This week’s grounding of Monarch Airlines, a victim of multiple factors, not all of which were under its control, has shown that the airline industry remains highly volatile.
Market conditions, global security, eco-concerns and other challenges continue to confound travel businesses. In the face of so many factors they can’t easily influence, travel brands need to make sure they’re delivering the best possible experiences in the areas they can control.
In travel, as in most commoditised industries, it’s long been recognised that adding layers of service and additional value is the best way to differentiate a brand against its competitors. At the high end, travel brands are basically saying “our core offering is exactly the same as those others, but we’ll make you feel more special than they do”.
The low-cost end of the market even makes this extra layer a virtue by its absence; “if you don’t want the frills, don’t pay for the frills." Given this focus, with more and more data available, and more and more sophisticated technologies at their disposal to help use that data in delivering truly personalised experiences, it feels like, with no pun intended, the sky should be the limit for travel brands seeking ways truly to add value. And yet…
Even if a passenger is not part of a frequent flyer programme (and far more so if they are), an airline knows a lot about a passenger, over and above the basics of name, date of birth and other profile data. It knows where we travel and how frequently; what class of travel we use and which fare category within it; how far in advance we book; whether we use online or airport check-in and when exactly we do that relative to departure time; whether we use their app if they have one, whether we use their airport services (lounges, travel assistance) and more beside.
Some of this data may be used to customise the communications we receive from an airline; a different coloured header in a monthly newsletter or variation in the offers presented to us for example. Otherwise, the value exchange is essentially one-sided: airlines may use it to set fares and to balance revenue across the available seats on a flight, or for route and capacity management – all of which is valuable to them. But you and I, the customer, don’t see much return on that data exchange – it’s not in the flight and service themselves; the price of the ticket covers those.
There’s also potentially much more data that could be added to a profile, and therefore used to create value, through existing channels or in some cases by adding data touchpoints during the actual travel experience and responding to that data with a personalised experience next time.
At the heart of all this is a pair of disconnects which frequently block progress towards realisation of a true ‘product plus service’ differentiating package.
Vision meets reality
First is the gap between ‘pure’ customer-centricity and the commercial realities of running many travel services. Operating costs, in traditional travel businesses especially, are prohibitively high, and financial decisions will determine whether changing a process or using data to create additional customer choice or control can occur. Travel industry observers are familiar with traveler groups’ cries of “bean counters at work!” when service features are cut, while it’s rare to hear that services have legitimately been enhanced without passed-on costs.
Equally significant is ‘the ecosystem gap’. Brands have ambitions (or at least opportunity) to add value to their product by using data to create personalised and customised experiences and extra value through service, content and utility. This creates a vision for a service ecosystem which needs to be delivered via their data and delivery platforms; their technology ecosystem. The problem for many traditional travel businesses is that the latter was not designed with the former in mind.
Data is captured primarily to inform business decisions, not to enhance service, and systems have been built to enable that process. How many seats can we sell at what price? What is our likely occupancy rate in July? Do we make enough money selling excursions to justify the logistics of running them? What is our commercial response to the answers to these questions?
Little of this, if any, manifests as a tangible improvement to an individual customer’s experience of the core product because these technology ecosystems weren’t designed with that goal. What we tell an airline or a hotel or a cruise line very rarely translates into a personalised experience unless we explicitly request it. And even then we might be charged for being the exception, because exceptions are costly in businesses where efficiencies and economies depend on predictable, replicable models.
The problem for travel businesses is that they are now in a world where intelligent use of data to create personalised and customised experiences is a basic expectation, and customers are increasingly aware of the value in the data they provide to businesses. This isn’t a Monarch problem, it’s an industry problem, but Monarch certainly didn’t show they were even on the way there.
The road forward
This is not meant to say that travel brands are fighting a losing battle, however, nor that the only way forward for them is costly technical and organisational change. (Though there’s a reason that digital transformation is on every CEO’s agenda at the moment.) But it is meant to say that properly interrogating how all this data they collect from their customers can be used to add meaningful value - through offering increased choice or control as an inherent part of their service delivery and not just as a communications data segment - should be a starting point on the road to creating meaningful value.
Then, tackling the ecosystem gap can follow based on a clear vision of what they can, and should, be trying to deliver. It’s easier to plan the route when you know your destination.
Jon Pollard is global solutions director at RAPP UK