June 2018, London
Could regulatory barriers put paid to personalisation?
Tom Bacon considers the impact of new regulations, like GDPR, on online travel and reports back from Miami where Wyndham Hotels shared personalisation insights
Most e-merchandisers today see increased personalisation as a double whammy – a way to drive more revenue, while better meeting customer needs. Travel companies, like e-tailers in general, strive to replicate the success of Amazon and other leading e-merchandising companies in their businesses.
However, new regulations designed to address privacy concerns and misuse of personal data by companies may put up barriers to e-merchandising.
- Facebook has faced new scrutiny after it became known that its data on users had been shared and misused.
- ‘General Data Protection Regulation’, or GDPR, specifying how personal data on European citizens needs to be maintained and used by corporations, becomes effective this month. The regulations limit the personal data that can be stored, imposes additional hurdles on how customers may grant permission to use of their data, and requires greater transparency in how such data is used. Travel companies marketing to European customers – like all businesses targeting Europeans – need to comply.
- Multiple organisations worldwide are investigating possible regulations like GDPR to apply in their countries.
- In the US, specifically in the travel industry, Senator Chuck Schumer of New York has asked the Federal Trade Commission to investigate potential use of personal data that can be made available through IATA’s ‘New Distribution Capability’ to personalise airline pricing.
So, how do actual or possible regulations impact the industry’s efforts to increase personalisation? Arguably, some regulations - key aspects of GDPR, for example - should be embraced by travel suppliers, as a roadmap toward their personalisation goals.
The tricky 10%
A survey by Boston Consulting Group (BCG Big Data and Analytics survey, 2016) found that 90% of customers think using individual data to personalise services is beneficial and embrace this type of merchandising. Presumably, these customers see the value of Amazon and want similar personalisation in other sectors. But that still leaves 10% of customers who said they do not approve of companies using their personal data to deliver more personal offers. Arguably, the GDPR regulation focuses on the 10% minority with its new restrictions. From a legal standpoint - but also from a business standpoint - e-merchandisers need to acknowledge that this group is defining how they wish to be treated online – and that this is what personalisation is all about! So, in this case, addressing their concerns, meeting their needs, means more limited use of their data. Of course, based on the survey, we also need to continue to embrace personalisation – most customers understand the value of more individualised treatment. Consistent with this, the GDPR allows personalisation if the customer unambiguously opts in.
The GDPR mandates transparency. But again, transparency is a business imperative and not just a legal requirement. At the Eyefortravel Smart Analytics conference in Miami, Venkatesh Sharma, Director, Inventory and Pricing at Wyndham Hotels, and a leading expert in e-merchandising, spoke of how his company already personalises offers to its customers; in response to searches, Wyndham presents choices to individual customers based on an analysis of their travel history or their unique profiles.
Offering such ‘personalised’ alternatives was not enough for many customers; many travellers didn’t automatically make the link between the choices offered and their actual needs. Many travellers were baffled, and actually turned off, by the choices presented. Wyndham is striving to offer transparency along with the recommendations – the customer is advised why the alternatives made the cut. Such transparency is consistent with GDPR, but Wyndham was focusing on customer needs rather than any regulatory requirement.
Personalisation is a conversation
Wyndham has concluded that personalisation requires “having a conversation with the customer”. The customer should understand and be able to respond to personalisation. Rather than rely on an algorithm to ‘personalise’ offerings, the relationship with the customer needs to become a conversation, an ongoing dialogue. Personalisation must build in customer engagement and responsiveness to all customer inputs on an ongoing basis.
The basic mandates of GDPR, and the concerns of most protectors of personal data, are consistent with true personalisation and actual improved customer service. Although the specifics are important, and legislators should likewise be open to changes that further improve customer experience, more generally, the proposed legislation can help both e-merchandisers and customers.
Tom Bacon has been in the business 25 years, as an airline veteran and now industry consultant in revenue optimisation. He leads audit teams for airline commercial activities including revenue management, scheduling and fleet planning. Questions? Email Tom or visit his website