Direct sales are obviously a powerful way to build customer relationships and defend tight margins.
And online is the key to growing direct sales.
NB: This is an analysis by Boyan Manev, vice president of business development and product marketing at Vayant.
Low cost carriers, like Southwest and Ryanair, were first to understand the potential of online. They worked hard to build their web presence. Canny scheduled carriers followed and today every airline has its own online travel shop.
Do something different
So how can airlines make their online channels stand out from the crowd?
Online promotions are one answer. These can build buzz, drive traffic and activate bookings.
Hotels have led the way: London’s The Hoxton Hotel’s £1 room flash-sales are an object lesson in smart marketing.
Inspiration is another tactic for adding differentiation to airline travel shops. British Airway’s Picture Your Holiday or EasyJet’s Inspire Me fire the traveller’s imagination, allowing them to envision (and buy) their dream holiday.
The newest kid on the block is personalization.
Marketers have always craved the ability to offer something ‘just for you’ and big data analytics make it possible.
Today’s processing power means retailers like Amazon can crunch data derived from billions of online interactions to create highly-targeted personal offers.
External barriers to getting personal
Airlines were once the leader in online direct sales – but today airline marketers are handicapped by outmoded business processes.
For one, airlines don’t have complete control over their own marketing data. The data needed to compile offers are scattered across different external systems.
Base fares and fare rules are filed with organizations such as ATPCO and SITA. Airline schedules are filed with OAG, while taxes and filed and stored in IATA.
The industry’s reliance on the GDS is another brake on personalization. Seat availability is normally hosted externally by the GDS, as well as the airline PSS systems.
Historically, the GDS players have executed data integration and price setting, denying airlines the pricing logic control they need to achieve personalization.
The arrival of ancillary makes personalization even more difficult as airlines rely on the GDS to include ancillary services in their core price computation algorithms.
Internal barriers to personalization
It’s not hard to identify the external factors impeding personalization – but airlines also create their own barriers.
The chief culprit is the way most airline marketing departments rely on other departments to generate offers.
Take the example of email marketing. This should be a key pillar of any direct strategy.
It allows you to sell to "the audience of one", targeting customers with highly personalized offers.
Today’s dynamic email marketing solutions mean you can update the customer with bookable offers, available at the moment they open the email.
It’s an exciting opportunity but airline marketers’ hands are tied because different airline departments have different priorities.
Say an ecommerce department wants to run an email-based offer to ten destinations. Fares and Pricing provides information on available flights and prices.
The campaign is launched – but almost immediately the revenue department manipulates availability and the offer is out of date.
Result: frustrated customers and a wasted opportunity.
Clearing the way for personalization
Airlines can solve this issue for themselves by re-engineering internal processes.
They can give each department access to their own fares and pricing engine, enabling them to manipulate and use data as they see fit.
Equipped with this tool, the airline’s ecommerce marketers could acquire prices, automatically track for changes and update email offers.
By unharnessing the ecommerce specialists from dependence on pricing or revenue, airlines can liberate their creativity.
Wider industry moves – such as IATA’s NDC initiative – should complement reforms made within airlines and help clear the way for more personalization.
Creativity without constraints
We expect to see a lot of innovation in offers – and these will transform the way customers discover and buy travel.
Airline websites will be truly personalized around the preferences of individual customers, with search and features like maps and calendars all contributing to a richer online experience.
Targeted personalized offers will reach customers in the channels they use – email, social media, search engines.
And whatever the channel, each customer’s personal preferences for everything from favorite seat to dietary requirements will be used to shape the priced offer.
The industry is moving in the right direction, removing or reducing many of the external barriers to personalization.
But ultimately the journey to personalization, and unlocking the profit potential of direct sales, starts with the individual airline and its decision to empower its marketers and set ecommerce free.
NB: This is an analysis by Boyan Manev, vice president of business development and product marketing at Vayant. It appears here as part of Tnooz’s sponsored content initiative.
NB2:Airline people image via Shutterstock.