Product differentiation, customer retention and optimised marketing to drive eDreams growth

Product differentiation, customer retention and optimised marketing to drive eDreams growth

European online travel agent eDreams ODIGEO is targeting further revenue diversification adding to its core flights business and driving customer loyalty to achieve future growth.

This week the OTA revealed its annual results for the year to March 31 and unveiled a new six point strategy under recently installed chief executive Dana Dunne.

He told Travolution that the firm has run a successful customer loyalty scheme in one of its markets which it will test with a view to rolling it out internationally.

But he said this was just one part of a strategy to adapt eDreams to the “evolutionary pressures” that are challenging the business.

Key to these was product diversification which has been a key driver for growth as well a reassessment of eDreams’ channel mix to focus on lowcost channels and customer retention.

He said this would mean exploring opportunities outside of Google, but also using Google in a far more cost-effective way.

“That’s why we are investing heavily in landing page technology. It means we use our Google experience much more efficiently.

“We are doing a lot of things much more effectively with Google and in addition we are doing a number of things besides Google to improve our marketing effectiveness.”

Dunne said eDreams was working to not only offer value product but a great experience to retain customers which will help to reduce the cost of acquiring customers it already has.

Channels like social are being invested in as well as CRM and mobile, which is seen as an opportunity for eDreams to provide a full end to end service.

Display and video-based advertising are two other areas that Dunne believes offers good growth opportunities. Dunne said eDreams had the international footprint to achieve scale.

“We have done some reorganisation in the marketing team to ensure we get full value from all the channels that are important to us.

“We’re focusing on the customer experience end to end. That involves lots of different things about the entire customer journey and booking flow.

“Much of that relies on A-B testing and we have invested significantly in these capabilities. We run lots of different tests each and every day on our sites to test different propositions with our customers.”

In its annual results eDreams reported revenue margin growth – the money it retains after paying suppliers – to €436 million and adjusted EBITDA, or profit of €90.5 million.

Adjusted net income stood at €13.4 million and cash at the end of the period stood at €121.8 million, 22% ahead of guidance.

Non-flight business – up 7% to net revenue margin of €87.6 million – continued to drive growth with flight business flat year on year for revenue although volumes were down 1%.

Growth in expansion markets – bookings were up 12% to revenue margin of €180.1 million – outstripped core markets of Spain, France and Italy and now account for 41% of total revenues.

Dunne said: “eDreams ODIGEO has built a successful travel business over the past 15 years and I am pleased to see today’s results in line with our guidance.

“However, the industry is fast evolving and challenging our business. To build on our success we need to act differently.

“We have thoroughly assessed the challenges and developed a robust action plan with a strong and renewed senior management team to drive the business forward.

“Amongst our key priorities will be to enhance our customer experience by simplifying the user interface and improve service delivery.

“We are looking to build customer loyalty by offering value-add products and diversifying into non-air products whilst continuing to increase our ability to adapt to demand and improve product quality.”

The six point strategy will see eDreams ODIGEO strive to:
1.     Optimise our traffic source by reassessing the channel mix, focusing on lower-cost channels and customer retention;
2.     Increase focus on mobile web, which attracts a large and growing share of customers;
3.     Enhance end-to-end customer experience, simplify user interface, address pain points, and enhance value and service delivery to customers;
4.     Maintain a lean and nimble model, with enhanced product quality, increasing our agility to adapt to the ever-changing environment in which we operate;
5.     Diversify our revenue by delivering value-add products and services that increase our customers’ basket size while enhancing their customer experience;
6.     Culture and talent, building a passionate and empowered organization that will drive long-term success.

The firm said the new strategy will be carried out in two phases, the first focusing on near term performance for the full year 2015/16.

This will include:
1.     Optimizing cost allocation with a focus on customer acquisition
2.     Enhancing customer retention with a focus on service
3.     Growing mobile and enhancing user experience
4.     Diversifying revenue mix, building on our strong flights core
5.     Strengthening culture and talent
The second phase in 2016/17 will see to rebuild growth trajectory:
1.     Innovative offerings
2.     Continued focus on user experience
3.     New products and partnerships
4.     IT agility
5.     Continued cost optimisation

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