The consumer has more ways than ever to connect with a brand – but which areas of the industry are best equipped to manage consumer relationships successfully, asks Kevin May.
A favourite question from Graham Donoghue, when he was new media director at TUI Travel and face-to-face with online travel agencies, would be to ask them about their assets.
Forgetting capital such as staff, technology and buildings, Donoghue would be alluding to the fact that his company – a vertically integrated tour operator – owned retail shops, hotels and aircraft, and OTAs did not.
The benefit given by those in what were the big four at the time was that owning stock allowed companies to leverage their value for the bottom line and schedule availability more efficiently, but also take firmer control of the relationship with, say, a hotel owner.
Brent Hoberman, as chairman of lastminute.com in the summer of 2006, would hit back during one of these Travolution advisory board roundtables by saying that consumer demand had changed “at a greater pace than they had in the past, so predicting that and getting that right” would be difficult.
Now, ironically, Donoghue might have different point of view given that he is managing director of the comparably asset-lite meta-search engine Travelsupermarket.com.
Since 2006 the big four have morphed successfully into the big two and the impact of consolidation is finally kicking in.
So far, it appears that efforts to cut capacity have, in a manner of speaking, worked in terms of the impact on the yield performance of these giants of the industry, but – as some might suggest mischievously – it also indicates that owning the relationship with the asset owner is becoming less important than taking control of the bond with the consumer.
In the mass market, where the purchase funnel is becoming increasingly muddled, fuelled by a swing back towards high levels of commoditisation as a result of economic pressures, customer ownership will be even more critical.
It therefore begs the question as to which areas of the industry are best equipped to succeed in owning the relationship with the consumer, especially if – as research elsewhere in this edition suggests – the modern consumer has the ability to connect with a brand in more places than ever before.
Online travel agencies
OTAs are some of the most prolific online media spenders in the travel industry, but only one (Expedia) really embraces TV advertising. Nevertheless, the ownership battle begins the second consumers arrive on most sites, with invitations to sign up for alerts, newsletters, et al. Booking engines have improved enormously and reams of destination content and some form of user reviews are now included on most sites.
A good online experience is vital (alongside customer service if things go wrong) simply because, apart from a post-trip email or invitation to review a hotel, this is generally where the opportunity to connect with a consumer ends.
Like their OTA cousins, meta-search engines are heavily reliant on media (primarily online) to get users in the door. TV advertising has worked wonders for brand perception for the Travelsupermarket site, while white labelling is a major part of the growth strategy for a string of other meta sites.
Newsletters and deals abound on most sites, with a few experimenting in editorial content. What the OTAs have forgotten or not bothered with, meta sites have picked up in terms of functionality, highly imaginative tools and – on the whole – comprehensive listings. The problem begins the second a user leaves the site as they already in the clutches of the seller of the final product.
Hotels are positioned at the cutting-edge of customer ownership. Consumers may well be attracted through glossy offline media or online campaigns to a host website or via an aggregator site; they could find themselves on the doorstep of the hotel after booking through an OTA, bedbanks or tour operators.
But the moment the customer walks in the door, the process can begin to own that relationship, primarily through first-rate service and ensuring the advertised facilities meet the expectation (and more) of the customer. No other sector of the industry has the opportunity to build the same level of affinity with the customer than the place that puts a roof over their head for the duration of their trip.
By virtue of being the primary method for getting off the British Isles for a holiday, airlines are in a unique place in the hearts and minds of travellers. Most airline websites are doing an adequate (but sometimes fantastic) job of fulfilling the needs of customers and often try very hard to instil the brand values of a product on users.
Unfortunately for airlines the customer experience is reliant on factors often out of their control, such as the quality of airports and air traffic delays. Similar to hotels in some respects, airlines have a captive audience to make their mark once a flight gets off the ground – a period that can make or break attempts to own the relationship with the customer.
Providers of ancillaries – such as car hire or destination services – are often in a strange position when it comes to ensuring they make a valuable and positive impression on a customer. Products are often bought via a third party and, unless it is a niche service or unique attraction, are highly commoditised.
The opportunity to build an affinity with the customer is therefore difficult. Destination services are often one-off moments with the customer, so the likelihood of a repeat booking is small, meaning that a recommendation is often the best opportunity a product will get. However, for car hire and travel insurance, ensuring the product fulfils its obligations as a service can be enough to increase the chances of ownership.
Vertically integrated tour operators and agents
Thomas Cook and TUI Travel – the behemoths among travel providers – are unique in that they have the opportunity to own the customer at more points along the consumer journey than perhaps any other company. Websites, retail agencies, call centres, aircraft, hotels, ancillary products and in-resort services, alongside the obvious CRM tools, are all part of a process of ensuring a customer’s expectations are met. Unfortunately, despite this dizzying array of opportunities, if one area falls down then it is harder to make amends.
The independent high-street travel agent also has a unique place in the hearts and minds of consumers given that it has the chance to build a relationship with the consumer at a sweet spot in the travel process – when the customer is simply looking for ideas and wants to rely on the experience of an expert. Loyalty can be gained easily, but agencies and homeworkers are at the mercy of the market and consumer desire for convenience and choice pits them against the myriad options on the internet.
More sales are made direct on an operator’s website or call centre, meaning that the ownership opportunities start earlier in the travel process than before. Strong performance in this area – especially from some of the cutting-edge sites on the market – can help build affinity quickly but equally this means that the expectation levels need to be maintained throughout the process.
Operators are at the mercy of airlines and a hotel, so managing the process – even if it goes wrong – is vital to building a relationship with the customer. Post-trip communication is a key area and, if done well, can pay dividends even if the product would normally be counted as particularly niche. Onward recommendations are also vital.
The outsiders – in other words: Google
What most companies would either fail to recognise or wish to admit to is that forces beyond the borders of the travel industry are in a terrifyingly strong position when customer ownership is an issue on the table. The most likely contender here is the search giant Google. It is – especially in the UK – the starting point for millions of consumers when researching a holiday.
The position of travel brands in natural search listings can be the difference between a handful and thousands of potential leads a day. Add sponsored links into the equation and it would be a naïve person who said that a technology-media company such as Google didn’t have some claim to owning the customer (and the industry) – at least at a critical part of the consumer journey.
The Vertical Approach – Tim Williamson, customer director, TUI Travel UK
As a vertically integrated tour operator we’re in a privileged position to be able to interact with our customers at every step of their holiday experience.
From the initial inspiration, research and booking stages via our retail staff and websites, during the journey, via our in-flight crew and airport staff, once on holiday, via our experienced resort teams and 24/7 holiday-line, to arriving back home with post-travel communications – it’s a position other travel companies envy and we well aware of its importance.
To dismiss it as an opportunity to drive home marketing messages misses the point. Consumers are becoming more demanding and the one-size-fits-all approach no longer works.
Different customers have different expectations: a customer travelling to a Platinum property is looking for a very different experience to a family of four heading to a Thomson Villa, or a group of friends on their first holiday overseas.
It’s only via interaction that travel companies can inspire customers, help them choose the holiday that’s right for them, can ensure their airport and in-flight experience are hassle free and, that once in resort, customers have the holiday they’ve dreamed of.
It’s an opportunity to add value, and for today’s consumer providing a nice flight and pleasant hotel isn’t enough.
Being involved in the process is about using the opportunity to talk to your customers at the right time, using communications that are useful and add value. It’s about recognising that customers are individuals with different demands and expectations. Ultimately, it’s about making the travel experience memorable for every customer.