Personalisation at scale is now becoming possible, says Rodrigo Acuna Agost, head of AI research at Amadeus
Some transactions we don’t really think about. When we stop at a coffee house on the way to the office to purchase our daily Americano; or pull into the nearest service station to buy petrol, it requires little thought or emotion. However, for most of life’s larger purchases this is not the case, particularly when purchasing travel.
For most of us, the decision-making process is not straightforward. We all make choices for both rational and emotional reasons, and it is important for the travel industry to take both of these into account in order to make better informed merchandising decisions.
In recent decades, technology has unlocked a deeper understanding of how people search, book and experience travel. Big data analytics and machine learning allow the industry to absorb and utilize more data than ever before. The ability to ‘anticipate’ and ‘predict’ what travelers want is now a reality.
Empowering travellers by considering psychological factors
Traditional customer behaviour theory assumes very rational decision-making, however data has shown us that travel decisions are also influenced by emotional, cognitive, cultural, social, and other psychological factors.
For example, modern consumers have more alternatives than ever before, and often find themselves scrolling through an endless list of flight or hotel options, in an attempt to find the right product for their needs. However, many find this overwhelming rather than liberating and it hinders the decision-making process – a phenomenon that psychologist Barry Schwartz referred to as ‘The Paradox of Choice’.
Amadeus is researching on how to leverage artificial intelligence algorithms to predict choices by including explicitly behavioural economics elements. For example, displaying fewer options can improve conversion. Machine learning models can help travel companies find the best combinations of options that maximize conversion taking into account the effect of different cognitive biases.
Moving beyond A/B testing
Even machines need to experiment in order to find the optimum price to sell a product. The same is true for optimizing digital marketing. Artificial intelligence has the power to enable travel companies to better analyze human interaction with their website, in order to identify what is most effective. Continuous experimentation conducted using intelligent algorithms means small changes can be made to a website, such as changing colours or moving ‘call-to-action’ buttons, almost in real-time.
This advances on the current use of A/B testing, carried out manually in a time-consuming manner and can help to reduce the vast ‘look-to-book’ ratio that exists today. Currently, only five percent of travel website traffic ultimately leads to a purchase. Travel shopping of tomorrow will mean less browsing and more buying, if travel companies have the tools to deliver what their customers want.
Predicting the future, without a crystal ball
The travel industry has traditionally predicted the demand for its products by analyzing historical data. However, by using choice modelling techniques, which examine the factors impacting customer behavior, and combining this with historical trends, travel providers can make more accurate, precise and reliable forecasts. Once a customer-choice model has been calibrated, it can be applied to any future scenario. This means travel sellers also benefit from a more flexible process which can account for unforeseen changes to routes, plans or availability. And ultimately this means they are able to offer customers more products, at attractive prices.
Enhancing human relationships
Some travelers, of course, prefer the help of a travel agent when searing for an experience that is tailored to their needs. Artificial intelligence is also now being deployed in this scenario in order to optimize the recommendations made to travelers.
Amadeus is currently developing a prototype , which uses natural language processing to predict, recommend and personalize trips for their customers while the agent is engaged in a conversation with a traveler. By analysing a traveler’s tone of voice, their vocabulary, even their emotions, the technology can make assumptions about preferences, displaying tailored options for the agent to recommend. This allows the agent to dedicate more personal attention to the traveler.
The benefits of AI are far greater than simply saving the traveler time. It will usher in a new age of digital marketing for travel, where travel companies benefit from understanding the exact experience their customer is looking for and marketing the best product, the first time, every time. In other words, personalisation at scale is now becoming possible. Ultimately, the travel purchasing experience will become just that – an experience – and not just a series of products.
To find out more about how artificial intelligence and other technologies can empower travel companies to understand their customer’s motivations, download this new report from Amadeus: ‘The importance of understanding travelers’ moviation’.