Travel is a competitive market and there are some dominant forces at play but there are ways to compete, writes Pini Yakuel
The online travel industry is thriving. According to eMarketer, in 2016 online sales cumulatively generated $565 billion, and that number is projected to swell to around $820 billion by 2020.
The growth in travel-related businesses over the last few years has created another interesting phenomenon – the domination of two big players. Last year, 80% of all hotel bookings in Europe came through just two websites: Expedia and Booking.com.
Big players often don’t have the time to pay attention to the small customer
At the same time, Airbnb, the short-term lodging broker, has become a force to be reckoned with, and poses a very real threat to hotels and holiday rentals. These companies are doing to travel what Amazon has done to retail – they are shaking up the market and rebuilding it around their service. The result is a market increasingly dominated by a relatively small group of big players, with tons of small players trying to play catch up.
The good news is that the big players often don’t have the time to pay attention to the small customer. From our vantage point, we don’t see the large OTAs doing much in the way of personalisation, and this is where smaller firms can really stand out.
7 top tips
Let’s be honest though, it’s not an easy environment for smaller brands but by carefully using data to make highly personalised offers, it is possible to eat into the big players’ market share.
1. Create an emotionally intelligent, personalised market
Small companies must make offers that add value to the individual. It’s always been important to foster customer loyalty, but today it may well be the line between success and failure.
2. Know your customer
To stand out, providers must prove to their customers that they are understood and that their wants and needs will be accommodated. By using insights from customer data, brands can offer a relevant and personalised service and a convenient user experience that accurately matches their needs.
3. Promote relevant offers
Marketing communications often fall short by promoting options that customers are disinterested in. Another big no-no is to continue to make offers long after the travel has been booked. Brands can, and should, carve a space for themselves and charm customers.
4. Understand patterns and tailor the offer
Optimove has found that customers who spend a long time planning holidays and researching competitors spend more once they book. In addition, customers who take longer to make their first booking after registering with an OTA make higher-value purchases. Brands who understand patterns like this can tailor their offering to different kinds of customers, such as by offering cautious big spenders a VIP package.
Customers who take longer to make their first booking after registering with an OTA end up making higher-value purchases.
5. Use data to start a conversation
Businesses can do far more with data to target customers: using data to find ideas for conversation starters can engage each customer and keep them coming back.
6. Divvy up the customer base
By using key data to divide the customer base into different groups, brands can deliver specific promotions and rewards to target different types of customers. Depending on personal taste and how customers respond, using data alongside retention tactics like this can find the best kind of offer for each person to keep them coming back.
7. Focus on loyalty
In both retail and travel, customer loyalty is not what it used to be. In an online world with less human interaction, customers are attracted and retained only through a constant exchange of value. So, when large travel companies abandon customer service, they reduce the value they offer to customers, and invite the competition in. Herein lies the opportunity; contender travel businesses need to find what ‘value’ really means to each customer. By using data insights to adapt communications to different types of customer, businesses can compete with larger companies and offer a distinctive, tailored service – the perfect fit for every customer.
Pini Yakuel, the CEO and co-founder of science-first relationship marketing firm Optimove. Optimove Data Science Team Leader Roni Cohen will be speaking at EyeforTravel Europe
June 2018, London