Thinking like a retailer
Retailers have developed sophisticated merchandising techniques to better serve their customers. Providing travel services demands airlines to have a deep understanding of the travellers’ needs and desires, and services offered should be targeted to meet both practical needs and emotional desires. At the same time it is vital that travellers feel that they are deriving value from the additional services offered, rather than being exploited. Based on the industry report “Thinking like a retailer: Airline merchandising” by Frost & Sullivan, we have summarised the key merchandising techniques used by airlines today.
- The importance of timing during customer journey
Timing during which the customer journey is made is the first consideration because travellers are more open to offers at certain stages of the journey. This usually happens during the booking stage and 48 hours before departure. While the booking stage is the ideal time to approach the traveller with bigger travel related choices and decisions that require thought and comparison, such as hotels, insurance and entertainment, two days prior to departure is when travellers begin to focus on airport parking, transfers, luggage and other logistics of their trip. Many travellers are also open to receiving offers when they are back home, considering their next trip. Very few airlines are currently using this opportunity, especially with frequent travellers.
- The importance of merchandising techniques
Timing combined with the appropriate merchandising technique will optimise customer engagement. Merchandising techniques can be grouped into three categories:
1. Offer creation and packaging
2. Customer contact
3. Value and usability
- 1. Offer creation and packaging
The key is to offer simplicity and choice. Therefore, clear communication of the value of the offer is vital. Simplicity could mean a bundle of services that improve the travel experience, such as reducing waiting with priority security, priority boarding and airport transfer.
Subscriptions are a pricing model whereby a single service or group of services is offered for a monthly, yearly or seasonal fee. Subscription packaging offers value to some business travellers and frequent flyers because the value of a subscription is tied to frequency of use.
- 2. Customer contact
The way in which the traveller is approached with the offer is sensitive, and there is a fine balance between relevant customer contact and one causing irritation.
Out of the customer contact techniques, context-aware email and push notifications are the most effective.
Context-aware emails use a technology which incorporates various information about the mobile user, such as the user’s current location, to provide more relevant offers or services. An example of a context-aware email could be a real-time flight schedule update.
Push notifications isa permission-based mobile application customer communication technique and an important marketing channel. According to the report, push notifications are responded to 3 times faster than emails.
- 3. Value and usability techniques
Value and usability techniques are designed to improve conversion by providing clear value and ease-of-use. User interface optimisation is therefore the cornerstone of any merchandising strategy. It is also the single most important driver of conversion – upto 10-20% – and an important tool for brand-building.
- The importance of channel
With the emergence of mobile as a direct sales channel, airlines now have the ability to reach travellers at every point during their journey. Despite the increased importance of smartphones and tablets, travellers still prefer to use PC to purchase additional services. The report does do not suggest that the PC will always remain the most important channel and that travellers are reluctant to use other channels. Although, it is critical, when designing a merchandising strategy, to understand the different purchasing techniques to different channels.
While tablets, that are gradually replacing laptops, are the ideal channel for more complex and expensive purchases, such as rental cars, hotels and travel insurance, the smartphone can be used as an efficient channel to offer for instance cheap and simple airport and flight services.
- Using personalisation to drive sales
As airlines begin to move deeper into the end-to-end travel experience arena, personalisation becomes even more important. By collecting and analysing more and more traveller data, such as user preferences, social connections, rental history and other web footprints, airlines will be able to use this information for targeted merchandising offers.
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