Customer-centricity is the topic on everyone’s lips in the airline industry today. Airlines are discussing plans for transformation towards offer- and order-enabled modern retailing, and one of the biggest benefits being touted is the ability to create more relevant and targeted offers at the individual traveler level.
When an airline "knows" their customer and can tailor their offer accordingly, personalization presents no real challenge. However, airlines don’t always (indeed, rarely) have full visibility of who the traveler is. In such cases, the absence of individual insights means personalization can be problematic.
Arguably the biggest challenge facing the industry right now centers around how to put the traveler at the center of the airline decision-making process.
The personalization challenge
Personalization in the traditional sense – designing something to meet someone’s individual requirements – presents a unique challenge for airlines because 70% of customers travel with an airline no more than once a year. This results in a high volume of anonymous travel shoppers and a very low volume of "shopping basket" data that can be analyzed at an individual traveler level.
Even for travelers who do make multiple trips with an airline, the complexity of those trips can render the data less valuable for analysis purposes. For example, a traveler may book a week of skiing with a group of friends early in the year, a solo business trip to a city center for two nights and a two-week family vacation at a beach resort or theme park in the summer. Although the same traveler is searching for each trip, their requirements and preferences may vary significantly based on the trip purpose.
And let’s not forget, even where prior trip data is available, past behavior is not always an accurate predictor of future purchasing propensity. Consider the example of a once-in-a-lifetime vacation to Egypt to cruise along the Nile and see the Great Pyramid of Giza. That exact same trip is highly unlikely to be repeated when that traveler comes to book their next trip.
The non-personalization solution
Sabre advocates for airlines to consider a range of potential approaches to the broad concept of personalization and what it can deliver. For example, we believe airlines could see powerful results through non-personalization using trip-purpose segmentation, which seeks to better understand the "why" behind traveler preferences.
Non-personalization means making trip recommendations that are not based on a traveler’s past behavior or personal data. Instead, it uses contextual information such as search parameters (which may include number and age of travelers, origin and destination point, dates of travel, etc.) from which to make inferences. In the case of an anonymous travel shopper, this may be the only information available to the airline.
Of course, where personal information is available, a hybrid solution is the smart choice – using personal data to enrich any contextual information for an even more targeted recommendation. Take the example of a traveler who had a negative experience on their previous trip. When that same traveler shops for their next flight, if the airline can identify the prior service failure and respond (by offering a free seat upgrade, for example) the traveler experience can be greatly enhanced.
Trip-purpose segmentation uses transaction data to group travelers into cohorts using trip-purpose (the "why") as the defining characteristic of their purchasing behavior. This concept is not new. Indeed, from the earliest days of revenue management pricing, a Saturday overnight stay was used to define business trip-purpose versus leisure trip-purpose.
Today, thanks to advances in technology, the application of AI/ML to marketplace data can analyze combinations of shopping request attributes to identify commonalities across trips to create unique cohorts. For example, all itineraries that represent a first-ever trip to Paris create a cohort for trip-purpose segmentation that can be used by airlines to create offers that better match traveler needs and are therefore more likely to convert into revenue.
Accelerating innovation
The Sabre Labs team is at the cutting edge of developments in the arena of traveler-centricity through uncovering trip-purpose segments – you can read more about their pioneering work here.
Every day, Sabre supports our airline partners by exploring new and innovative ways they can use data and technology to better anticipate traveler needs. To overcome the challenge of becoming more traveler-centric and reap the rewards as they accelerate towards modern travel retailing. It’s a complex challenge being faced across the industry, but with the cutting-edge advances of Sabre Labs combined with Google Cloud Platform’s infrastructure, data analytics and machine learning, Sabre’s airline partners will be ideally placed to succeed.