What does purchasing experiences mean for the travel industry? There 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 behaviour and is personalising the trip experience and more importantly adding much needed revenue for the travel provider.
A better customer experience
The rail industry is starting to open up to the possibility of selling more to customers. Ticket prices can’t be pushed forever higher for fear of losing out to alternative transport modes, which means putting more focus on ancillary services is a good alternative approach. In a recent blog we learnt that Ryanair was leveraging the bundling model and using it to personalise their offer based on customer information.
According to Amadeus Traveller Tribes: Building a more rewarding journey, bundling is becoming much more widespread and sophisticated. Using customer contact techniques and a focus on the online user experience leads to a much more effective approach in creating a positive purchasing experience.
What does this mean? It means a customer-centric approach that ensures customers’ incentives to buy are focused on creating positive purchasing experiences before thinking about revenue maximisation. For merchandising to work, revenue maximisation should be second place to customer experience.
Predictive personalisation throughout the journey
Bundling has already become more sophisticated in the airline world with the use of ‘fare families’* which offer value to customers and airlines alike. Progress in big data analytics will allow railways to personalise bundles in real-time to the individual and the possibility of improving revenue per passenger using a more intelligent collection and use of customer data. 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 traveller journey extends with mobile devices and global wireless connectivity, the number of potential touchpoints 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 touchpoints 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: fare families are bundles of fares designed around specific traveller types and grouped under the same branded name.