| ||Facing financial turmoil over the last couple of years, transport firms and travel agents have had their work cut out for them as many holidaymakers have opted to stay in Britain to cut costs. And things seem just as uncertain now, as the air travel side of the industry faces ongoing turbulence with the recent disruptions. |
According to the International Air Transport Association air travel declined in 2008 and 2009 and figures from the Office of National Statistics show that visits abroad by UK residents are continuing to decline – in the three months to February 2010 foreign travel was down 14% on the same period a year ago.
These changes in consumer behaviour and spending – which could be reinforced by the recent difficulties with flights – have made it essential for marketers in the travel sector to alter their strategies in order to retain customers. As tough economic times encouraged travellers to shop around for the cheapest deals, many firms started to concentrate on customer retention and development in a bid to stem customer churn. This is still a sound approach.
Customer loyalty programmes have been a key weapon in the battle to win the hearts of travellers who might have been wavering as the recession dragged on. Many firms recognised that making use of existing customer loyalty programmes and customer data to better understand customer needs during the recession was a wise use of the marketing budget.
Some firms even launched or extended loyalty programmes during the recession. For instance, in response to recessionary cost-cutting by flyers, which resulted in a drop in business travel, British Airways extended its loyalty programme by offering elite membership of its Executive Club even to those buying discounted economy tickets.
Our recent research showed that 60% of marketing decision makers in the travel industry said that loyalty programmes became more important to successful business during the recession. While this is a substantial percentage, it fell significantly below the all-sectors average of 71% and lagged far behind the utilities and telecoms sector (97%) and the banking sector (82%).
This slightly lower figure might seem surprising in a sector that was one of the early adopters of loyalty schemes. Many marketers in this industry, however, are likely to have seen the sophisticated and highly effective loyalty programmes as fundamental tools for their business – an essential requirement to succeed in any economic climate rather than as extraordinary recession-busting measures. Furthermore, the sector has been employing effective customer communications for some years.
In making any alterations to their marketing strategies, many organisations in the travel business chose to concentrate energy and resources on price promotions, which, when combined with an already sophisticated approach to loyalty programmes and customer communications, could prove to be a more valuable point of differentiation during the recession.
While this approach to marketing would seem to make sense, other aspects of travel firms’ marketing strategies seem less thought-out. One disturbing finding in our research was that only 40% of marketing decision makers in the travel sector surveyed felt that the majority of loyalty schemes in their industry were fully integrated with all other marketing activity.
By integrating all marketing activities, a business can ensure consistency of message and the complementary use of different channels, which can maximise impact on the customer. Companies that fail to integrate marketing activities – especially when it comes to existing customers – risk being inefficient and contradictory in their customer communications, thus hurting the potential ROI of their campaigns.
As the UK exits recession, travel organisations that have not aligned their marketing activities are already wasting valuable marketing resources and could struggle to maintain customers won during the recession.
As the economy picks up and consumers start loosening the purse strings, travel will be back on the agenda for many who had put holidays on hold – even with the recent flight disruptions. Many firms in the sector will see economic recovery as an opportunity to prospect for new customers. The risk, though, is that the existing customer base may get neglected in favour of attracting prospects.
Neglecting existing customers, however, could lead to the loss of customers before new ones have even been recruited. Therefore, businesses that have invested in database marketing and integrated their loyalty schemes with other marketing activities will be much better placed coming out of recession as long as they maintain a focus on their existing customers.
And when it comes to their prospecting activities, their investment in database marketing will actually help them when it comes to prospecting by informing their new business campaigns by providing a profile of their best customers – and using that in their targeting.
Those that haven’t invested in database marketing and integrated their activities are going to have a tough time competing with those that prepared themselves for the good times while weathering the bad.