Fostering a feeling of shopping in a “travel supermarket”

Exclusive: From defining to positioning ancillary strategy

Published: 11 May 2009

Exclusive: From defining to positioning ancillary strategy

Travel suppliers have adopted a varied approach to ancillary strategy, with differences originating from the way ancillary revenue is defined within various organisations.

Generally, ancillary services are categorised into three main areas – 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 depends on brand and customer profile, customers expectations, mix of direct and non-direct distribution and systems, and practical implications of being able to offer them.

For some additional products, airlines might not have the skills and expertise. In such cases, a careful evaluation of partners with whom to build partnerships with is also vitally important.

Niki van Wijk, VP - e-commerce, Transavia, says considering that all travel suppliers aim to increase their turnover, due to decreasing yield on their core products, it is vital to assess how to “position yourself”.

“Do you sell those products in the slipstream of selling your core product or are you going to position yourself as a travel brand offering a broad set of travel products? transavia.com has chosen the primary strategy. Our ancillary products should be logically related to air travel and are sold as a “service” to our customers,” said Niki.

Referring to the definition of ancillary revenue, Niki said there is a need to differentiate between the core product-related ancillary revenues and additional travel-related service such as car hire, accommodation etc. “Some airlines have chosen to reduce their core product to minimum, whereby the customer buys extras such as luggage, seats, check-in etc. And other airlines have included 20kg luggage and free check-in.”

For its part, Transavia believes that selling products such as car rental and hotel should be done in close cooperation with specialised partners. “However XML technology allows us to integrate those products to a certain extent, therefore creating a logical and more relevant product offering,” she said.

Learning from experience

Eyeball tracking studies combined with advanced website analytics are important in delivering effective placement recommendations. However, just as important is learning from experience and many trials and tests.

“Eye ball movement is not always indicative of click behaviour. Eye tracking data in conjunction with click stream data will yield the best insights into customer behaviour,” said Cameron Jones, director of business development EMEA, Expedia.

“Small tweaks in marketing messages/copy and relevance of placements can have enormous upside for driving incremental transactions. There is a critical list of key placements that we at the Expedia Affiliate Network know will drive conversion the minute they are implemented so we look for these when we first audit a new partner’s site,” added Jones.

Niki added that understanding a consumers purchasing process is key to optimising conversion.

“With these type of analytics it allow us to better position additional products throughout the website / process, therefore being more relevant to consumers and thus generating more sales,” she said.

Online travel portals have an edge in this domain, says Arthur de Perthuis, director, Experts Marketing.

“Each area of the website is considered as a space to push conversion or cross sell products and traffic analytics help to avoid the drop out. Conventional evaluation methods such as web analytics are great for identifying problems with a particular website, though they provide little information about why these problems occur,” he said. “Therefore, the usability testings combined with eye ball tracking will be key to finding the best approach to adopt in order to grow the conversion rate. From an ancillary point of view, being on an airline website should be viewed as a customer making his shopping in a “travel supermarket”.”

Transparency

There is a definite, measurable increase in revenue from offers that allow a guest to customise their plans. For instance, in case of hotels, customising stay – pre-ordering amenities, requesting room upgrades, booking spa appointments before arrival, etc.

At the same time, it is believed that the results of personalisation, however, are a bit harder to pin down, and those initiatives can be detrimental if the company does not obtain permission from the guest.

“We believe that transparency and thus permission is key to our brand. So whatever we are offering should be clear to a customer, not intervening with privacy regulation. However, personalisation can work if it is clear to the customer that they will benefit from providing details about their interests to receive good and relevant deals. And that will indeed increase revenue further. However, that requires smart technology, to be able to generate those “personalised” offers in a cost effective way,” explained Niki.

Related links: Ancillary strategy

Ancillary Revenue in Travel Europe 2009 Conference

EyeforTravel is scheduled to conduct the forthcoming Ancillary Revenue and Partnerships in Travel Europe 2009 Conference in London (May 19 -20) this year.

For more information, click here: http://events.eyefortravel.com/ancillary-revenue/agenda.asp

Or

Contact: Gina Baillie
Regional Director, Europe
+44 (0)207 375 7197
gina@eyefortravel.com

Related Reads

comments powered by Disqus