Personalization is essential to drive future merchandising revenues for airlines, with tailored bundles of both airline and partner services potentially increasing a traveler’s basket size by between €30 and €35, according to new research released today.
’Thinking like a retailer: Airline merchandising’, a research report commissioned by Amadeus and written by consulting firm Frost & Sullivan, highlights that in the battle for additional service revenues, airlines must be able to compete with data-centric travel companies by more effectively using the customer data they already collect, if they are to truly maximize this commercial opportunity.
With airlines now able to gather and analyze more traveler data than ever before - including mobile app and social media behavior, session history from in-flight connections, travel history and previous purchases – the report argues that this information must be used to create a single unified customer profile, which in turn would allow airlines to adjust their merchandising techniques according to the type and timing of individual traveler journeys. This combination of better data management and far greater traveler insight will result in increased relevance, conversion and ultimately revenue.
With 26% of all travelers more likely to respond to messages tailored to personal interests and 22% more likely to respond to location-specific promotions, the study encourages airlines to develop comprehensive merchandising strategies that take into consideration the impact of timing, technique, channel, service and price.
The report’s other key findings include:
- For a quarter of travelers, the best time to consider an airline’s additional offers is when they return home and are thinking about their next journey. To unlock the potential of this growth opportunity, the report says airlines need to change their mindset in order to recognize that their relationship with customers continues after the flight lands
- The five most important merchandising techniques are user-interface optimization, context-aware e-mail notification, promos & third-party deals, push notification and value-added bundles
- Some 79% of global travelers would prefer to buy extra travel services directly from airlines. Airlines can leverage their channels to meet this need
- The most important channel for merchandising ancillary services is the web accessed via PC – however, the importance of mobile is increasing rapidly. Airlines should optimize their websites for different kinds of mobile devices. The conversion rate of consumers using tablets (2.6%) exceeds that associated with PCs
- When it comes to Branded Fares and Fare Families airlines need to remove the complexity and be explicit about the value of each bundle
- Purchase of additional offers is highest at time of booking. Airlines can maximize their revenues by equipping their sales channels for such purchases at booking time
“As airlines evolve from being providers of one core product – flights – to travel experience businesses with a wide range of services, they need to view themselves as retailers,” said Lawrence Lundy, strategy consultant, Frost & Sullivan. “Understanding where, when and how to merchandise products and services to the traveler is vital to retailing effectively, and this study aims to cast light on precisely these elements of a merchandising strategy.”
Published to coincide with Amadeus’ Airline Digital Conference (Madrid, 4-5 June 2014), the world’s largest gathering of e-Commerce and mobile airline executives, ’Thinking Like a retailer: Airline merchandising’ is informed by interviews with senior airline executives, as well as a survey of more than 300 business and leisure travelers in the UK, Germany, USA, Brazil and Singapore.
You can download a free copy of ’Thinking Like a retailer: Airline merchandising’ report at: www.amadeus.com/airlinemerchandising
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