Making sense (and business) out of irrational behaviour
Big (and little) data has come up as a topic at a number of airline conferences in the past month with advice from the great and good on the need to tap into it.
A recent session from Boxever chief Dave O’Flanagan was a little different, however, with one strand focusing on the fact that things may not always be what they seem.
Yes, airlines are trying to track customer behaviour and use data to get closer to them, thinking about lifecycle marketing and attempting to move away from the siloed approach to data.
But, how can they understand irrational human thinking, the related purchase decisions and act accordingly?
To explain, O’Flanagan, who was speaking at the OpenJaw t-Retailing Summit last month, drew a couple of examples from Dan Ariely’s book Predictably Irrational. Ariely is a professor of behavioral economics at MIT.
First was subscription offers from the Economist – online $59, print $125 and combined $125 – the majority of people (84%) opted for combined and the remainder (16%) for online.
But, when the print option was removed, the figure for online increased to 68% while combined print and web decreased to 32%.
When print only was shown, print and web was seen as a far better option but without it, customers who just wanted the online version could go for the cheapest option.
The second example, also from the book, is for two free trip offers, one to Paris, one to Rome.
With just two options, customers found it difficult to choose but by adding a third offer, no coffee included in the Rome trip, everyone opted for Paris because of the perceived value.
“It had the illusion of substantially more value, it anchored them to Paris. This is the cognitive bias/illusion that people fall into.
“Having the data means you can understand where these pockets exist and understand your customer.”
Many hotel intermediaries are already good at this, see this piece for examples, but what’s to stop airlines from picking up some of the best practice out there. Some already are with messages such as “three seats left at this price.”
There’s work to be done to apply these principles to airline marketing and retailing and, there are other principles formed around how humans behave coming into play.
Social proof, for example, the need to be and do like others, is an interesting area for airlines to explore according to O’Flanagan. Boxever is already uncovering some interesting findings on in-cabin behaviour.
“In the front of the cabin people are not buying but as we move down it starts to peak and aisle seats, mid-cabin convert the best.”
So, if passengers are adopting a ‘herd animal’ mentality, airlines could start to offer pre-ordered meals to take advantage of that propensity to buy in and around the middle of the cabin.
The scarcity technique has been mentioned above but what about using authority and brand equity by making recommendations, the Boxever boss says a third of Amazon’s revenue comes from its recommendations engine.
This is a technique that’s already working well for online accommodation intermediaries.
None of this removes the ‘silo’ challenge for airlines but it does perhaps help them focus on the opportunities and the need to strike a balance between retailing and the customer experience.
NB: Disclosure – flights for author’s attendance at the event were supported by OpenJaw.
NB: Shoes image via Shutterstock.
Linda Fox is deputy editor for Tnooz. For the past eight years she has worked as a freelance journalist across a range of B2B titles including Travolution, ABTA Magazine, Travelmole and the Business Travel Magazine.
In this time she has also undertaken corporate projects for a number of high profile travel technology, travel management and research companies.
Prior to her freelance career she covered hotels and technology news for Travel Trade Gazette for seven years. Linda joined TTG from Caterer & Hotelkeeper where she worked on the features desk for more than five years.