"Let me recommend something for you" - it’s a concept as old as retailing itself.
Especially in the pre-internet era of travel booking, this phrase was a key tool in a travel agent’s arsenal to monetize every aspect of their customer’s trip.
From ground transport to parking to things to do, a travel agent acts as the user’s trusted advocate and ensured his or her customer had a great trip.
Personalized recommendations are a fairly basic part of the customer service experience in other industries such as retail, and, in many of them, an essential part of it.
But in the travel industry, the drive towards efficiency, self-service and away from travel agents has mostly shifted this part of the travel experience to mid- and high-end hotels equipped with a concierge desk, leaving a lot of money on the table for the rest of the industry.
But thanks in part to Big Data and predictive analytics, the travel industry is starting to get equipped to bring this critical part of the customer experience back to front and center.
Enter the Next Best Offer
In an article in the Harvard Business Review titled "Know What Your Customers Want Before They Do", several Deloitte executives termed the sending of an automated offer at the right moment, at the right price, and in the right channel as a "Next Best Offer".
Following on from that analysis, this article will take a high-level look at how Next Best Offers (NBOs) could be used by the travel industry to further monetize their existing customers’ itineraries as well as significantly enhance customer experience and satisfaction.
First, some definition: Next Best Offers should not be confused with in-path upselling currently employed by many travel brands.
While there are many logical and successful upsell processes employed in the travel industry, these almost always happen pre-purchase and encourage a user to essentially add more items to their shopping cart.
An NBO differs in that it is typically sent after a purchase or order has been made and is designed to be relevant and complementary to that purchase.
Examples of NBOs in other industries
Let’s take a brief look at some real world NBO examples in other industries:
What a Travel NBO might look like
- In retailing, Amazon is perhaps the best practitioner of NBOs. Have you ever purchased an item, only to get an e-mail offer for a related item a few days later?
- In dining, after ordering a main course at a restaurant, the sommelier recommends a bottle of wine that perfectly pairs with that main.
- Grocery store "club card" programs frequently target consumers with offers and coupons based on past purchase behavior
Thinking about the above examples, some obvious examples might look like this:
- A hotel engages their customer with a welcome e-mail offering a selection of top activities for the city they’re visiting
- An airline sends their customer an offer for discounted ground transport after a delayed flight to expedite the customer to his or her destination
- A car rental company offers their customer hospitality options on a 1-way rental over 400 miles.
Aside from the merchandising and monetization opportunities, the above also represent stellar customer engagement and satisfaction opportunities. A customer receiving the above airline offer might think:
"My airline actually thought about me. Wow."
A different customer receiving the above hotel offer might build an affinity for the hotel’s brand, always choosing that brand due to the welcome experience program.
Travel NBOs are simple? Think again
In the travel industry, merchandising opportunities based on past purchase behavior may seem obvious, and even endless. But scratch the surface a little, and things become more complex.
This is because we all have varying personas when traveling:
On a business trip, I’m likely to buy (or not buy) very different products than when I’m vacationing with my family. But even the business/personal trip criteria can be too simplistic. A one-day overnight business trip means my schedule demands are very different than when I’m spending a week with a client. A weekend getaway with my significant other will also look very differently than a week with the kids.
In summary, it gets complicated, quickly.
A tempting solution to the above is what many ancillary providers do today: Conclude the above problem is too hard, and send the traveler a link to a plethora of options so they can figure it out themselves.
This typically results in the traveler being sent to a white-label booking engine with thousands of options. When prompted with this overwhelming amount of options, the typical result is the traveler choosing nothing and "figuring out later.
Even worse, they’re likely to completely ignore any future offers since their time was wasted the first time.
Thinking about a Travel NBO: The basics
In the HBR article, Deloitte split the process of designing an NBO into four basic tenants:
- Define Objectives: What goal is the NBO trying to fulfill?
- Gather Data: Utilize any and all data sources required to make an intelligent offer.
- Analyze and Execute: Use gathered data to match customers to offers. Make offers sparingly and monitor engagement.
- Learn and Evolve: Analyze performance of previous offers to improve the relevance of future offers.
Let’s take a look at the above in a bit more detail from a travel angle:
- Defining your objectives as a travel brand should be fairly straightforward. Are you just considering further monetization of existing customers? Are you looking to spend some of your marketing budget to subsidize certain offers for high value customers? Can you design an offer that your customer will always remember you for? All of these are things to consider.
- Gathering data is perhaps the part requiring the most preparation in designing an NBO. You’ll want to utilize every data source you can to assemble a detailed profile of your customer, including demographics, psychographics, purchase history, the itinerary the customer is traveling on, who he/she is traveling with, etc. You also might want to consider things such as what is happening around the traveler (events, weather) and how the products you’re offering in your NBO can relate to all those data points.
- Analyzing and executing, as always, are the most critical. Aside from finding an efficient delivery vehicle for your offers – whether e-mail, mobile app, or in-person – you’ll most want to consider the timeliness and relevance of your offers. A business traveler is likely to not engage an offer for a city bus tour. Worse, offers sent too frequently will quickly annoy the traveler and make him disable any offer functionality. Relevance is a key point: Understanding what persona a traveler is traveling under will significantly increase the chances of conversion and a meaningful engagement. Determining a user’s persona requires large-scale statistical analysis and data science experts, and should not be taken lightly.
- Learning and evolving should not be overlooked. Consider each offer sent – and its success or lack thereof – as a way to fine tune your future offers. Did the traveler delete your offer without opening it? Perhaps you need to look at how the offer’s subject line was phrased. Did the traveler not engage at all? Perhaps you got your persona classification wrong. How long after making the offer did the guest engage with it? Perhaps your timing was off. All of these – and countless more – are data points to learn and evolve from.
Especially when starting out, you’ll want to design your NBOs to be extremely lightweight and broad. As your learning evolves, you can begin to be more fine-tuned and laser focused in the types of offers you send and how often you send them.
But beware: NBOs can and will backfire if executed poorly. The most critical things to avoid are:
Start your engines
- Sending frequent offers: Start with one offer per trip. Don’t annoy your customer at every turn.
- Don’t creep out your customer: Big data and data sciences enable a level of insight into a customer’s behavior like never before. But being “too good” can backfire: A creeped-out customer is a dissatisfied customer.
All of this may look too complicated for you or you may want to just keep retailing the way you’ve been doing it. But don’t rest on your laurels - major travel brands are not only heading down this path, but may trap you in a place you don’t want to be: The last guy to engage the guest.
Imagine a scenario where your friendly online travel agency is sending your guests more relevant and timely offers than you are as a hotelier or airline. Imagine their offers taking your guests off-property (in case of hotels) or directing business to competitors (in case of other travel products).
The race to engage the traveler intelligently has already started. Don’t be the last to the finish line.
NB: For further reading, here is the HBR article "Know What Your Customers Want Before They Do" as well as the associated Deloitte webinar.
NB2:Clock beach image via Shutterstock.