NB: This is a guest article by Eric Dumas, CEO of Vayant Travel Technologies.
Travel was the engine that drove the first wave of ecommerce. Travel made ecommerce a star, as the online travel landscape – and far beyond – was transformed.
Now, it’s time for travel sellers to lead the next stage in the ecommerce revolution with customer-shaped travel shopping.
Travel enticed millions of people to take their first steps into ecommerce. Players like Lastminute.com brought a new spontaneity and excitement to travel.
Innovators like TripAdvisor let consumers share their experiences. Meanwhile, ecommerce reshaped travel itself, unleashing a structural shift that gave rise to a new kind of airline: the low-cost carrier, with its flexible business model.
Where travel led, other sectors followed, using the interactive and social aspects of ecommerce to further revolutionise the way people shop and consume.
Today’s ecommerce leaders are experts in shaping their offers around individual customer’s aspirations and shopping behaviour.
World-beating retailers like Apple iTunes and Amazon are “customer-shaped”, using their knowledge of the customer to tailor and target recommendations, at the right time and in the right channel.
Yet the travel industry – the original ecommerce pioneer – is only taking its first steps towards this kind of customer-shaped shopping experience. As a result, travel shopping can seem like hard work.
According to research (WAYN, Frommer’s Budget Travel survey in August 2010) the majority of travelers visit anything from six to twenty websites to find the right flights.
Traditional air search is not shaped around the way people want to shop. Research shows that around 50% of leisure shoppers have no specific destination in mind when they go online, and 40% are flexible about when they go (The Future of Travel Search - PhoCusWright and Amadeus).
Imagine it’s a gloomy February afternoon in London. You’re looking for an affordable break in the sun: you don’t mind whether that’s in the South of France, Corfu or the Canary Islands.
You’re not that fussy about when you travel – but you do know how much you have to spend. You go online to find that dream getaway – but instead you’re confronted with an exercise in form-filling, with traditional search compelling you to look (often, again and again) for specific city pairs or dates.
Success stories like Amazon and iTunes teach us that consumers today want inspiration, not perspiration. They want recommendations that are personal and relevant: and they reward vendors who can provide them with this kind of customer-shaped experience.
We believe that becoming more “customer-shaped” is the key to addressing the four main pain points for online travel sellers. By adopting a customer-shaped approach, travel sellers have the opportunity to shift pain into gain.
1. Customer Loyalty
Loyalty is in an increasingly valuable commodity in the crowded online environment. It’s always better business to get value from an existing actual customer than spend money on acquiring new customers.
Customer-shaped shopping is key to a retention strategy.
2. Improve conversion ratios
Conversion is an enduring issue for the travel industry. Unproductive searches pile cost onto travel agents and burden the GDS and airline hosts with redundant requests.
By helping travel sellers better anticipate and meet needs, customer-shaped businesses turn lookers into bookers.
3. Attract new customers
A customer-shaped business is better at attracting new customers, leveraging the power of ‘word of mouth’ and using its customer insights to drive advertising and social marketing.
4. Reduced costs
By being better at anticipating – and then efficiently fulfilling – customer needs a customer-shaped business can reduce its operating costs.
Anything that can reduce hits on the GDS or airline host, for example, can help drive down cost (for both the travel seller and the GDS, a great win-win situation).
Conclusions
The benefits of being customer-shaped are clear. But becoming customer-shaped is not as daunting as it sounds. At the heart of everything is how efficiently travel sellers make use of search data: a valuable and perishable commodity.
Across our industry, we need to recapture a revolutionary mindset and be ready to examine and re-think everything we do.
This is essential to becoming more customer-shaped, and more successful. And it’s key to leveraging exciting new possibilities to make travel shopping an even more personal and powerful experience, by using platforms like mobile and social.
Yes, there are players out there who understand the way the world is going and are becoming more customer-shaped.
One example we admire is EasyJet. They are being typically proactive about exciting and inspiring customers. Their InspireMe tool is all about stimulating the imagination of the airline’s 400 million or so annual visitors, and enticing them to explore more.
As mobile becomes ever more central to travel shopping, the speed, accuracy and accessibility of search data will become critical success factors for travel sellers.
In the age of customer-shaped travel shopping, players who deliver inspiration – and eliminate perspiration – will be the winners.
NB: This is a guest article by Eric Dumas, CEO of Vayant Travel Technologies.
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Very nice piece. But perhaps we should examine why travel is not so focused on innovation. I believe this is due in large part to the operations excellence that has been a hallmark of certain sectors. E.G. Airlines. The ballet that is an airline juggling resources to meet their operating goals is a think of beauty. Innovation in that environment is a tough thing to introduce. Couple that with a culture of risk aversion and you have a long term resistance to the time of ground breaking innovation that the industry needs and desires but isnt quite prepared to put its money where its mouth is.
I have an expression I use a lot that scares people. It is a question I ask frequently. If someone is going to eat your children – then why not you?
Cheers
Timothy
Just a little historical note: Travel was not the original e-commerce pioneer. It was the porn industry that holds that honor. The porn people figured out how to make online payments, and how to do it in a secure environment. I forgive you for not knowing this.
@michele ………………………. glad Eric is forgiven on that note
@michele And ironically, user generated content is now killing the porn industry …
Hmm, airline e commerce dates to the 60s, 79s and 80s – that was truly ground breaking! It didn’t use the Internet, but the ability to sell online internationally is that old!
also seem to recall that Southwest Airlines and their low cost model pre date the Internet (or at least its escape into widespread use in the 1990s) by some considerable time.
Plus, part of this article seems to be very pro GDS (or something like it) because it rests on the idea of providing the consumer on that grey February afternoon with a wide range of choice to serendipitously browse through. Few individual airlines or hotels come close to that and never will. Some of the web sites that come close only do so because either they are attached to a GDS or have a mass of separate inventory links behind them.
As for the outbound/return dates problem – well that’s just a function of the simple truth that travel inventory is nothing like books or DVDs or other physical products. Not worth dwelling on that here,other than to say it’s like Amazon selling you not just a book, but the exact volume that is the 2nd in row 4 of layer 5 of the pallet arriving at 14:50 on the 22nd Feb. Even Amazon’s fabled compute power does not try to do that! (Because they have no need to, unlike an airline)
“Unproductive searches” – so it costs Amazon nothing for all those times I’ve browsed and bought nothing? And if you move those from the GDS – or the airline’s own system -they still have to happen somewhere?
May be innovation is slow to come because it is really, really hard to do? As Timothy has commented above, all the other bits of running an airline are vital and very, very tricky in their own right.
Eric, this is an awesome article.
I like your use of “customer-shaped shopping”. At Maitaz.com we’re calling it “customized travel” and talking about “making travel human again”. Regardless of what we all call it, there’s a few startups in the travel space working on this challenge.
As an avid traveler myself, I’m really happy there’s more people sharing the same perspective and hope some of these companies succeed. The travelers need it. The travel industry needs it.
How close are you to launching?
Pretty soon in closed Beta.
I’m tired of hearing that Amazon and Apple are the models to which the travel industry should aspire. Shopping for books or music or clothes or some other consumer good is NOT a valid comparison to researching a flight or hotel room or a walking tour of London, as Sceptical points out.
My travel history (and every other traveler’s) is spread across hundreds of provider databases – airlines, hotels, car rental providers, vacation rental sites, OTAs, GDS’, Tripit, OpenTable, segment-specific mobile apps, etc. – so there is no critical mass of my travel info in any one place. That makes it very difficult for any one travel provider to speak to me with any of the authority Amazon or iTunes has.
This challenge of dispersed buying information is not going to be met anytime soon, which is why comparing travel to retail will be unattainable (for now). Search data, as the author points out, is much easier to come by but only tells half the travel story (what I looked for, not what I bought).
There are so many smart people in this industry, and more coming in every day. Instead of trying to force travel to be like some other industry, I’d like to hear about new models that can work for both the consumer and the travel provider.
@Sceptical and @Valyn:
Seems to me you’re making excuses on why we can’t borrow innovative models from true pioneers like Amazon…when in fact we can.
Amazon was a pioneer of profiling, of generating user content (e.g. reviews), of “siblinks” (e.g. ‘people who liked or bought x, also were interested in y’), and, among many others, of making the buying process easy. There’s no reason OTA’s or large airline websites shouldn’t be able to capture – and more creatively use – the mass of data they’re collecting. Expedia, for example, has not only what you searched for, but what trips you’ve purchased, can capture your mouse-stream data, can integrate your support calls and content, along with your trip advisor reviews and views. Why *shouldn’t* they start trying some new search and recommendation alghorithms?? So yes, travel can and should be compared to industry e-commerce leaders.
@Sceptical – how is this pro GDS? Because it talks about search and trying to improve look to book? As an online buyer of my own tickets, as I’m sure you are, doesn’t that also benefit the customer as well? I actually have bette things to do with my time then check 5 sites and heaps of city pairs looking for something good. Besides, ultimately these fees are passed on. I’d love to see a site that rewards me with a discount for finding and booking faster!
@All: the porn industry is *always* at the forefront of innovation and as Timothy points out, part of that could be because there’s almost zero downside risk. But one thing that could be borrowed from them might be the ability to test new ideas out on limited sites. E.G. customized landing pages on OTA’s which incorporate a new search or profiling technology as a trial. Harder with airline sites, but also possible if developed properly.
While Porter liked to say “there are no mature industries, just mature businesses,” I’ll take it a step farther and say “There are no mature businesses, just mature leaders!” Meaning: much of this comes down to the company leaders and corporate culture being mentally “stuck” : the technology IS available to improve the online travel experience, such as Vayant’s, for example (full disclosure: I’m not part of Vayant), it’s just a question of IF the online marketing and technology teams have the ability to take advantage of these technologies?! As a long time online travel user, I certainly HOPE positive change is to come…
I find it interesting that you quote Easyjet Inspireme as the customer centric type of travel innovation – when this was launched after British Airways launched both the trip seeker (near enough the same as inspireme) and their Holiday Finder tool… which allows users to filter through many holiday package options, very quickly to gain inspiration and doesn’t require a destination – they can filter by budget, temperature and approximate dates…
Bit more research maybe?
Really pleased to see so many comments and the scope of our argument developing so interestingly. We believe that the best way to continually innovate is to challenge and to question and I am glad to see this being carried out here.
For innovation to happen, first we need to realise that the current shopping model is not customer-shaped (I focus on travel search in particular as that’s what we do at Vayant). Rather, it is shaped around computers and existing systems. Second, we need to be willing to improve the model and make it more human-shaped for the benefit of the consumers – the actual travel buyers who fuel our industry. Third, we look for new models – no matter if completely new or tested by ecommerce experts – whatever works best.
A couple of answers to some specific questions, and sorry for the delay, we have been a the Travel Technology Show since Monday where innovation was all around!
@Timothy: in a mature industry such as travel, changing habits and adopting new technology is never the fastest route. We all know that with change comes risk. On the flip side, change and innovation are necessary and a key part of success. We strongly believe that it is only a matter of time before shopping technology innovation is taken on by the airlines. As consumers shift their shopping habits online, on mobile and on social, traditional search methods will become cost-prohibitive. Scaling searches, managing big data, and providing accurate quality results is the only way forward – whatever the final manifestation looks like.
@Matt: Easyjet InsprieMe is my favourite example amongst many (you are right). It is directly on the front page, is laser-focused on inspiration and their design is very attractive. This combination of visual design (I think Steve Job’s called it “lickable” ) and great user interface keeps customers coming back.
@sceptical, @Valyn and @Steve: thank you for your comments which are very much inline! Only to add that, like Steve, I agree that Amazon and Apple et al are GREAT examples. No, we cannot copy their model (you are right, selling travel is more complicated than buying a book), but they have set the benchmark of a supreme online shopping experience – one which consumers now take to be “standard”. As an industry, we have to emulate their innovative spirit (if not always their delivery) if we are going to get anywhere close to providing pain free (or perspiration free) shopping for travelers.
@eric – nice to see a response from the original author.
Google is, indeed, a supreme example of technological innovation. Setting aside what their business is about, what they have done in engineering their own IT infrastructure from the ground up, hardware and software, pretty well independent of “conventional” IT providers is exceptionally impressive.
See http://www.wired.com/wiredenterprise/2012/08/google-as-xerox-parc/all/
It is this ability and willingness to behave that way, plus very deep pockets, that distinguish them from others. They have/had the advantage of a blank sheet of paper. As you observe, nothing and nobody in the travel industry has that.
I would be very interested to hear more about (a) how you would define and describe “human shaped” for the travel industry and (b) how you would overcome the massive diversity and wide distribution of core data in the travel industry to achieve this (or why you think that is not an issue!)