Six Opportunities for Travel Companies to Transform the Customer Experience

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1 Six Opportunities for Travel Companies to Transform the Customer Experience The travel industry led the way in the adoption of an online sales model. Expedia was launched almost 20 years ago in 1995, while the industry also created the Global Distribution System, a precursor to the Internet. As a result, the vast majority of travel bookings are now derived via the Internet. According to Google s The 2012 Traveler report, upwards of 83% of leisure travelers use the Internet for travel planning and 65% of those are now doing online research before even deciding where they are going. And yet in many ways, the travel industry is now lagging behind other market sectors, most notably retail, in its adoption of current online innovations. Research from edigital reveals that travel companies consistently score lower than retail organizations, which deliver both a better mobile app and main site experience. From the creation of mobile sites to personalization and social media to video, few travel companies are exploiting new technologies to maximum benefit to improve the customer experience and drive up revenue. This lack of investment and innovation is in direct contrast to customer attitudes toward the use of the online channel for travel-related research and purchase. A decade ago, only one in three UK Internet users had made a holiday or travel booking online, and many were not comfortable with online only as a channel. Now 80% of travel products in the UK are researched or purchased online, the highest figure for any country in the world, according to European Travel Commission (2012), New Media Trend Watch: Online Travel Market. This white paper considers the key trends in online customer behavior, from mobile usage to social media, as well as the importance of ratings and reviews and outlines six key opportunities for the travel industry to improve the customer experience, increase ancillary sales, boost conversion and drive up average booking values per customer.

2 MAXYMISER Customer Experience Customer attitudes are changing. While the focus in 2011/2012 was primarily on price, attitudes about travel have changed in parallel with the way in which customers behave online. An individual today will typically take nine different sessions to research a holiday before booking, according to Google s 5 Stages of Travel study. Whereas previously that research would have occurred across multiple websites to achieve the lowest cost, now, according to PhoCusWright, the trend is toward using fewer sites and favorite brands, with the determining factor being ease of use. In addition, the way individuals even consider travel is changing. According to Dr. Miguel Moital of the School of Tourism at Bournemouth University in the UK, 10 years ago there were three distinct stages to travel: pre-trip, during trip and post-trip. The rise of social media has created a new stage: the dream stage, which happens every time someone sees holiday photographs uploaded onto a social networking site or reads a friend s travel-related update. Social media is stimulating people to constantly and consistently dream about travel, even when they haven t made any travel plans, Moital says. Social media is stimulating people to constantly and consistently dream about travel, even when they haven t made any travel plans. It is therefore unrealistic to expect a one-size-fits-all website to deliver the ease of use and good experience customers now demand. Organizations need to consider where a customer is in the travel process, whether the customer has visited the site before, or if the customer is a repeat traveler. Is the customer only interested in leisure? Or leisure and business? A single website cannot appeal to every visitor, every time. Optimization of the content and processes presented to customers across every channel through which they interact with a travel company is an essential tool in creating the best customer experience and ensuring that each interaction reflects an individual s stage in the travel process. Companies need to test the response to different content and different user journeys, including the booking funnel, and adopt a culture of data-driven decision making to present the most effective content and experience. Price transparency is a key example. Under the latest Office of Fair Trading guidelines, all travel companies must adhere to guidelines for pricing and display. However, testing the timing and positioning of information on pricing reveals a measurable impact on conversion rates. For example, when fees and admin charges are made clear, customers sway more toward options that do not carry debit card fees. The challenge for the industry is to ensure adherence to the guidelines and meet consumer demands for trusted information while also assessing how best to display pricing and determining the value of multiple payment options. The key is to have a flexible way of presenting both content and experience to reflect customer drivers in a very fluid marketplace. The ability to test and prove the value of content and experience is key to driving lifetime customer value. 2

3 WHITE PAPER Ancillary Sales As travel companies face increasing competition, price pressures and low margins, the role of the ancillary product sale is becoming increasingly important. The typical travel company s target is to increase ancillary sales by up to 10% per annum. The challenge is determining where it is best in the online journey to make the ancillary offer and ensure that such offers are the most relevant to each customer or customer group. Testing the timing and description of the offer such as priority boarding or extra baggage is key in maximizing the additional sales tally. For example, a ferry company s usage of video displaying cabin sizes has proved beneficial in encouraging customers to opt for the larger and more expensive option. This process highlights the need for a more personal approach. The ability to personalize the ancillary offer even at the most basic level between business and leisure customers can deliver a measurable uplift. Personalization As demonstrated by the statistics above, it is now essential to understand where individuals are within the travel process. More than 83% of leisure travelers and 76% of business travelers plan online, according to The Traveler s Road to Decision 2011 by Google and Ipsos OTX MediaCT. However, growing numbers also brainstormed or started thinking about a trip, read reviews from other travelers, requested more information related to an upcoming trip, watched a travel video or looked at travel content or reviews by family or friends. Personalizing the experience, therefore, is going to become increasingly important to meet this variety of online activity and reflect the diverse needs of the customer. Ancillary sales is a key area where personalization can pay off by ensuring that the right offer is presented to the right person at the right time. For example, offering a business customer a premium lounge pass or a family the chance to book into a kid s club at the hotel in advance at the right point in the booking process significantly increases the chance of additional sales. Personalizing the experience is going to become increasingly important to reflect the diverse needs of the customer. Personalization also needs to address the entire customer experience from the first time an individual arrives to the site throughout the journey, which is likely to span multiple visits. It also needs to reflect the way individuals consider, research and book travel. For example, don t expect the customer to book at the first visit when the statistics above clearly show that individuals make multiple visits before making a final decision. Content should reflect where the individual is on the dream, research, plan, book and pre-trip experience and present information based on previous visits, searches or holidays. Indeed, it is important to remember that the opportunity does not end once the holiday or travel event has been booked. Customers often return to the site between booking and travel to check information. Presenting relevant content at this time can both improve the customer experience, boosting brand loyalty, and add ancillary sales, such as excursions, as well as partner sales such as insurance or car hire. 3

4 MAXYMISER Relevant Experience Companies also need to think about personalization in a new way. It is not just about the type of person or improving segmentation. It is about understanding the search behavior and personalizing the search experience. For example, one of the biggest causes of customer dissatisfaction and site abandonment is a no availability response to a search inquiry. However, companies have the chance to personalize the result based on the visitor s search. For example, if an individual has searched for two adults and two children at an adult-only hotel, the response will always be no availability. By adding an explanatory line that the venue is adults only and offering a number of family-friendly hotels nearby, the visitor experience is fundamentally transformed. A similar approach can be adopted for air travel: rather than presenting no availability on a route that is not provided London City to Geneva, for example the company can offer relevant alternatives for that date, such as flights from Heathrow, Gatwick or Stanstead. This approach is proven to reduce abandonments and improve the overall customer response to the brand. Ratings and Reviews The importance of ratings and reviews has been understood by travel companies since the earliest guides were published. However, many travel companies are still unsure about the way online reviews and ratings should be used. A recent PhoCusWright study with TripAdvisor reveals that 9 out of 10 users agree that TripAdvisor hotel reviews help them feel more confident about the decision to book a hotel. Indeed, more than half (53%) of respondents would not book a hotel without reviews. The impact on value is significant: if a hotel enhances its review score by just one point on TripAdvisor, it can increase rates (prices) by 11.2% while maintaining the same occupancy or market share. More than half (53%) of respondents would not book a hotel without reviews. While sites using reviews tend to perform better a study from L2 showed that travel sites that incorporated user reviews increased traffic by 24% compared to 7% growth for sites with no reviews content the challenge is how best to present reviews and ratings information on the website. The reviews need to be trusted, preferably independent and, increasingly, tied into social media. As customer attitudes toward reviews continue to evolve, it is essential to analyze how reviews affect online behavior, from booking abandonment to conversion, to assess how best and when to use this additional content within the overall customer journey. Organizations need to determine where best to place the review content on the site, as well as track the impact of both star ratings, where appropriate, and reviews. Continually assessing the role of on-site reviews versus links to external sites, such as TripAdvisor, is also important as customer attitudes to review information continue to evolve. 4

5 WHITE PAPER Social Experience There is a clear and growing trend away from the generic review toward the experience of friends and family customers increasingly prefer the wisdom of friends over the wisdom of the crowd. A Forbes study of Facebook users discovered that more than 50% of respondents indicated that seeing a friend s holiday photos inspired them to book a trip to that place. According to Google and Ipsos OTX MediaCT s The Traveler s Road to Decision 2011, one in four travelers have used social networking sites to plan their travel, while 45% have made travel plans based on reviews and experiences of others. This is true of both leisure and business travel. The survey also revealed that one-third of respondents changed their hotel preference after checking in with social media, according to a survey by World Travel Market in the UK. The industry is certainly embracing social media four of the top 20 brands using Twitter for customer support are travel brands; likewise, five of the top 20 Facebook brands are in the travel sector. However, while travel companies scored well on Response Rate and Response Time key performance indicators, they were below average for Engagement Rate, indicating that they are behaving in a reactive way rather than starting conversations. The growing influence of social media has also raised awareness about the value of better imagery, including 360-degree views and video, on the customer experience including both the professional images created to demonstrate cabin size or hotel facilities and user-generated images. This is a new area for most companies, and rigorous testing of content and user response will be critical to assess how best to combine the additional information delivered via reviews and videos and where in the overall experience from dream to purchase it is best presented. Mobile Another essential area of development for the travel industry is mobile. Not only has mobile browsing more than doubled in the past 12 months, but the use of tablet devices to access travel sites is expected to increase 180% in 12 months, according to Google s The 2012 Traveler report. Indeed, 19% of all travel queries in 2012 came from a mobile device, according to GPMD s 2012 Mobile Internet Usage Statistics, up 11% from the previous year. Two-thirds of tablet owners made a travel purchase on their device in the first half of 2012, according to PhoCusWright. Most importantly, the mobile user has evolved from researching to purchasing: almost half of all travel searches on a mobile device result in a purchase, according to Nielsen. Yet the mobile experience remains inconsistent: more than one-third of customers (36%) now say that a mobile site that is hard to navigate or see on a mobile device is a deterrent to purchasing, according to Google s The 2012 Traveler report. This rapid evolution in consumer behavior underlines the need to deliver a good mobile experience. Companies must provide far more than a scaleddown version of the desktop, including bigger links and fields to enable ease of use and ensuring imagery, including video, works via a mobile device. Understanding the way customers are using different devices and responding to mobile content is now essential. Some organizations still assume that customers don t want to pay via mobile. Yet when the online rate is significantly lower than the pay-on-arrival rate, 5

6 MAXYMISER preventing a customer from completing the purchase via mobile is a risky strategy. Rather than second guessing customer behavior, a data-driven approach is far more effective. Testing the customer reaction to the online experience is critical especially given the rapid changes in mobile behavior. This is not a set-it and forget-it strategy as customer attitudes and the quality of the online experience evolve, it is essential to revisit concepts and ideas to assess their ongoing relevance to the market. Those companies without a dedicated mobile site need to develop one fast and those that do have one need to optimize it and not expect that a scaled-down desktop version will do the job. This is not a side issue: a travel company s mobile strategy can and should run in parallel with its desktop optimization programs. Conclusion The global growth in disposable income has created a market where 1.4 billion adults some 30% of the worldwide population now have sufficient disposable income to be able to travel abroad, according to the ITB World Travel Trends Report 2011/2012. The market potential is huge. Yet this industry is also highly susceptible to outside factors from heat waves to ash clouds to terrorist events. In addition to the day-to-day demands of improving revenue and responding to competitor activity, a travel company s ability to respond immediately to changes in customer attitudes is essential. A consumer base now firmly committed to using the online channel to research and book travel both business and leisure presents travel companies with a chance to rapidly deal with unprecedented incidents, address new competitive challenges or exploit unexpected opportunities. The chance to repurpose and personalize content on the fly, change the customer experience to reflect escalating demand for a specific location, for example, or exploit fluctuating currency rates to upsell attractively priced rooms, flights or ancillary products is compelling. As organizations that have used optimization to improve the user experience and ancillary sales can attest, the uplift is significant. Building on existing optimization techniques to improve the user experience, companies can exploit personalization and embrace mobile and social media to drive additional revenue streams and tap into the extended travel purchasing life cycle. 6 USA UK +44 (0) Germany +49 (0)

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