Ancillary services and customer loyalty: partners or rivals?

NB: This is a guest article by Janet Titterton, director at Collinson Latitude.

Ancillary services are a prominent part of modern life, illustrated primarily by the Euro 15.11 billion of ancillary revenue generated by airlines in 2010, a growth of 96% since 2008.

Nonetheless, particularly in the travel industry, these programmes have certainly not yet realised their potential. To look closely at these programmes is to see unfulfilled possibilities.

Just like Web 2.0, the time has come for ancillary services to take the next leap forward, becoming dramatically more effective, widespread and relevant to customers.

The travel industry can look to other sectors, such as retail, to see the success Tesco and Amazon have achieved when it comes to clear segmentation, targeting and indeed engagement of customers.

Of course, increasing customer spend whilst also increasing customer satisfaction can be quite a challenge. Each company needs to find unique, sophisticated, tailor-made solutions.

In the future, I would expect to see more “fare packages”, where distinct benefits are associated to each fare brand. Customers can therefore enjoy the flexibility of choosing the particular fare with the associated benefits they want.

BMIbaby, for example, now offers several flight fare options, including “FamilyFly” for group trips and “FlyPlus”, which offers more flexibility than the standard flight package and includes benefits for the traveller, such as the use of executive lounges.

Equally, Air Canada provides an “On My Way” service, with benefits including automatic flight information updates.

However, without the insight of your customers’ needs and habits, providing relevant and compelling ancillary propositions could be a minefield. Just as data is critical to loyalty programme performance, so it remains business critical to drive and enhance ancillary revenue programmes.

A better ancillary services programme may not necessarily mean a radical overhaul of a business plan; it might begin with nothing more than better data analysis and utilisation of the insight that may already be at your fingertips.

Direct Connect dramas

Anyone doubting the commercial value of data need only take note of the tensions and conflicts we have already seen this year, in the airline industry, over the so-called ‘direct connect’ philosophy. Data is a key prize in this battle.

Travellers tend to book flights first, only choosing other travel requirements such as hotel, car hire and insurance after flight confirmation. An airline directly selling the flight, therefore, is at the top of the food chain and the first point in the travel booking process.

This primary position brings the advantageous opportunity to offer customers other travel requirements through the airline’s travel industry partners and, as such, securing the consequent ancillary revenues.

Furthermore, third-party bookings deny the airline visibility of the wider customer spend at the time of transaction. The airline knows of the flight booking, of course, but has no visibility of other related purchases passengers may have made, such as car hire, guided city tours or winter sports insurance.

Without such customer specific data, airlines will struggle to offer the kind of customised loyalty and rewards programmes that allow them to build long-term, profitable relationships with passengers.

Thus the key to better loyalty and ancillary programmes is to adopt a customer-centric view, which is dependent on solid database marketing and customer feedback and tracking.

Maximise customer touchpoints

If you want to offer customers benefits that spread across many areas of their lives, programmes should find channels of communication that reach across their lives too. By offering wider lifestyle rewards within frequent flyer programmes (FFPs) stretching beyond traditional travel redemptions, you can increase the opportunity for consumers to interact with your brand more frequently.

FFPs and hotel frequent guest programmes (FGPs) help maximise the touchpoints brands can have with their customers. Ubiquity of message is needed to ensure the customer is constantly engaged in a relationship with your business, whilst always being reminded of the brand at the centre of the programme.

By ensuring multi-channel contact with customers – from their desktop computers in London to their mobile phones in Beijing – you maximise opportunities for customers to earn and redeem loyalty points, for example.

Mining the data you hold is fundamental to offering relevant and timely offers. If you know your customer loves golf, having subscribed to one of your membership packages with a golfing theme, why not offer that customer a means to earn loyalty points by buying golf equipment from a partner supplier, through your website?

In this way, you can achieve the holy grail: seamlessly combining ancillary services and customer loyalty – creating strong complementary programmes, not conflicting ones.

Targeted ancillary services programmes can help you meet customer expectations of the personal touch. And the closer you are to your customers all the time, the greater your chance to build long-term profitable relationships.

NB: This is a guest article by Janet Titterton, director at Collinson Latitude.

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.



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