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Looking for ancillary revenue? The bundling era for rail

July 12, 2016
Author: Eve-Marie Morgo

What does purchasing experiences mean for the travel industryThere is much discussion on the evolution of merchandising in the travel industry and how it is evolving.

Ever since the low-cost carriers took-off with a model of unbundled services we once took for granted, there has been a new strategic move across the travel industry to offer more services as add-ons during the purchasing process. This model focuses on customer behavior and is personalizing the trip experience and more importantly adding much-needed revenue for the travel provider.

A better rail customer experience

The rail industry is starting to think about selling more to customers, and putting more focus on ancillary services is a good alternative. Recently, we learned how Ryanair was leveraging the bundling model to personalize their offer based on customer information.

According to the report, Amadeus Traveller Tribes, bundling is becoming much more widespread. Focusing on the online user experience will lead to a much more effective purchasing experience. For merchandising to work, you must focus on a customer-centric approach that ensures customers’ incentives to buy, before thinking about revenue maximization.

Predictive personalization throughout the journey

In the airline world, bundling is more sophisticated thanks to the ‘Fare Families’* usage, offering value to customers and airlines alike. The use of big data in the travel industry will allow railways to personalize bundles in real-time, improving the revenue per passenger.

This is a huge opportunity for rail operators who have been forced to keep a tight control on costs whilst trying to maintain and grow revenue per passenger.

Personalisation tools are already becoming more attainable and more advanced as companies begin to move data from business silos into company-wide cloud-based databases. As more data is captured from social media channels, location-based mobile services, and health data from wearables, bundling will become increasingly granular. This granularity means higher conversion.

Let’s take an example of how this could work: in the weeks before visiting the railway application, a customer has tweeted that they are looking forward to a break from work. This information is combined with historical trip data showing that this individual has previously booked a spa day with a third-party. When this customer visits the application, a ‘relaxing bundle’ is surfaced. Such a bundle would be perfect for the Simplicity Searcher tribe.

The launch of new sales channels is becoming the norm

As the traveler journey extends with mobile devices and global wireless connectivity, the number of potential touch points becomes virtually unlimited. Previously, the customer contact environment included the railway website and possibly email, and Twitter, that’s about it.

The environment is already becoming more complex, with push notifications, context-aware emails, and social media channels. Airlines are beginning to integrate these touch points in the event of a crisis or delay. We must not forget however that quality of information is key and perception of the airline or railway as a trusted source will be essential to avoid confusion and frustration during the journey.

To conclude, if railways become more effective retailers by evolving their offer, including both ancillary services and fare families, they will for sure improve profitability as the end result.

*Fare families: bundles of fares designed around specific traveler types and grouped under the same branded name. 

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