.

The industry has gathered a fair bit of understanding of what clicks in this arena.

“The maturity ancillary revenue now has within the industry means there are key learnings as to what can work effectively and not just for the airlines but for the other travel suppliers as well,” said Cleland.

Seamless integration

Travel suppliers, especially airlines, in some cases have decided to extend through partnership.

For example, airlines often outsource the sale of non-core items such as car and hotel, partnering with OTAs. Then, they extend themselves on things like the sale of premium seats, checked baggage, and even lounge access.

Today successful suppliers need to fully integrate their ancillary partner seamlessly into their website, offering customer the ability to add ancillary products either as individual components or fully integrated as a dynamic package, says Cameron Jones, director of business development EMEA, Expedia.

“At the Expedia Affiliate Network we have helped our partners enhance their retailing strategy with our dynamic packaging technology. Some of our key partners have experienced up to a three-fold increase in revenues after implementing the Expedia Affiliate Network dynamic packaging solution,” said Jones.

Partners must ensure that the ancillary product is integrated throughout their retailing strategy from marketing communications to all customer touch points including the offline channels.

“Getting this aspect of the partnership right is just the beginning though, as the integration also needs a high level of relevancy not only from a perspective of supply and demand matching but also from a customer purchase lifecycle relevance,” said Jones.

Trust

Customers want the product they are buying to work before they will trust a company for buying other services. A big part of making this work, especially if the company is 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 doesn’t know what additional services the businesses are offering.

Eurostar’s Cleland said its really important for the additional services you offer to have a good visibility and understanding internally.

“Ensuring staff understand how the service works is critical. Providing educational incentives with key staff experiencing the products or services is worth the time especially for those dealing with customer enquiries,” she said.

“Lastly, co-funding bonus incentives with suppliers of the services for sales staff from experience has a really positive impact on income. Eurostar has jointly invested in both bonus and educational incentives for staff working on ancillary products, which has resulted in increased sales during the bonus incentive period, and increase sales post educational,” said Cleland.

According to Jones, travel suppliers need to align their ancillary revenue strategy with their strategic objectives and management support is important in helping an organisation drive sales through ancillary products.

“Clear expectations and targets need to be set from the top down to measure and reward success. At the Expedia Affiliate Network, we work from the ground up with our partners leveraging their market knowledge with our retailing and marketing expertise to ensure the integration maximised the potential,” said Jones.

“We have found our partners learn quickly the benefits of adding all of our products when their staff also uses their site to book their own travel,” said Jones.

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Choosing the right ancillary revenue strategy

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