Thomas Cook provided an update of its "digital transformation" this morning as part of half-year results ended 31 March, 2014.
The company has come a long way in the months since it embarked on its journey and chief executive Harriet Green didn't pull any punches in her description of a business in crisis.
- Disconnected online business
- No omni-channel experience
- Zero digital experience at senior board level
- No culture of 'digitisation' in the company
- Poor online customer experience
- Siloed approach making it difficult to implement a digital strategy
Well, things are improving with a more diversified business - a third of revenue now sourced from outside the traditional package holiday business as well as £3 billion in online revenue and £500 million from mobile and tablets.
The number of web platforms has been reduced from 17 to seven with an ultimate goal of one while the number of websites has been almost halved with a goal of two to three per segment.
Online bookings from tablets and mobiles are up 72% for Thomas Cook's tour operator business and online bookings in Germany have increased 28% YTD.
The Flythomascook responsive site, unveiled late last year, is already earning its keep showing an 87% increase in revenue from tablets in its first month.
Online bookings increased to 39% for the past six months with a target of more than 40% for the full year and more than 50% in 2015.
There's still a way Green pointed out as she outlined some of the plans to continue the 'digitisation' of Thomas Cook and make further cost cuts (benefits) going forward.
Of note is the launch of a new UK website this month, the 'already in progress' One Web single platform for all inventory and a single view of the customer and a promise to 'leapfrog the competition' on mobile.
The website will include a My Account facility and the plan is to extend it to the Netherlands and France by the end of this year and Belgium and Germany next year.
And, where to after that?
Thomas Cook is now embarking on Wave 2 of its transformation with predictions of the 'benefits of a similar magnitude' by full-year 2018 - that is, £400 million.
Green says the company has already identified £150 million in benefits using by continuing to apply the lean philosophy to the business.
Wave 2 is also about better yield, more digitisation (think call-centres and customer experience developments) and 'enablers' - transformation of IT, finance, HR operations to make for a more efficient business.
The ongoing transformation will see a further shift to digital channels which cost 38% less to serve the customer than Thomas Cook stores and reductions in cost to serve are planned for all channels.
Financial highlights:
- Earnings before tax and interest rose 39% (£77 million) to £274 million year-on-year.
- £131 million revenue hit as a result of 250,000 fewer customers travelling to Egypt.
- Strong demand for new concept hotels with summer bookings up 44%.
- Wave 1 cost improvements £20 million ahead of target therefore increasing Wave 1 2015 target from £440 million to £460 million.
NB: Main image via Shutterstock.