“Thinking like a retailer: Airline merchandising” (download report here), 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 have if they are to truly maximize this commercial opportunity.
The crux of the report is about the impact and performance of different merchandising techniques. It considers what, when and how airlines can best satisfy their traveller needs and desires to meet their revenue generation and customer satisfaction KPIs.
Airlines are now able to gather and analyse more traveller data than ever before, including mobile app and social media behaviour, session history from in-flight connections, travel history and previous purchases. The report urges airlines to use this information to create a single unified customer profile, which would allow them to adjust their merchandising techniques according to the type and timing of individual traveller journeys.
This combination of better data management and far greater traveller insight will ultimately led to increased relevance, conversion and revenue.
With 26% of all travellers 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.
Other key findings:
• Best time for additional offers: A quarter of travellers think about their next journey on their return home, and this is the most opportune time for airlines to market their special offers to them. To unlock the potential of this growth opportunity, airlines need to change their mindset in order to recognise that their relationship with customers continues after the flight lands
• Five most important merchandising techniques: User-interface optimisation, context-aware e-mail notification, promos and third-party deals, push notification, value-added bundles
• Extra travel services: About 79% of global travellers would prefer to buy extra travel services directly from airlines. Airlines can leverage their channels to meet this need
• Leverage on technology:The most important channel for merchandising ancillary services is via the web with a PC, but the use of mobile devices for the same purpose is increasing rapidly. Airlines should optimise their websites for different kinds of mobile devices. The conversion rate of consumers using tablets (2.6%) exceeds that of PCs’
• Simplify: Airlines need to remove the complexity and be explicit about the value of each bundle of Branded Fares and Fare Families
• Timing: Purchase of additional offers is highest at time of booking. Airlines can maximise their revenues by equipping their sales channels for such purchases at booking time
Julia Sattel, senior vice president airline IT, Amadeus, said: “It’s clear that in order for airlines to succeed in the highly competitive and fragmented travel retail sector, they must think like retailers and adopt an effective approach to merchandising, in which personalisation takes centre-stage.”
Lawrence Lundy, strategy consultant of Frost & Sullivan, concurred. “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. Understanding where, when and how to merchandise products and services to the traveller is vital to retailing effectively, and this study aims to cast light on precisely these elements of a merchandising strategy.”
• “Thinking like a retailer: Airline merchandising” was published to coincide with Amadeus’ Airline Digital Conference (Madrid, 4-5 June 2014). Data was derived from interviews with senior airline executives, as well as a survey of more than 300 business and leisure travellers in the UK, Germany, USA, Brazil and Singapore.
