If you knew what your peer group was doing, would you be more inclined to book that extra legroom or upgrade to upper class. Tom Bacon thinks so

Pick a peer group – your neighbours, friends or co-workers.  Say they all are taking a certain action (keeping their lawn nicely maintained, taking interesting vacations, getting into work by 8 am).  If you choose not to follow their lead – why is that?  You can certainly choose to act differently but you probably have to justify to yourself why you have chosen a unique path.

Amazon has effectively created a new peer group for you – readers of similar books.  This is not very meaningful if the book is too widely read but it can be quite useful for The Causes of World War I or Architectural Records of Early Christianity.  If you read and liked a narrowly focused book then you might be interested in the habits of others who enjoyed the same reading.  So when Amazon advises you that ‘Many readers who selected XYZ also read ABC’ it might carry some weight.

Effectively, Amazon becomes a ‘friend’, a trusted resource on its own.  Currently, more often, airlines are regarded as the opposite – a source of suspicion that will more likely take advantage of you than ‘help’ you.

Merchandising in general works hard to find such peer groups whose recommendations have meaning.  Celebrities you trust or would like to be more like.  Busy moms.  Road warriors.

Likewise, airlines should consider applying this type of merchandising to airline ancillary services – particularly now that ancillary services have proliferated to the point that they have become difficult for customers to stay on top of or to fully understand.

For example, would it change your behavior if you knew that:

• Most families checked bags and purchased pre-reserved seats and onboard video?
• That they paid for two or three checked bags and three video screens for a family of four?
• Customers who bought their tickets more than 45 days in advance tended to also elect travel insurance?
• Customers who searched flights a month in advance but didn’t book within three days ended up paying $120 more on average – and then regretted their delayed purchase?
• Many business travellers bought a bigger seat, a drink and WiFi?
• Business travellers who saved money with a 14AP fare often ended up changing the ticket for $200, negating their savings versus full fare?
• Frequent flyers using their miles for international travel tended to pay for an upgrade to business class?
• Frequent flyers with over 50,000 miles in their bank are choosing to take advantage of a special reduced-mile award travel period this fall?

We often seek a simple way to navigate through transactional complexity; models of ‘normal’ behavior can give us such a helpful guide, whether it is to bravely expense additional service fees ‘because everyone is doing it’ or as a way to feel we haven’t been ‘taken’ by new fees.

Airlines could determine the appropriate ‘peer group’ by:

• Characteristics of the base fare selected (how far in advance, rules, amount, how many travellers are in the group)
• Base ancillary features selected (business travelers who bought x tended to buy y)
• Your own travel history (if they have it, perhaps via frequent flyer records)
• Select trip-specific inputs (purpose of travel, etc.)

Amazon doesn’t, of course, tell us exactly how many ‘others’ selected the related reading.  Likewise, airline merchandisers need not provide all of the detail to help steer customers to the new services.  But, with guidance from one’s peer group, travellers can become more comfortable with the new fees -- and consequently feel more comfortable buying up.

As airline master travel merchandising, expect use of ‘peer group’ recommendations as used successfully by Amazon and other e-retailers.  In the new world of ancillary service fees, such recommendations can be ‘win-win’, helping travellers make sense of the fees and driving incremental revenue for airlines.

Tom Bacon is 25-year airline veteran and industry consultant in revenue optimization. 

Questions?  Contact Tom at tom.bacon@yahoo.com or visit his website http://makeairlineprofitssoar.wordpress.com/