At a recent EyeforTravel conference Tom Bacon took home some lessons from the hotel industry that could be applied to airline revenue management
It seems that personalisation, if done right, does work. This is certainly the belief of Trivago, which believes that displaying generic content for all searches – a picture of the hotel and a standard room – often misses the customer connection.
Instead, Trivago identifies whether a customer is business or leisure, whether they are looking for a room for a weekend jaunt or a week long vacation, for an individual or a family, and then, based on that assessment, offers content more appropriate for that customer type. This could a picture of the pool, an offer for faster Wifi or information about nearby restaurants or tourist attractions. Trivago claims that the display of content specific to the customer type or trip type has a huge impact on click-throughs.
In fact, a more personalised approach to hotel search, Trivago told an EyeforTravel conference earlier this year, had resulted in an 82% increase in click-throughs.
So are airlines missing a trick? It would appear so.
Airlines today still generally respond to searches with generic content and offers. But the question is: would they likewise gain an 82% increase in click-throughs from responding in a more personalised fashion?
Currently, most airlines have a generic response to flight searches with a display of alternative flights, flight times, and fares. They differ, however, on the initial search page itself – before the actual city pair/travel date is entered. Here are some examples.
A large airline displays frequent flyer offers, information about new products, and destination-specific inspiration all on one screen surrounding the search boxes.
Another legacy airline has little content/information except the basic search requirements – a simple, very focused response that is in sharp contrast to its competitor described above.
One low-cost carrier includes a generic promotion of low fares to various destinations.
Another low cost carrier promotes its’ own frequent flyer program that offers even steeper discounts.
These different approaches reflect different views of what the customer is looking for. Will he be enticed by new information about special fares or destinations or frequent flyer deals? Presumably, most customers simply proceed with the search they had intended to initiate.
None of these airlines vary content in response to the search itself. Arguably this is where the content has a much bigger impact on whether the customer actually books the flight. Once the customer has entered a search request, the airline potentially has some information to use to construct a more personalised, Trivago-like, response. Here, it is possible that the response could focus more on the fare – or on the destination – or on the product, depending on the airline’s assessment of the customer.
New role for RM
Revenue management (RM) is famous for big data and analytics – forecasting and optimising across many segments. But content management invites RM to assume a new role: managing or creating demand.
Certainly, an 82% uptake in demand for any customer segment or fare class could drive a completely different RM model. RM should team with e-merchandising to ensure that content is optimised in the same way that it already optimises prices, inventory, sell-up and s on. RM needs to analyse demand and assess the impact of different merchandising approaches across customer segments. Therefore, RM has an important role in demand management. Rather than assuming the historical demand, RM could strive to increase the demand and, when successful, modify the inventory allocations accordingly.
Here’s how airline content might become more customised:
The customer type can often be derived from the parameters of the flight search itself. Key factors include origin city, destination city, dates of travel, and number in party. Thus, the analysis is two-step:
1) Identification of relevant customer types from the search parameters
2) Selection of optimised content for that type
RM has historically been an analytical powerhouse within an airline; it can thus help validate the benefits of targeted content through statistical analysis. Application of RM’s analytical tools to create demand, rather than just forecasting demand, presents a tremendous merchandising opportunity.
Trivago has proven the booking impact of applying analytics to content management for hotels. Increased airline revenue will likewise come from a coordinated approach to demand by merchandising and traditional revenue management.
Tom Bacon is a 25-year airline veteran and industry consultant in revenue optimisation and leads audit teams for airline commercial activities including revenue management, scheduling and fleet planning. Questions? Email Tom or visit his website