It is well-known that growing competition in the travel market leads to a greater need for additional revenue streams. Ancillary services now being offered to consumers throughout the purchase process and beyond. In this article, Nigel Bramwell, CEO of Voiamo, explores the need for add-on services that are not one-offs, but that build long term relationships with customers.
Ancillary revenue has become vital for the travel industry across the globe, as fierce competition continues to drive down prices. It’s practically impossible to book a hotel room or hire a car without being offered a variety of add-on products, ranging from breakfasts to travel insurance. According to IdeaWorks, airlines made more than £18billion last year offering extras such as food and in-flight entertainment. The research also showed that Australian airline Qantas reaps an average of £37 in additional extras from each passenger.
The growth of the internet as a purchasing channel has made it easy for the hospitality industry to push extra products into the buying journey. Once the preserve of low-cost hotel chains and airlines, offering add-ons is now a staple for the entire travel market – high-end, low-cost and boutique alike.
There are clear advantages to offering customers a variety of extras, but are the one-off extra transactions currently on offer - such as food, room upgrades, excursions and travel insurance – really the full potential of this approach? An extra £37 per customer is not to be sniffed at, but in such a competitive market, is the industry really making the most of the process?
The travel industry needs to look beyond single transactions and make the connection between additional revenue and deepening customer relationships. Longer term add-ons – ideally, involving contracts and recurring revenue - are therefore the gold standard that has to be aimed for. Offer the customer a reason to invest in your brand on an ongoing basis.
For many, this thought process has ended with the development of a mobile app. E-Marketer predicts that US travel sales purchased digitally (via mobile devices or online) will total $168billion in 2017, while sales via mobile devices alone will reach nearly $50billion. So mobile applications are therefore crucial in driving customer interaction, predominantly due to the ease of purchasing tickets, managing bookings, choosing seats, booking accommodation and so on. User-friendly mobile apps can also help drive customer loyalty, provide loyalty offers, feed relevant information or updates, enhance traveller interactions – essentially, build long term customer relationships.
But apps tend to depend on connectivity. The provision of apps helps to secure customer loyalty and moves people into self-service and away from call centre queues, reducing costs. But both these advantages and the investment into the app are undermined if the customer doesn’t have mobile connectivity, which is particularly unlikely if they’re abroad and consciously avoiding exorbitant data roaming charges by turning off their 3G.
So if a solution to encouraging customer loyalty is a mobile app, but these cannot be relied upon due to either unreliable or expensive data connectivity, how can a travel company solve the problem?
The answer is a second ancillary product – low-cost, low-commitment, SIM-based mobile data packages. They not only allow the customer to circumvent the much-publicised high data roaming charges, but they also intrinsically entail a contractual relationship over the course of a minimum of a month. Far longer than most travel companies’ or hotels’ customer relationships.
Indeed, for many hotels, they also present an opportunity to improve upon Wi-Fi provision. Instead of installing a costly Wi-Fi infrastructure, they can offer a low-cost mobile data package that gives the customer connectivity within and beyond the confines of the hotel, while giving the hotelier a longer customer relationship.
Add-on services and products are vital for survival in the travel industry. And if these are to move beyond basic one-off transactions and deepen the customer relationship, targeting “real estate” on customers’ smartphones is vital. Apps may be one route, but without connectivity, they are severely limited. Fortunately, the solution – mobile data packages – are not only a simple enabler for the apps, but also a standalone longterm add-on service in their own right.
For more information visit www.voiamo.com