Travel vs. Retail. How travel professionals need to think differently to engage, convert and retain customers
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1 Travel vs. Retail How travel professionals need to think differently to engage, convert and retain customers March 2014
2 Travel vs. Retail Contents Introduction #1 #2 #3 #4 #5 #6 The mobile visitor presents a greater opportunity for travel businesses The typical media mix for a travel business differs greatly to that of a retailer Site search is incredibly important for travel businesses but smarter user segmentation is required Cart abandonment offers travel websites a huge opportunity compared with retail First impressions are especially important for travel but be patient Travel users repeat purchase faster than retail! Conclusion About Qubit
3 March 2014 This report examines some interesting behavioral differences between leading retail and travel companies. It seems obvious that it is a very different experience shopping for that perfect holiday compared to buying your next pair of shoes, but just how different? It is widely known that retail and travel have different conversion rates, average order values, and paths to purchase, just by the nature of the buying process. People might spend a whole year deciding which holiday to go on, whereas few people will spend this length of time deciding to buy a new pair of shoes. For travel, this means: Conversion rates are lower. Qubit s travel clients see an average conversion rate of 0.75%, whereas retail sees an average of 5.29%. Average order values are typically higher. Qubit s travel clients see an average order value over 10 times greater than that of retail. Paths to purchase are a great deal longer. Travel purchases can take double the time compared to retail (13.2 days compared to 6.5) with an average of 9.4 pages seen per purchase. This makes the purchase cycle far more complex. 1 In this report, we ll look to understand the other differences between travel and retail websites, why these differences might exist, and how travel websites should optimize for them. 1 IgnitionOne and Google 3
4 Travel vs. Retail #1 The mobile visitor presents a greater opportunity for travel businesses Key insights Travel customers are twice as likely to browse on a mobile Mobile and tablet conversion rates on travel sites are 15 times and 10 times lower respectively than for retail, whereas computer is only five times lower! Retail conversion rates Retail traffic Travel conversion rates Travel traffic Retail CR/ Travel CR Computer 6.03% 69.75% 1.22% 67.43% 5x Mobile 2.40% 4.00% 0.16% 8.32% 15x Tablet 5.55% 26.25% 0.57% 24.25% 10x Over our sample, approximately 8% of travel visitors used mobile, whereas only approximately 4% of visits to retail sites came from mobile. Generally, visitors are less accustomed to making large purchases on mobile. The on-the-go nature of the mobile purchase means the large difference in conversion rates makes sense, as people are more accustomed to spending big on their computers. Tablets are often used for browsing in the living room, where the second-screen generation make many of their big spending decisions. The high street has become the couch. Despite this, the difference in conversion rates is still smallest for computers. It seems the oldest platform is still the most trusted and seemingly the best optimized for conversion. 4
5 March 2014 Travel companies need to work hard on ensuring their campaigns are cohesive between mobile, tablet, and computer. You don t want a less-than-smooth mobile experience to undermine that impulse holiday buy. Action Make the most of the GPS capabilities of mobile by using hyperlocal targeting to serve location based offers. This can include: Serving holiday-goers with local attractions Nearby hotels with available rooms Local car hire and taxi ranks Expedia s mobile web app streamlines the purchasing process and allows for easy browsing 5
6 Travel vs. Retail #2 The typical media mix for a travel business differs greatly to that of a retailer Key insights Pay-per-click has a much bigger part to play in travel, with traffic approximately 50% higher than for retail Travel sites are less reliant on direct and traffic but both perform better relative to retail conversion rates Affiliates, although a smaller percentage of traffic, have very high conversion rates so need to be explored further Retail conversion rates Retail traffic Travel conversion rates Travel traffic Retail CR/ Travel CR Retail traffic/ Travel traffic Affiliate 12.29% 4.65% 5.44% 0.98% 2.26x 4.74x Direct 5.03% 25.82% 1.01% 18.88% 4.98x 1.37x Display 3.45% 1.12% 0.28% 2.30% 12.32x 0.49x 5.21% 5.89% 1.90% 2.07% 2.74x 2.85x SEM 4.65% 18.68% 0.55% 34.05% 8.45x 0.55x SEO 4.12% 42.82% 0.41% 36.48% 10.05x 1.17x Social 1.87% 0.85% 1.19% 1.33% 1.57x 0.64x Vertical Search 0.35% 0.17% 0.74% 3.89% 0.47x 0.04x Average/Total 5.29% 100% 0.75% 100% 7.05x N/A 6
7 March 2014 There is quite a large difference in both the mix and performance of marketing channels between retail and travel companies. In both cases, affiliates are the highest performing traffic source by conversion rate, based on a last click model, but in the travel sector it represents the lowest amount of traffic. Retail sites seem to be doing a better job at capitalizing on the opportunity whereas travel websites are not; 5.7 times the amount of traffic comes to retail through affiliates compared to travel. In terms of media mix, travel websites rely more on display, SEM, SEO and vertical search, relative to retail, but are amongst its worst performing channels. This could be down to the fact that these channels are typically associated with upper funnel traffic, but given these channels represent nearly 75% of traffic these need to be fully optimized. Conversely, retailers rely more heavily on direct, affiliate and , which are travel s best performing channels relative to retail, where the difference in conversion rate is the most favourable. Action Use an advanced attribution model to value upper funnel activity Without the use of a sophisticated attribution model, you won t be getting the most out of all your channels. For example, both SEO and display advertising are recognized by many in the industry as being some of the most important steps in a travel website s path-to-purchase, but here they are distinctly undervalued relative to other marketing channels and retail comparatively 7
8 Travel vs. Retail Advanced attribution models, such as Qubit Behavioral Analytics, outperform arbitrary ones 8
9 March 2014 #3 Site search is incredibly important for travel businesses but smarter user segmentation is required Key insights For travel businesses, the search pages are by far and away the page type visitors spend the most time on, spending an average of nearly 7 seconds per pageview Retail visitors spend, on average, a longer time on product pages than anything else Only 24% of retail sessions use search, whereas approximately 99% of travel visits use search Mean time spent on page per URL category Time spent (secs) Content Product Home Category Checkout Search Mean time spent on travel Mean time spent on retail 9
10 Travel vs. Retail Travel websites need to be looking for upsell and optimization opportunities at this point of the purchase cycle. Ecommerce websites in general often see as many as 30% of their visits begin with the search bar, but for travel websites this may be even higher. Percentage of sessions where pagetype is viewed Search Category Product Retail 24.44% 73.26% 51.36% Travel 99.00% 51.52% 16.65% For our websites, search is by far and away the most important part of the browsing process, whereas for retail, category and product pages are the most popular. However, just because an overwhelming amount of travel site pageviews fall under the umbrella of search, this does not mean travel websites should double down on search engines. In fact, some of the forerunners may be moving away from this type of website design, as visitors are baffled by too much choice. Curating a large number of options down to a few can work wonders for conversion rates, leaving customers with a small number of carefully personalized product pages, rather than wading through the hundreds of different vacations on offer. At Qubit, we see a distinction between the utility and the experiential web the utility web refers to catalogue-esque websites such as Amazon, whereas experiential websites are 10
11 March 2014 those which focus on wowing the customer. Booking.com might be the Amazon of the travel world, but Scott Dunn for example, pushes you towards a smaller selection of curated holidays to help inspire and engage users. This approach can help the more experiential websites compete with the large utility players like Expedia or Booking.com, by harnessing their expertise and ability to hand-pick recommendations. In particular, different visitors often want different things. Consider personalizing for your users through more effective segmentation. For example, first time visitors might feel lost and appreciate a helping hand or need some inspiration. On the other hand, seasoned vacationers might get put off if you funnel them aggressively towards French mountain cottages, when what they want to do is hike in the desert. In reality you probably need to be adopting both a push and pull strategy when it comes to search. To really succeed you need to understand your different user segments and then create great experiences that specifically help them find what they are looking for. Action Utility: make your search bar prominent and include upsells in the search results, along with adding in industry specific filter functionality Experiential: curate your selection and serve your visitors with layers directing them towards your highest performing products 11
12 Travel vs. Retail Expedia bundles together flights, hotels, and car hire to encourage multiple purchases Gogobot has the searchbar at the center of its homepage, making it the site s focal point 12
13 March 2014 #4 Cart abandonment offers travel websites a huge opportunity compared with retail Key insights Travel sites have a much bigger issue with abandoned checkouts with nearly 90% of visitors leaving before confirmation, compared with only 28.4% in retail Over a quarter of travel visits end up looking at the basket, compared with only 7.38% in retail Travel visitors see product pages less than basket pages, suggesting search and category pages are the most important for driving conversions Retail: visitor purchase funnel Website visits (100%) Category (73.26%) Product (51.36%) Basket (7.38%) Checkout (4.26%) Abandonment rate: 42.28% Confirmation (3.05%) Abandonment rate: 28.40% This is a graph illustrating the purchase funnel of retail sites on a per session basis. 13
14 Travel vs. Retail Travel: visitor purchase funnel Website visits (100%) Category (51.52%) Product (16.65%) Basket (25.45%) Checkout (5.45%) Abandonment rate: 78.59% Confirmation (0.58%) Abandonment rate: 89.36% This is a graph illustrating the purchase funnel of travel sites on a per session basis. Cart abandonment has always been a real opportunity for ecommerce businesses to drive their conversion rates, and it looks like travel companies can truly capitalize on this. Travel visitors are three times more likely to look at the basket than retail. This difference is particularly striking when looking at the checkout conversion rate. In stark contrast to the 72% checkout conversion rate we see in retail, 89% of travel visitors who see the checkout fail to purchase. This implies that travel retailers need to optimize the basket and checkout section of their websites. While we would never expect travel sites to reach the lofty heights of retail (due to the higher average order values), it never hurts to dream! 14
15 March 2014 Action Use a site abandonment tool to catch your users as they leave Here is an example of how lastminute.com could engage with site abandoners in a number of different ways. Serving the right content, to the right user at the right time could have a dramatic improvement in conversions. Upsell offer Content engagement Time limited offer Upsell recommendation 15
16 Travel vs. Retail #5 First impressions are especially important for travel but be patient Key insights Travel visitors see fewer pages on their first visit than retail visitors but more in later sessions On the first visit, travel visitors convert half as often compared with retail, which is the biggest difference through the purchase cycle On average, 55% of travel visitors are new, whereas retail sees approximately 55% returning visitors Number of pageviews per session Pageviews per session Session number Travel Retail 16
17 March 2014 The fact that travel visitors browse for longer on their third, fourth and fifth visits implies that this latter period is the optimum time to target them, as they are then the most engaged. On the other hand, personalizing their experience on their first visit may raise the likelihood of them returning to purchase. Travel visitors, as we have already seen, spend most of their time searching for a holiday as if they tend to search for a destination, then decide on the package. On the other hand, this data implies retail visitors more frequently know what product category of purchase they are looking to make before they make it. Percentage of conversions per session number 25 Percentage of conversions carried out Session number Travel Retail A graph tracking the conversion activity of all users that visited the websites analyzed over several individual days. These visitors were then tracked for 31 subsequent days. 17
18 Travel vs. Retail 22% of retail conversions happen on the first day, double the proportion of the travel industry only 11% of travel purchases occur on the first day. Travel websites need to incentivize returning as much as possible, whereas retailers can still rely on a large chunk of their conversions to occur on the first visit. Percentage of returning versus new visitors 60 Percentage of total visitors Returning New 0 Travel Retail As shown above, approximately 55% of travel visitors are new, whereas retail sees approximately 45% new visitors. This is perhaps due to the effect of people clearing their cache in order to appear like a new visitor, to take advantage of new visitor deals or to avoid price-hiking scams. 2 Given that returning visitors are the most important (a very small percentage of visitors convert on their first visit), travel websites need to focus on getting people to return
19 March 2014 Action Target new visitors with welcome messaging and incentives to return. You can use any of the information you know about your visitors to target them effectively. This can include (but is not limited to): Geolocation (city, country) Entry search term Device type Browser Referrer Time (day, week, month) Additionally, targeting them with incentives to return can include such things as layers reminding them of upcoming sales or time limited deals, rewards for repeat purchases and loyalty schemes, among other things. Skift targets new visitors with a welcome message highlighting their unique selling points 19
20 Travel vs. Retail #6 Travel users repeat purchase faster than retail! Key insights Travel visitors tend to make associated purchases, leaving less time on average between their first three purchases than retail Very few travel visitors purchase more than once over a two month period, less than half of the proportion of retail visitors A greater proportion of retail visitors purchase for a second time, but with a longer time than average between them than travel visitors Mean recency between first and second purchases and second and third purchases 8 Average number of days between purchases Days between first and second purchase Days between second and third purchase 0 Travel Retail 20
21 March 2014 Type of repeat purchase behavior Retail Travel Second purchase on same day as first 20.27% 42.81% Third purchase of same day as second 19.90% 40.35% Second and third on same day as first 6.86% 23.51% Proportion of visitors who purchase twice 7.69% 3.55% In retail, only 20% of customers who purchase twice, make their second purchase on their first visit this shoots up to 40% for travel. For travel websites, these types of purchases seem to come from upsells and cross-sells. Perhaps you booked a hotel and forgot about flight reservations. Retail customers purchase for a second time more frequently, but not as quickly taking almost double the time to purchase again. This suggests that travel websites are doing a great job at cross-selling, but still need to work on their customer retention. At the same time, travel visitors seem to be more cautious, as only 3.55% of travel customers purchased more than twice over a two month period. This means that in order to drive lifetime value for each individual travel visitor, you have to maximize the number of purchases they will make over a small period of time. Whereas for retail, you should focus on bringing them back at a later date. 21
22 Travel vs. Retail Travel visitors who purchased more than once 40% 36% Proportion of visitors who purchase more than once in a two month period 24% 3.6% 96.4% Proportion of visitors who purchase once in a two month period People who purchased twice on the same day People who purchase three times on the same day Retail visitors who purchased more than once People who purchased several times but not on the same day 26% 67% 7% 7.7% 92.3% 22
23 March 2014 As seen on the previous page, although a much smaller proportion of travel customers purchase more than once, a far higher proportion of these carry out multiple purchases on the same day. Approximately 60% of travel customers who purchase more than once purchase on the same day, whereas only 33% of retail customers do this. Given that travel visitors who are looking to purchase multiple times will usually be looking for associated products, target them with the appropriate upsells to maximize your average order value. Action Merchandize based on personalized information to double up on ancillary purchases easyjet offer a variety of options regarding flight, accommodation, and extras in order to drive up average order value 23
24 Travel vs. Retail Conclusion We have long known that conversion rates and purchase cycles vary greatly between the travel and retail sectors but how to act based on these differences have been less clear. The insights unveiled in this report are not only interesting, but illustrate a clear opportunity for travel businesses to boost conversion rates by delivering customer experiences that are underpinned by data driven insights. Whether it s welcoming visitors with a hyperlocal message or optimizing search functionality, through insight into visitor behavior travel businesses can get ahead of their competition and make up some ground on retail websites. The key insights included: The mobile visitor presents a greater opportunity for travel businesses The typical media mix for a travel business differs greatly to that of a retailer Site search is critical for travel businesses but smarter user segmentation is required Cart abandonment offers travel websites a huge opportunity compared with retail First impressions are especially important for travel sites as they need to make their customers return Travel visitors repeat purchase more quickly than retail 24
25 March 2014 About Qubit Qubit helps drive conversions on ecommerce websites. We do this by putting marketing and ecommerce teams in control of their optimization strategies so that they can create relevant and engaging experiences for their visitors, in real time. Qubit consolidates tag management, visitor analytics, A/B testing and personalization, all within a single integrated platform to remove IT barriers and create one seamless workflow. As these technologies work together, huge value is placed on business agility and collecting detailed data, to understand every aspect of visitor behavior. This new approach to personalization is known as Customer Experience Management, and enables businesses to create relationships with their visitors in real time and ensure that their expectations are met at each stage of the purchase lifecycle. To date we ve helped Exodus Travels (part of Tui PLC), Jet2, Scott Dunn, and James Villa Holidays improve their conversion rates and become more nimble in their marketing and ecommerce operations. For more information about our products and research, please contact info@qubitproducts.com or visit our website Qubit Drive conversions, fast. 25
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