Reducing friction is the cornerstone of any modern pricing strategy
Nobody wants to stand in the way of the booking, but what revenue managers should really be striving for is engagement, writes Tom Bacon
Reducing ‘friction’ in the travel planning process seems to be top of mind, if a recent EyeforTravel conference in Miami was anything to go by. By ‘friction’, we mean anything that gets in the way of a customer completing his travel-related task (planning or booking) on their website. ‘Friction’ includes slow loading speed, cluttered displays, and too many steps – all of which lead to higher abandonment rates.
Of course, pricing plays a role in reducing friction too and here are four things to think about.
- Fewer steps (ancillary clutter)
I have never purchased flight insurance but that remains a step in every airline booking I make. Really? This step is an annoyance, a source of ‘friction’ for me. Likewise, on some airline sites, the default is packages aka flight + hotel which requires me to override with ‘flight only’. The move of the industry to ancillary has unfortunately tended to add significant ‘friction’ to the booking process.
- Fewer options
Rather than offer dozens of choices, less friction would be associated with fewer, more relevant choices. Branded fares are an opportunity to display three to four bundled choices and short-circuit the plethora of combinations of choices that currently exist.
- Default to speed you through (based on probabilities, most popular)
Defaults based on probabilities (most popular) would help the majority of travellers. Defaults need to be customer oriented, not necessarily revenue oriented, to minimise ‘friction’.
Ultimately, of course, we seek personalised experiences. Ideally, the choices and the defaults are based on each individual traveller’s specific situation/needs.
- Frictionless vs engagement
The opposite of ‘friction’ is not necessarily ‘frictionless’. What travellers really seek isn’t necessarily a quick, efficient experience; rather they wish for true engagement. Engagement could mean more time spent on your site! Friction is a distraction, getting in the way of making the sale. Engagement is the customer actively choosing to spend more time on your site, seeking more services or more value.
For pricing, engagement includes:
Full transparency: Easy, clear descriptions of services and rules need to be easily accessible. In fact, if it can’t be easily explained, it’s too complicated and you’ve probably lost that customer. On the other hand, if he can access the relevant information easily, he will potentially dig deeper.
More search options: Most travel sites offer multiple ways to sort flight options in addition to a default. Customers appreciate this flexibility and will play around to find the best flight based on the combination of factors important to them on a particular trip (price, departure time, arrival time, date, nonstop, select airline, etc.)
Ancillary descriptions:To promote sell-up, engaging descriptions of optional features should be available. Big seat, onboard meals, and expedited boarding are examples of typical sell-up features that lend themselves to merchandising techniques– including visuals or testimonials that can provide an emotional appeal.
The right time: An offer is ‘frictionless’ if it appears at the wrong time, when the customer isn’t ready for it. The same offer becomes ‘engagement’ when it appears at just the right time.
- Links to related material: Allegiant Airlines provides a merchandising platform on its site that includes ground transportation, hotels, and events, in addition to flight information. Allegiant has partnerships with most of these other companies that drive revenue for allegiant even if the passenger doesn’t book a flight.
With increased complexity in pricing – and more ancillary fees, in particular – friction is a significant concern. Pricing that results in abandonment due to confusion or continuous postponement of travel decisions will not meet an airline’s revenue goals. Thus, reduction of friction must be a key element of any modern pricing strategy.
On the other hand, pricing can actually offer a positive role in customer engagement by providing clear value add – helping the traveller efficiently find an experience that best meets his needs.
Meeting the customers’ total needs is ultimately the goal of pricing and new ancillary services can certainly help meet this objective. But pricing must continue to work creatively to overcome the ‘friction’ often associated with the new fees.
Tom Bacon is a 25-year airline veteran and industry consultant in revenue optimisation.